Case Study Chiquita Brands International (Research Paper Sample)

Case Study: Chiquita Brands International
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Case Study: Chiquita Brands International
I. Foreign Corrupt Practices Act
A. Overview
Chiquita Brands International is a leading company in the United States that imports and distributes bananas, as well as other farm produce throughout the country, though its reputation is majorly built in the latter. The demand for its produce is mainly driven by the high population and unfavorable weather for these plants to grow in the US, which forced the company to open several oversea outlets to source its products. One these countries was Columbia, which typically had a surplus of bananas. However, in order to start and eventually facilitate trade, the company was forced to engage in acts that would later taint its reputation.
The company was involved in corrupt acts with a paramilitary group by the name United Defense Forces, AUC, who threatened to kill Chiquita employees in subsidiary outlets in Colombia if it did not pay them any specified amount of money. It was for fear of its workers’ safety that the company agreed to the paramilitary group’s terms and in return, they were given permission to import bananas. This was a delicate situation that worried the newly elected head of the company in 2002, Rodrick M. Hills, to an extend that necessitated him to have talks with the DOJ officials. The two sides ultimately agreed that it was in the best interest of the safety of the company’s employees, for Chiquita to continue paying the AUC. This was a direct violation of the FCPA, although they concluded that it was a contingency plan to cease of forms of business operation in the region (Einhorn, 2006, p. 33). Eventually, the information was leaked to the public and a case was built against the company. In this case, it was ruled out that Chiquita would pay fines in excess of 25 million dollars and compensation for the families that lost their members.
B. Earlier Reactions
Chiquita Brands International initially claimed that the allegations about being involved in corrupt actions were untrue. In May 1998, the company was reported by The Cincinnati Enquirer in an eighteen page section to have had been involved in a series of acts that violated ethics works and legal framework of the United States. Although the report did not specifically link the company’s activities with the Colombian paramilitary group, it revealed various secrets that were an eye opener for Chiquita’s activities and misdeeds in Colombia (Gonzalez-Perez & McDonough, 2006, p. 52). The company denied all the listed allegations, and subsequently sued those behind the report, after it was found that investigative reporters of The Cincinnati Enquirer had repeatedly hacked the Chiquita’s voice mail system.
C. Enforcement of the Law
The legal battle against Chiquita Brands was concluded in March 2007, after the company was fined 25 million dollars, as a part of a settlement with the US Department of Justice for its ties with the Colombian paramilitary groups. Court documents indicated that Chiquita subsidiary made payments of about 1.7 million dollars to AUC, in exchange for local protection of the company’s employees in the volatile banana harvesting zones of Colombia. AUC, like other paramilitary wings in Colombia is listed among Foreign Terrorist Organizations (Cohen, 2007, p. 38).
II. Ethical Theories
Two ethical theories are applicable in the case of Chiquita Brand's involvement in illegal payments of Foreign Terror organization. These include: utilitarianism theory and Aristotelianism theory. The two ethical theories provide conclusive explanations about the company in its activities, offering diverse perspectives in relation to potential justifications that the Chiquita had in making its overall decision of engaging in unlawful transactions (Driver, 2009, p. 15).
A. Utilitarianism
Utilitarianism theory is based on the view that the morally right action is the one that produces the most good. In regard to this theory, it tries to explain that the actions of Chiquita are morally right in the perspective that the company considered paying the paramilitary group, as a way of protecting the lives of its valued employees. Although paying the AUC was a direct violation of the FCPA, it generally provided a greater good to continue rather than discounting these payments. The Utilitarianism theory in ethics of business considers the overall good and happiness of all those involved in the transaction. Profit maximization is an essential part of the theory, since the desire for any company to make money in business is highly understandable; hence, it is a priority for most companies. The case of Chiquita to maximize on its profits is proper in order and acceptable; therefore, its bid to ensure continuity in its business venture is justifiable as a business entity (Driver, 2009, p. 18). In this regard, the theory can be used to justify the company’s decision to engage in making payments for the protection of its employees, who highly contribute to the overall profit making aspect of Chiquita.
However, the Utilitarianism theory offers other perspectives that aim at ascertaining that all the stakeholders of the company were expected to be happy about its activities in Colombia. In this case, the stakeholders of this company are all its employees, their families, suppliers of the company, retailers, consumers, all Chiquita’s affiliates and citizens of Colombia attacked by the paramilitary group that received funding. In this perspective, it is essential to note that the majority of the stakeholders were generally happy about the activities of the company in Colombia. Chiquita Brands acted in a relatively unethical manner when it decided to fund the AUC. By paying the paramilitary group at the threat of its retaliation in the event of a refusal to pay is firstly illegal within the country of Colombia, where the specific plantations were located. The company had an option to open a plantation in a country that maximized its profits with the absence of such paramilitary groups, but opted to proceed with an activity that would empower or benefit an illegal group (Driver, 2009, p. 18). If Chiquita had made a decision to stop and never set up its operations in such kind of environment, there would have not been a legal case, as the damage, as well as empowering an illegal group would have been in existence; hence, the greater good of all the stakeholders would have prevailed.
B. Aristotelianism
Aristotelianism theory entails the existence of aggregates between extremes. The theory is a collection of philosophical doctrines as attitudes that aim at establishing a philosophical inquiry. It is based on virtual ethics that argue that the highest temporal goods that are internal to humans are actualized by participation in social practices. In the case of Chiquita Brands, the Department of Justice had all the powers to ask the company to stop its payments to AUC with immediate effect, an act that would have been in conformity with the FCPA. The DOJ on the other hand, only let them to continue with the payments as the damages were already greater, while in reality, the trade had to stop. The acts of the DOJ can be viewed to have been in conformity with the Aristotelianism theory. This was based on the Aristotelianism virtues that a good person is one who directly serves the purpose of living well and rationally (Jones, 2007, p. 56). As for the case of Chiquita, making payment for a period of time provided a rationale of convincing the DOJ that a stop of transaction would negatively affect the course of good business that the company was making as a benefit of the paramilitary groups in Columbia.
The Aristotelianism theory is applicable in explaining the justification of the department, as well as Chiquita to settle for an agreement that would favor the continuity of the company’s business. The theory is in conformity with the act of DOJ in regard to the case of Chiquita, where they agreed that the company would continue to pay the paramilitary group as a solid solution was being sought. The agreements between the Chiquita and the DOJ were mutually aimed at pulling the company from its engagements with an illegal group in Columbia, subsequently utilizing the elements of having a collection of philosophical doctrines and attitudes that were aimed at achieving a philosophical inquiry. The philosophical inquiry in this scenario involves the final decision that would offer a lasting solution in regard to the overall good (Segal, 2006, p. 67). Although the court’s decisions did not favor the Chiquita Brands Company, it was practically ethical to agreeable virtue of achieving a final solution in regard to the US law.
The Ethical outlook of the Chiquita case is mainly based on the overall interpretation of the issues facing the company as per the utilitarianism and Aristotelianism theories. The ethical outlook entails company’s decision to make transaction with FTOs, which was against the Criminal Justice as from 2001, subsequently subjecting the company to the DOJ. The main issue with the company was its ignorance to government’s enlisting of AUC as a FTO, which meant that Chiquita had the opportunity to withdraw its operation in Colombia in a proper way as the company did after its voluntary confession of its acts two years later. This would have helped the DOJ to be more lenient into its previous activities in Colombia, and probably avoid chances of being fined.
III. Chiquita Brands International
There are various areas of law that have been addressed in the outcome of the case of Chiquita Brands Company. These laws include employment law, business law and security regulations laws. From the activities of Chiquita, it is evident that the bu...