[Congressional Record (Bound Edition), Volume 147 (2001), Part 11]
[Extensions of Remarks]
[Page 16244]
[From the U.S. Government Publishing Office, www.gpo.gov]



                     CHIQUITA BRANDS INTERNATIONAL

                                 ______
                                 

                           HON. MAXINE WATERS

                             of california

                    in the house of representatives

                        Thursday, August 2, 2001

  Ms. WATERS. Mr. Speaker, Chiquita Brands International has played a 
historically controversial role in Latin America. Beginning from its 
inception as the United Fruit Company, Chiquita has assisted in the 
overthrow of democratically elected governments who refused to yield to 
its economic demands. Other allegations against the company include 
producing false documentation, intimidating potential competitors and 
bribing government officials in order to maintain its hold over Latin 
American banana production.
  During the Clinton Administration, Chiquita also became embroiled in 
a well-publicized legal standoff with the European Union. The 
litigation resulted from the company's claim that the banana regime of 
the European Union, which attempted to protect small-scale producers in 
Africa and the Caribbean, would lead to business losses for Chiquita in 
the European banana market. In response to Chiquita's complaints, the 
White House challenged the European banana regime in the World Trade 
Organization (WTO).
  Despite such strong-armed tactics, Chiquita has not been able to 
maintain market share nor profitability in the 1990s. Since Chiquita 
has never been a proponent of open competition and fair play at any 
time in its history, the company's claims that built-in competitive 
advantages for small producers hurt large producers seems especially 
dubious. Chiquita must begin to accept responsibility for its economic 
and strategic failings, rather than assigning blame to those who would 
assure a competitive market.
  The attached article on Chiquita's irresponsible behavior was co-
authored by Ernest Hartner and Randall Johnson, Research associates 
with the Washington-based Council on hemispheric Affairs (COHA), an 
organization that is committed to addressing issues associated with 
democracy and human rights throughout the Western Hemisphere. COHA's 
researchers have often spoken out about U.S. policies and practices 
toward Latin American countries. The article, which appeared in the 
June 18, 2001, edition of COHA's biweekly publication, The Washington 
Report on the Hemisphere, examines Chiquita's dubious history in Latin 
America.
  I request unanimous consent to include this article in the 
Congressional Record. 

               Capitol Watch: Chiquita Banana's Hard Days

       The long battle between Chiquita Brands International and 
     its many foes may be approaching an unanticipated ending. The 
     company's recent financial restructuring indicates that a 
     declaration of bankruptcy could occur in the near future. 
     Chiquita has long attracted fiery criticism from human rights 
     groups, labor unions and small-scale competitors over 
     accusations of unethical and anti-competitive over 
     accusations of unethical and anti-competitive business 
     practices. Nevertheless, news of the company's financial 
     difficulties came as a surprise to its detractors, who have 
     often tended to see it more as a gun-toting mafia than a 
     traditional corporation. Chiquita's possible demise should 
     serve as a cautionary tale for companies seen as chronically 
     operating outside the law, rather than acting as good 
     corporate neighbors.


                           A suspect history

       Through its 120-year existence, Chiquita has been a leader 
     in the world's banana industry. The company's long presence 
     in Central and South America has emphasized political 
     manipulation, dirty tricks and a history of labor 
     exploitation. First created as the United Fruit Company in 
     the 1880's, Chiquita historically has sought to take 
     advantage of the systematic corruption and tainted operating 
     conditions to be found, or to be created, in such countries 
     as Costa Rica, Guatemala, Honduras and Colombia. While still 
     known as United Fruit, Chiquita went so far as to arrange the 
     overthrow of a democratically-elected government in Guatemala 
     which has refused to yield to its self-serving economic 
     demands. More recently, in the Otto Stalinski affair, 
     Chiquita financed an alleged assassination attempt, produced 
     false documents, and bought judges and hot-shot Washington 
     lawyers in order to secure its dominance over the local 
     banana industry. Preceding the 1990 Banana War, rival banana 
     exporter, the Fyffles Group, alleged that Chiquita illegally 
     undercut agreements that it had made with independent banana 
     suppliers. Fyffes' Stalinski accused the company of filing a 
     fraudulent warrant and corrupting local judges and other 
     officials to carry out its will, resulting in the 
     confiscation of his company's banana shipments. Chiquita 
     claims that the warrant was filed only as a cautionary 
     measure, in light of Fyffes' defaulting on mortgage payments 
     owned to it. The warrant was later invalidated, but not 
     before Fyffes had suffered serious financial losses. Beyond 
     lost banana shipments, Stalinski also accuses Chiquita of 
     financing an attempt to kidnap him, with the intent of doing 
     bodily harm, using a false arrest warrant and paramilitary 
     forces.


