Bananas Rule in Central America

For anyone familiar with the history of 20th-century Central American political intrigue, economics and land ownership it should come as no surprise that Chiquita Brands International Inc. has, according to a recent year-long investigation by the Cincinnati Enquirer, engaged in questionable business practices in the hemispheric countries where it grows and buys its fruit.

The history of the multinational billion-dollar exporter of bananas, recently known as United Brands and before that the United Fruit Company, now under the control of Cincinnati businessman Carl H. Lindner Jr. and his family, is notorious.

As author Peter Dale Scott, a former Canadian diplomat and now professor of English at University of California at Berkeley has pointed out, the 20th-century banana republics of Central America can be seen as "creations of the fruit companies" (such as United Fruit and Standard Fruit and Steamship Co.) and the New Orleans organized crime "milieu."

"This symbiosis of the fruit companies, their local client rulers, the U.S. military and organized crime became institutionalized with the passage of years," in Central America, Scott wrote in Deep Politics and the Death of JFK [University of California Press, 1993].

In addition to this "symbiosis" the past 100 years of struggle for economic and social justice by the landless and peasants in such countries as El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and Panama has been punctuated by the intervention of the U.S. Marines and in recent years the U.S. Central Intelligence Agency (CIA) in defense of such unholy alliances.

In a May 3, 1998 copyright report the Cincinnati Enquirer summed up its year-long investigation of the Cincinnati-based company. The paper sent reporters to numerous Central American banana plantations as well as to Canada, Belgium, New York and Washington to compile its report.

Chiquita, through its Washington, D.C., law firm Kirkland and Ellis disputed suggestions that any of Chiquita practices are improper. "The information contained in the Enquirer's story was selectively edited, incomplete and presented out of context and portrays a highly inaccurate image of Chiquita," the company told Dow Jones News Service.

The Enquirer investigation, available online at, revealed that:

(ogonek) Chiquita used elaborate legal structures and front companies to get around laws limiting foreign ownership of land in Honduras and other countries. Citing records showing that Chiquita expanded control of banana-producing lands through companies that appeared to be locally owned but actually were controlled by overseas trusts directed by Chiquita subsidiaries.

By hiding behind dozens of supposedly independent companies, Chiquita thwarted labor unions as well as expanding onto lands that were off limits to foreign ownership, the Enquirer reported.

(ogonek) Chiquita and its subsidiaries are engaged in the use of chemical poisons that threatens the health of workers and nearby residents, despite an agreement with an environ group to adhere to safe practices.

-- A worker on a Chiquita subsidiary farm died in November 1997 after exposure to toxic chemicals in a banana field, according to a local coroner's report.

-- Hundreds of people in a Costa Rican barrio -- Barrio Paris, near San Jose -- have been exposed to a toxic chemical emitting from the factory of a Chiquita subsidiary, Polymer Plastipak. The plant makes plastic bags impregnated with a chemical poison called chlorpyrifos, used to protect bananas from insects, that can cause paralysis, nerve damage and death in humans. The company has conceded only that the plant emits a "bad odor."

-- Employees of Chiquita and a subsidiary were involved in an alleged bribery scheme in Colombia that has come to the attention of the U.S. Securities and Exchange Commission. Two employees have been forced to resign.

-- Chiquita fruit-transport ships have been used to smuggle cocaine into Europe. Authorities seized more than a ton of cocaine from seven Chiquita ships in 1997. The company was unaware and did not approve of the cocaine shipments, but the problem was traced to lax security on its Colombian docks.

-- Security guards have used force to enforce their authority on plantations operated or controlled by Chiquita. In one case, Chiquita called in the Honduran military to enforce a court order to evict residents of a farm village. The village was bulldozed and villagers run out at gunpoint. On a palm plantation controlled by a Chiquita subsidiary in Honduras, a man was shot to death and another man injured by security guards using an illegal automatic weapon.

-- U.S. federal regulators are investigating Chiquita's business practices. In April, investigators issued multiple subpoenas to Chiquita for documents. A company source gave the Enquirer copies of taped voice-mail messages by Chiquita executives.

Reaction to the Enquirer's investigation was swift from a member of the European Parliament. Glenys Kinnock, who represents Wales in the European Parliament, told the Cincinnati paper that she has appealed to the 15-nation union's lead agency in dealing with the banana industry. Kinnock is a longtime opponent of Chiquita's efforts to roll back EU banana protections. Those protections, in place since 1993, favor small banana growers from former European colonies in Africa and the Caribbean.

In April, the Chiriqui Land Company, an affiliate of Chiquita Brands, suspended 1,700 striking workers, saying a recent strike has made their services unnecessary. According to Fred Johnson, the general director of the company's Pacific division, "there have been no firings, these are 'temporary suspensions' under Panamanian labor laws."

The company's 4,500 workers in Panama walked out in February, charging that the company violated a contract signed last October. They say the company's decision to use an Atlantic rather than a Pacific pier for exports has cost 300 jobs. Chiquita says it no longer needs the services of packers and people who make its crates because it hasn't been exporting bananas since February. The strike, according to the company, has cost Chiquita more than $15 million.

Panamanian labor laws allow a company to suspend a worker "if his services are no longer needed, and that's what we've done," Johnson said.

"Chiquita is used to getting a favorable serving of legal decisions from these countries," Larry Birns, director of the Council on Hemispheric Affairs, a Washington-based research group that specializes in Latin American issues, told Dow Jones in a telephone interview. "Chiquita is the ugly American ... It has gone out of its way to underpay local banana producers, to break unions," Birns said.

