CALAMITY HOWLER/A.V. Krebs
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 http://enquirer.com/chiquita/index.html,
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 environhttp://enquirer.com/chiquita/index.htmlmental
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: avkrebs@earthlink.net.
He is author of The Corporate Reapers: The Book of Agribusiness
(Essential Books: 1992).
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