Cost of Doing Business: Chiquita in Colombia

By Aaron Mannes

The recent report that Chiquita Brands International has been fined $25 million for paying $1.7 million to the United Self-Defense Forces of Colombia (known by its Spanish acronym AUC) certainly raises the specter of giant American corporations in collaborating with local thugs to oppress the local population in order to provide cheap produce for the American people and maximize profits. The fact that Chiquita Brands is the successor to the notorious United Fruit Company, which for decades was involved in malfeasance in Latin America, only contributes to this image.

The reality may be more complicated. First, although the fine is for paying the AUC, the plea agreement also states that Chiquita made payments to the FARC and ELN. The company claims, plausibly, that these payments were necessary to do business in Colombia and protect is employees. The DOJ filing reports that after the AUC forced FARC out of the area where Chiquita was operating, Carlos Castano, AUC chief and mass murderer, made clear, albeit unspoken, threats. Recent kidnappings of geologists and oil workers as well as FARC attacks on dairies affiliated with Nestle further support the argument that doing business in much of Colombia requires paying off loathsome people.

Chiquita disclosed its payments to the AUC to DOJ in April 2003 and publicly in May 2004. A month later they completed the sale of their Colombian operation to a local company.

This raises an important moral question. Multi-nationals are accused of many evils, but because of their international standing they are also subject to international pressure and the laws of Western democratic nations. They also, at least occasionally, are run by moral people who are at least somewhat concerned with these issues. When these operations are taken over by local companies they are less subject to these pressures. Alternately, if the operations close down completely – or are dissuaded from even entering Colombia - it only forces more people into the illicit economy.

Chiquita’s actions were illegal and their payments helped the AUC continue its vicious campaign. But the underlying issue is the broader security situation in Colombia. As long as the writ of law does not extend fully throughout the country and there are large armed groups challenging state authority, businesses will be forced into deals with the devil.

Cross-posted to TerrorProfiles.

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