                      Roots of financial troubles

       Despite attempts to manipulate the global banana market in 
     recent years, Chiquita has found it increasingly difficult to 
     maintain market share and profitability in the late 1990's. 
     While other banana producers such as Dole and Del Monte 
     successfully adapted to changes in EU trade policy, Chiquita 
     became embroiled in litigation and various schemes to buy 
     influence in high places. On Chiquita's behalf, the White 
     House Trade Office filed suit with the WTO against the EU's 
     Lome agreement, an accord developed to guarantee its former 
     colonies preferential access to European markets and 
     lucrative aid packages. The morning after the complaint was 
     filed, Chiquita's CEO Carl Lindner expressed his thanks to 
     the Clinton administration was a $500,000 donation to several 
     Democratic state committees' coffers. This donation 
     represents only one in an unprecedented series of gifts made 
     to U.S. political candidates, without regard to party 
     affiliation. In fiscal year 1994, perhaps in an effort to 
     hedge his bets, Lindner was the second largest soft money 
     contributor to political campaigns, with $525,000 given to 
     Democrats and $430,000 given to Republicans.
       Secretary of Commerce Mickey Kantor continued to defend 
     Chiquita's interests before the WTO in the face of 
     allegations that contributions made by Lindner had influenced 
     his actions, and that Lindner had, in effect, purchased a 
     foreign policy. Chiquita and U.S. officials worked actively 
     to eliminate Lome preferences, with the WTO ruling in 
     Wasington's favor, but in the end succeeded only in securing 
     a partial compromise. The quotes first introduced by Lome 
     gave way to a first-come-first-serve policy that was later 
     replaced by a partial distribution of EU banana licenses. 
     During this period, Chiquita experienced a severe financial 
     crisis that has led to its impending financial restructuring.
       Chiquita's economic difficulties date back to 1992, several 
     years before the signing of the Lome agreement. The eagerness 
     of Chiquita's Lindner to assign responsibility for its losses 
     to the EU quota system should come as no surprise, given his 
     traditional reluctance to operate within the confines of a 
     competitive market. Traditionally, Chiquita has ruthlessly 
     sought `sweet-heart' deals with host countries leaders, which 
     allowed to it to gain domination of the local banana 
     industry, ofter after arranging for the purchased cooperation 
     of local officials.


                    `Strong armed' business tactics

       Despite some questionable cost-cutting measures aimed at 
     maximizing profit margins, such as the use of fertilizers 
     profit margins, such as the use of fertilizers banned in the 
     U.S., anti-union tactics and the alleged corruption of judges 
     and government officials, Chiquita still has been unable to 
     sustain the economic growth experienced in the 1980s. The 
     record profits of that decade were exhausted through 
     Chiquita's single-minded devotion to protecting its banana 
     turf, excessive legal expenses, and a series of poor 
     management decisions. Instead of diversifying its product 
     line, as Dole did by expanding into such new product lines as 
     freshcut flowers, Chiquita chose to increase its involvement 
     in the European banana market by making a determined assault 
     against the relatively minor concessions made to the English-
     speaking Carribbean islands. It spent millions of dollars on 
     refrigerated ships and advertising campaigns which sought to 
     strengthen its hold in Europe, but saw little returns as a 
     result of few changes in banana importation policy. This 
     resulted in the heavy debt burden that leads many to predict 
     Chiquita's downfall.
        Chiquita has never been a staunch proponent of open 
     competition and fair play, as evidenced by the accusations of 
     bribery, fraud and kidnapping. The company filed suit against 
     the EU alleging the `preferential' treatment of small-scale 
     banana producers. Chiquita adamantly views the guarantees 
     established by Lome, as an attack on the WTO's free trade 
     provisions. In an attempt to account for its financial 
     decline, Chiquita has focused attention upon problems caused 
     by Lome, rather than accept responsibility for its failed 
     economic strategy.





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