Carl H. Lindner Jr., 78, the chairman and chief executive officer of Chiquita, is worth $665 million, according to Forbes magazine, and also heads up American Financial Group, a property and casualty insurance company based in Cincinnati with $15.7 billion in assets in 1997. In recent years Lindner has also been a major financial contributor to both the Democratic and Republican parties.

Getting Butchers' Attention

Thirty-four meat and poultry plants, including five run by Tyson Foods Inc. and two by Perdue Farms Inc., were temporarily shut down by the U.S. Department of Agriculture in the first three months of 1998 after inspectors found the food contaminated by feces or the plants operating in dirty or unsafe conditions.

The action was a crackdown on food safety after only one plant was shut down for similar reasons in fiscal 1997. Most of the plants in 1998 were closed for a day or two while some had only one processing line closed.

"This is a very effective tool to get their attention," said Carol Seymour, an administrator in the USDA's enforcement division. To restart their plants, she said, companies must submit corrective safety plans to the USDA.

Beginning in 1997 the USDA started phasing in regulations that gave inspectors the power to shut plants that failed to have adequate safety systems. Prior to the new regulations the agency could only stop plants from operating with sanitation problems after proving that their products were contaminated -- a time-consuming process that often took years.

"Proving that a plant isn't preventing a problem is simpler and allows us to act quicker," Seymour said.

Meat and poultry industry officials are not happy with the new aggressiveness, according to David Nelson, an analyst at Credit Suisse First Boston who follows the food industry. "They are concerned about a lack of due process," he told the Wall Street Journal. "Inspectors can shut down the plants whether the company feels it's justified or not."

In April, after industry complaints, USDA did revise its procedures, giving companies that aren't caught with contaminated products three days to correct problems and avoid a shutdown. Tyson Foods, the world's largest chicken processor, had the most plants at least partially shut down, as five of its 44 plants were affected.

"We're looking at Tyson very closely for a number of reasons," Seymour told the Journal, citing allegations surrounding former Agriculture Secretary Mike Espy's relationship with the company. Espy has been charged with accepting $35,000 in illegal gratuities from several companies, including Tyson. But she added that "I don't believe these figures show a major failure here. It's way too early to draw conclusions."

Perdue's plant in Dillon, S.C., was shut down in February for a day and a half after inspectors found condensation they thought could drip on the birds. An eviscerating line at the company's Lewiston, N.C., plant was closed for three days after an inspector decided that too many birds were falling on the floor. A Perdue spokesman said it supported the department's tougher policies.

Most of the 34 plants that were shut down were cited for failing to prevent fecal contamination, said Seymour, after inspectors found equipment wasn't functioning properly.

The Tapes Stay

Judge Blanche Manning of the U.S. District Court in Chicago has ruled that hundreds of hours of tapes that were secretly recorded during a two-year investigation of price-fixing at Archer Daniels Midland Co., "the best documented corporate crime in American history," can be used as evidence at the trial of three former company executives.

While she rejected a contention by the defense that law enforcement officials had directed an effort to destroy evidence that might have helped prove the defendants' the judge did sharply criticized the government for its handling of the chief cooperating witness in the case, Mark Whitacre, a former ADM executive.

Whitacre is among the defendants in the price-fixing case, along with Michael Andreas, the former vice chairman of the company and son of Dwayne O. Andreas, ADM's chairman of the board and former CEO, and Terrance Wilson, the former head of the corn processing division. While employed at ADM Whitacre recorded numerous conversations that the government says proves a conspiracy between ADM and certain competitors to fix illegally the prices of lysine, a feed additive.

Certain government decisions regarding Whitacre's role in the investigation, Judge Manning observed "border on gross negligence." Moreover, she dismissed some of the explanations by government agents of their handling of the case as "fantastic" and "ludicrous." However, she ruled that this didn't show intentional government misconduct, which would have been required to suppress the tapes.

The defense motions stemmed largely from contentions by Whitacre last year that he had been instructed by an FBI agent to destroy certain tape recordings he had made of ADM executives. Earlier this year, Whitacre said in a sworn affidavit that he had made up the allegations against the agent.

Monsanto 'Understands' Doing Business in Vermont

Monsanto Co., maker of the synthetic bovine hormone BST, has dropped plans to sue the state of Vermont over its new labeling law, which allows dairies to label their products as free of bovine growth hormone. However, Monsanto will continue to sell the hormone in the state. Company officials said that they now have a better understanding of the legislation.

"Monsanto understands that doing business in Vermont today under the new law is the same as it has been over the past four years," said Cheryl Morley, president of Monsanto Dairy Business.

While the Food and Drug Administration says the hormone is safe, Vermont consumers have said they want to know what's in their dairy products. Earlier this year the state's lawmakers approved a bill that allows producers of milk and ice cream, such as Ben & Jerry's, and other dairy products to label their products as hormone-free if they come from cows that weren't given Monsanto's synthetic hormone that can be injected into cows to increase their milk production.

Following the approval of the legislation Monsanto immediately sent Vermont dairy farmers a letter saying the company would stop selling BST in Vermont and would challenge the labeling law in court. The company said it objected to requirements it register with the state's agriculture department and provide information about its customers if the state was investigating whether a farmer had made false claims about being BST-free.

Vermont Gov. Howard Dean then met with Morley and other Monsanto officials after they flew to the state to try to persuade him to veto the bill, however, he told them he wasn't planning to change his mind and would sign the legislation.

A.V. Krebs is director of the Corporate Agribusiness Research Project, P.O. Box 2201, Everett, Washington 98203; e-mail: He is author of The Corporate Reapers: The Book of Agribusiness (Essential Books: 1992).

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