Monday, April 15, 2013

Chiquita Paying for Protection (2007)

Based on Paper by Ryan Scott
Business Ethics Case Study by Ryan Scott

Case Description:
Chiquita, a world leading American based produce supplier, is a multibillion dollar international company. Chiquita was founded in 1870 by Captain Lorenzo Dow Baker, merged with Fresh Express brand in 2005, and is immediately recognized by “Miss Chiquita” found as the focal point of their logo. Chiquita proclaims themselves to be a leader in social and environmental responsibility in the produce market, joining with the Rainforest Alliance to preserve biodiversity, and to make money, with core values of integrity, respect, opportunity, and responsibility. Despite these more recent efforts to put a positive light on the company, Chiquita has gotten into trouble after admitting before the U.S. Dept of Justice that they had paid money to the tune of $1.7 million over the course of 7 years to private militia groups in Columbia. Chiquita paid this money to appease these groups, believing that if they hadn’t, more money would have to be paid out to make up for loss of product, damage to property, and possible injury to employed personnel. Upon further investigation into the case by the Justice Department, this same group whom Chiquita was paying money, then used the money to fund the alleged torture and killing of several hundred Columbians, causing huge uproar by those involved towards Chiquita. A formal suit was brought before Chiquita in a Florida District Court in 2007. Chiquita plead guilty to charges of funding these groups in Columbia, and paid the resulting fines and restitution settlements of $25 million.
The Stakeholders:
The stakeholders involved are all people employed by Chiquita, their immediate families, suppliers of Chiquita, retailers of Chiquita products, consumers of Chiquita retailers, all affiliates of Chiquita, and all of the citizens of Columbia attacked by the groups who received funding from Chiquita.
Individualist Perspective:
            The individualist theory focuses on profit maximization by any legal means possible. From the Individualist/Friedman perspective, Chiquita acted in an unethical manner when choosing to pay money to local militia groups. Paying this group at the threat of retaliation from the group if Chiquita refused to pay is illegal within the country of Columbia where the particular plantation was located. The decision to be made from this perspective would be to open a plantation within a nation that maximizes profit, and is absent of such militia groups and such powerful extortionists. If it was legal for these groups to require money from landowners within their region of operation, this would not have been unethical according to the Individualist Theory of Economics.
Utilitarian Perspective:
The Utilitarian Theory of business ethics considers levels of happiness of all those involved in the business transaction under consideration. Profit maximization is an important part of the theory, as the desire to make money in business is understandable, however different from the Individualist Theory, it is not the first priority. It is also accepted that there may not be a solution that maximizes the happiness of all everyone involved, in which case the highest possible level of happiness is the choice that should be made. From a Utilitarian perspective, Chiquita’s choice to build plantations in these environments was not an ethical one. The happiness of employees under constant threat of attack by volatile militant groups is not a maximum when compared to those employees in other prospective nations. The happiness of the employees who did eventually find out about the incident was also not maximized, and in most cases was minimized, losing the support of some consumers for life. The happiness of the natives within Columbia is also minimized. This is caused by the furthering of power of these groups, because the majority of the country is at their mercy, since now they can buy more munitions and armaments to commit atrocities with. If Chiquita had never set up an operation in this kind of environment, there would have been no legal case, and no bad publicity. The damage and loss of life would have been smaller, as well as greater happiness in the stakeholders.
Kantian Perspective:
            The Kantian Theory of business ethics focuses on the idea of rationality, and promotes enhancing a person’s rationale so they can make the best decision for themselves. The Formula of Humanity, one of the most important pillars of the Kantian thought process, states that humans ought to be respected as a fellow human being with the ability to feel and think, not as a mere means to an end. The Kantian believes companies and consumers should be motivated by "Good Will" only when making decisions, doing the right thing because it’s the right thing to do.The Kantian is also responsible to their own belief system to respect the autonomy of others, their needs, and their differences. From a Kantian perspective, Chiquita’s choice to pay these groups for protection is an unethical one. This choice is unethical because when consumers purchased Chiquita’s products, they were funding groups who terrorize Columbian citizens as a means to gain power. Chiquita did not allow the consumer populace to know about this decision for several years. Had these people known their money was going to this cause, the consumers would most likely not have bought the product. Furthermore, if Chiquita made the choice to pay the paramilitary groups money, and informed their consumer that their money was going to terrorism, the choice by Chiquita would still be unethical, because the people of Columbia are not being treated as beings capable of making rational choices. The choice was also unethical because the choice to pay these groups is not motivated by “Good Will”. Funding the arming of hostile civilian militant groups who then intentionally take those arms and use them against their fellow man is not “doing the right thing because it’s the right thing to do”. The choice violates Kant’s Formula of Humanity by not respecting the rationale of the citizens of Columbia who are affected by their choice to fund these groups. The feelings and desires of the Columbians would understandably tend towards Chiquita not paying protection money, because they have a desire to live, and live free of the fear of unjustified loss of life, liberty, and property.
The Virtuist Perspective:
The Virtue Theory of business ethics is centered on the idea and definition of “good”. While many people may define good as “effective”, or, in terms of behavior, “morally upright”, the Virtuist defines good as “having the quality of serving an intended purpose well”. According to Virtue Theory, a “good person” is one who serves the purpose of living well, or uses rationality well, according to Aristotelian Virtues. These virtues are chiefly courage, honesty, temperance/self-control, and justice/fairness. The Virtuist would consider this decision made by Chiquita to be unethical. The reasoning behind this is the lack of honesty, courage, and justice/fairness. This choice was not an honest one because the company knew who they were dealing with; these groups are not new, and their behavioral history is well documented. Chiquita could have made the honest choice of choosing to open a plantation in a different area where this type of behavior can be avoided. Instead, Chiquita bowed down to these paramilitary groups out of fear, lacking courage, with the end of making more money. The company went further with its dishonesty by withholding this information from the consumer, knowing it would sway profits. This decision was also unjust, in protecting some at the expense of heightened hostility towards others. Those working on the plantation were largely, but not completely, protected from the civilian militants, while those outside the plantation now are in even more danger because the militants have more resources than before.


"Going bananas; Business ethics." The Economist [US] 31 Mar. 2012: 74(US). Academic OneFile. Web. 29 Mar. 2013.
"US: Chiquita fails to halt torture lawsuit." 6 June 2011. Academic OneFile. Web. 29 Mar. 2013.

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