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Case Study: “Blood Bananas”

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    Case Study: “Blood Bananas”
    Core Issue

    Chiquita Brands Company was a well-established international fruit growing and processing company in the 90’s. They had subsidiaries around the world; Colombia was one of those countries. With the creation of Banadex, Chiquita’s subsidiary in Colombia, revenues for the parent company increased a great amount. Banadex was Chiquita’s most profitable international operation; they had been working in that country around 100 years in the business of growing huge bananas’ fields. However, in the late 90’s, Chiquita Brands faced a dilemma; the leader of the bloody and violent United Self Defense Forces of Colombia (AUC), Carlos Castaño, “offered” their services to Chiquita Brands. Those “services” included the protection of their Banadex’s 12,000 employee’s lives and well-being. When I write “offered” is because there is no option to say no and just be in peace with that paramilitary organization. I know this by experience, in my beloved home country Mexico, this is happening right now; when those men approach to you or your business “offering” to protect you in exchange for money, either you pay them or run away. The outcomes of saying no is getting you, your family or employees kidnapped, raped or even killed in the cruelest ways possible. They have no mercy. The issue in this case is simple: What Chiquita Brands Company should have done when they were blackmailed in the late 90’s? Three were the possible complex solutions, 1. Pay a few thousand dollars per month to the AUC in exchange of their “services”. 2. Say no and continue its operations as they used to.

    3. Leave the country and shut down its Banadex’s operations.

    Ethical and Moral Dilemmas
    I remember a year ago, I had one accounting class with Dr. Rubik Atamian in UTPA and since the beginning of it, he thought us and wanted us to know the difference between morals and ethics. In the accounting field, professionals are faced with these two things, that is the reason why the Sarbanes-Oxley Act was passed, because people had either no ethics or not proper morals. Morals have to do with a person’s character, what they believe to be right or wrong; they usually do not change. Ethics in the other hand mean what a society believes to be a code of conduct; they can change as tradition, religion or even the nation evolves. In the Blood Bananas Case Study, ethical and moral dilemmas exist. The moral issue from my point of view is that Chiquita Brands Company may have known that if they pay the AUC they would be a part of this organization and as a consequence they would be contributing to these types of acts in Colombia and the problem would never see the light or an end. Maybe, they knew in their morals that this was wrong, that this was not the right thing to do, that this is not the way things should be done in any place of the Earth, that it was unfair to give up a certain amount of revenue each month just because a group of people is threatening you.

    The ethical dilemma is simple for me. At that time, it was common that this paramilitary organization blackmailed companies and people. The nation as a whole was contributing to these types of activities; it was common to pay certain amount of your income in order for you, your family or employees to be safe and alive. It was at the time, within Colombia’s code of conduct, to engage into this type of “business”, not because they wanted to but because it was a way of surviving. Not even Colombian Government had a way of controlling and stopping these activities. There was an immense battle between Chiquita’s morals and ethics in the late 90’s. They knew what was moral but what was ethic to do at the time and place of the events. Evaluation of Possible Solutions

    Three scenarios existed, neither of them were good. However, they needed to take action, and it needed to be right away. You cannot mess with those men time, patience and “business”. As I stated above the feasible solutions was either to pay, not pay or to leave the country. Scenario #1: The first possible solution was to pay the AUC in exchange for protection (the real service was protecting Banadex from themselves). If Chiquita engages in business with them, it would mean that they had the “permission” from them to continue operating in Colombia. At the time, according to the assigned article Blood Bananas the AUC was not yet considered a terrorist organization, so it was not illegal to do “business” with them.

    Scenario #2: The second possible solution was to ignore them, saying no thank
    you and continue its daily operations. By choosing this scenario, Chiquita Brands would need to hire its own security staff and increase its operation costs in order to pay for this unexpected change in employees. The AUC would not be ok with this decision, so they would attack top level employees in order to give a lesson to Banadex’s parent company.

    Scenario #3: The third and last possible solution was to shut down its Colombian operations and leave the country. This decision would have a notable impact for Chiquita Brands’ revenue and profit. Its Financial Statements would show a huge decline in its consolidated Income Statement and Balance Sheet because Colombia’s operations were its largest international profit. Not only that, but they would also be taking away 12,000 jobs and $70 million dollars’ worth of revenue in the Colombia’s economy

    What the company should do?
    Chiquita’s owners were living in a safe country, where these types of activities barely happened. They obviously did not know what to do at the time. I believe that if you have the wherewithal to pay, and it is really convenient for you to keep your business operating, do as they ask or simply leave. We know the outcomes of saying no. I did some research and I found that Chiquita Brands chose scenario number one. They engaged in this business for eight years, from 1997 through 2004 until they confessed to the U.S. Department of Justice its actions and had to pay a fine of $25 million dollars and other penalties. I believe that at the time it was the ethical thing to do given the time and place of events, I am not saying it was worth it, but at least it was the best solution they could find at the time. I would have done the same or maybe I would have shut down my company’s operations and open other subsidiary in another Latino country such as Mexico (In the late 90’s). Nowadays, the same thing is happening in Mexico, it is really sad to see this happening. I lived in Mexico for eighteen years, of which seventeen I could go out at night, go traveling anywhere in Mexico anytime of the day and feel safe in the streets without the fear of facing a shooting, an extortion or a kidnapping. However, I personally know many people that have encountered with these types of situations. They either run like criminals and leave the city or even the country or they do as these horrible people ask them to do in order to survive, to be “safe” or to continue its business operations. Saying no, is really and truly not an option, believe me.

    -Article: Ending Case for Part One, Blood Bananas
    – Teagarden, Mary B., and Andreas Schotter. “Thunderbird Case.” Blood Bananas: Chiquita in Colombia. N.p., 2010. Web. 12 Apr. 2013. . -“ – Meet Chiquita.” – Meet Chiquita. N.p., n.d. Web. 12 Apr. 2013. . -“ – The Chiquita Story.” – The Chiquita Story. N.p., n.d. Web. 12 Apr. 2013. . -“ – Commercials & Ads.” – Commercials & Ads. N.p., n.d. Web. 12 Apr. 2013.

    Chiquita Brands Company Overview
    Chiquita Brands is a Global Company whose main business and revenues come from producing and growing fruits and vegetables. It was founded by Captain Lorenzo Dow Baker in 1870. Its headquarters are located in Charlotte, North Carolina and it currently employees around 20,000 people all around the world, to be more specific, it has operations in six continents. This international company is passionate about their nutritious high-quality fresh and value-added food products; they produce from energy-rich bananas to blends of convenient green salads and other fruits to healthy snacking products. They are also passionate about upholding the values which is at the very core of its company: integrity, respect, opportunity and responsibility. These core values form the basis of their business performance and guide their everyday activities, including its giving programs. They try to improve lives, love the planet and lead the industry with their purpose to: “Live better, Live Chiquita!” Since they have had ethical and moral issues in the past, they now state that they are a company who will always commit to conduct its businesses ethically, morally and in accordance with the law. They also state that because they know they have a history, they now proudly focus on extending labor rights, protecting our environment and investing in the communities in which they live and work. If they have been successful is because of its core values and purpose but as well as marketing. They invest in having the best ads in the industry and getting more people to know them as time goes by. They say that there is no doubt that part of the reason that they are one of the world’s most popular brands is because of their TV commercials and print ads. This company had to learn the hard way, but there is no success if you do not encounter with a rock on your path in becoming a leader.

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