Corporate Ethics of Chiquita Brands Inc - Research Paper Example

? Chiquita Brands: Corporate Ethics Introduction Corporate ethics grew from the radical concept that business was meant not only for itself (Friedmanin Duska, 2007) and its owners but for the planet at large. It is no longer business for business’ sake but for the sake of all stakeholders. It is along this direction that this paper is written: to see how business, particularly big business, pursues its role as a corporate citizen. The paper would take a look at Chiquita Brands, one such organization that has dominated a niche in the world market for bananas, generating as much as $4.7 Billion in revenues in 2007 from its operation in more than 70 countries (Chiquita website). Corporate Ethics The strategy for business ethics in Chiquita Brands was begun in 1998 when the company engaged the professional services of SmithOBrien to craft and implement a CSR policy for the company. The first comprehensive CSR report was released in 2004. (SmithOBrien website). Chiquita Brands’ corporate commitment speaks of the corporate values of integrity, respect, opportunity and responsibility as the embodiment of what they are and what they do. The company defines integrity as ethical and lawful business communicated in an open and straightforward manner (Kotler and Lee, 2005). Respect is seen as fair and respectable treatment of people. They recognize that the growth and development of their employees is the key to the company’s success. They take pride in their services and make sure that these exceed customer expectations. As much as they uphold the primacy of their customers, they recognize that their accountability is to all stakeholders, including employees, suppliers, shareholders, communities and the world. (Chiquita website). At Chiquita Brands, corporate social responsibility is an integral part of their global business strategy. They make it a point to live up to the requirements of SA 8000, one of the more credible and verifiable social accountability standards (developed by Social Accountability International), by regularly including the SAI assessment in their corporate responsibility reports. Their openness on issues about their social, environmental and financial performance is highlighted in these reports. (Chiquita website). As part of their pursuit of these corporate commitments, Chiquita Brands has implemented an anti-retaliation policy to encourage the reporting or raising of concerns about potential misconduct and other ethical issues. This policy is available in six key languages to make sure it is understood by employees, contractors and vendors in most Chiquita locations. (Chiquita website). CSR Issues Involving Chiquita Brands Notwithstanding the implementation of a corporate responsibility policy sometime after 1998, a number of violations or infringements resembling CSR violations have been reported and documented involving Chiquita Brands. On of these was the conviction of Chiquita Brands in 2007 by a US court of illegal financial dealing with Colombian terrorists in the form of “protection money” during the period 2001-2004. $25 Million Fine The court slapped a fine of $25 Million and five-year probation, and was required to hire a permanent compliance officer. Under the International Emergency Economic Powers Act, the fine would have been almost $100 Million, but the court rendered a much lesser penalty in consideration of Chiquita’s self-disclosure and full cooperation (Annual Report 2010). The situation in Colombia is atypical of businesses engaged in landed estates for their production, as in banana production. Where the country is under-developed and the economy is struggling, this would have been an ideal location to operate a wide-area plantation because of the low cost of agricultural work (Vellema, 1999). Protection Money Most such areas, however, are characterized by the presence of insurgents who are also members of the local community and who feed on instigating for peasant rights, as in Panama and the Philippines (Vellema, 1999). There is no way an organization like Chiquita could get away from dealing with such anti-government groups but to toe the line and pay “blood money” in exchange for protection for their employees and the company’s facilities. These acts however are not seen in this same light by the regulators. These acts are considered “in support of terrorist organizations,” “abetting extortions,” and “encouraging human rights violations such as killing, kidnapping, raping, and torturing citizens,” which are what the terrorist organizations are accused of doing (Reisenger, 2007). In terms of its environment, such a conflict in Chiquita Colombia was imminent and beyond the effective control of Chiquita management because of the political nature of the conflict. The best that a company could probably do in such a situation was to seek protection from the government to whom the conflict was clearly addressed. Otherwise, what happened in Colombia would happen elsewhere where the situation is similar: insurgents demanding protection money and victim companies giving in to the demand just to preserve the continued peaceful operation of the business. If the government insists on compliance, it would seem that the only expedient move was to leave that country and locate elsewhere which was what Chiquita did (Suder, 2008). PAFCO Example But seen from a business viewpoint, it was truly a difficult decision to make. The experience in Chiquita Panama where the Puerto Armuelles Fruit Co (PAFCO division) operates could serve as a model of other similarly-based operations. In PAFCO, Chiquita Brands entered Panama as an FDI, agreed to help in the economic development of the area by employing local residents and putting up facilities such as road and port infrastructures, schools, medical centers and housing. It went well and smooth for a while but the setting soon transformed into a dissident-supported labor-management conflict leading to an edge and giving the company no other choice but to leave the country. (Chiquita website). It’s Pay or Leave? In terms of control and coordination, the cases of PAFCO and Colombia offer two divergent approaches. Both conflicts were too significant to ignore or downplay and only a drastic management decision could provide a resolution. It is to be noted that the indictment of Chiquita Brands in the Colombia “blood money” payments and the decision to sell PAFCO in the Panama labor-management conflict were outcomes that were not predicted to happen, neither were they part of an overall strategy. CSR a Continuing Challenge It would seem that, given the existence of a comprehensive CSR policy in the company, everything that is right would be happening in Chiquita Brands. The reality is the temptations for going off-tangent are ever present despite the strict observance of uprightness. Cases in point are the incidence of violations of competition laws in Europe, particularly price fixing committed by former executives. Chiquita has admitted to these infractions and was correspondingly pardoned for owning up to the error. However, subsequent investigations indicated that the company did not tell all and for this, the company may even lose the pardon and may be fully fined a substantial sum (Chiquita website). Events have their way of teaching moral lessons, and CSR will be a continuing challenge for moral uprightness. As it is, the CSR policy of Chiquita Brands could already stand as one of the best, but only if they would stand true to their core values of integrity, respect, opportunity and responsibility (Van Opstal, 2005). References: Chiquita website: http://www.chiquitabrands.com/CorporateCommitment/ethicsandintegrity.aspx Duska, R. (2007). Contemporary Reflections on Business Ethics. Netherlands: Pringer Kotler, P. and Lee, N. (2005). Corporate Social Responsibility: Doing Most Good for your Company and your Cause. New Jersey: John Wiley & Sons Reisenger, S. (2007). Blood Money Paid by Chiquita Shows Company’s Hard Choices, November 26, 2007: http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1195639472310 SmithOBrien website: http://www.smithobrien.com/client_CBI.html Suder, G. (2008). International Business under Adversity: A Role in Corporate Responsibility. Massachusetts: Edward Elgar Publishing Van Opstal, M. (2005). Corporate Ethics, Bananas and Frogs, December 12, 2005: http://www.coolmarketingthoughts.com/2005/12/12/corporate-ethics-bananas-frogs/ Read More