The Landmark Ruling against Chiquita Exposes the Failure of Voluntary “Corporate Social Responsibility”

CAPITALISM, 1 Jul 2024

Manpreet Kaur Kalra and Anna Canning | In These Times – TRANSCEND Media Service

Workers pack green bananas at the Santa Cruz plantation in Ciudad Hidalgo, Chiapas, Mexico. Bananas from the plantation are shipped to clients including Chiquita, the leading US banana distributor.
(Photo by John Moore/Getty Images)

Chiquita’s financing of a Colombian paramilitary group, although claiming to be a “responsible corporate citizen,” shows the need for robust civil society institutions. Chiquita inspired the derogatory label, Banana Republic.

20 Jun 2024 – Last week, Chiquita Brands International — one of the world’s largest banana distributors — was found liable in a Florida court for financing a Colombian paramilitary group. The ruling marks a landmark moment for corporate accountability: It is the first time a U.S. corporation has been held liable for human rights violations abroad in connection to their business operations. As momentous as this victory is in its own right, it also illustrates the ineffectiveness of voluntary corporate social responsibility initiatives — and the need for strong civil society institutions to protect human rights.

Chiquita Brands International has vast banana plantations throughout Colombia. After a 17-year legal battle, a federal jury in Florida delivered a groundbreaking verdict on June 10 holding Chiquita accountable for financing the violent paramilitary group Autodefensas Unidas de Colombia (AUC). The AUC was declared a Foreign Terrorist Organization by the U.S. Department of State in 2001. Chiquita has previously pleaded guilty to paying the AUC ​for security services.” The recent verdict holds Chiquita accountable for what they paid for: The court found in favor of plaintiffs who have long alleged the AUC murdered, tortured, and terrorized workers between 1997 and 2004 in an effort to intimidate them to prevent organizing, and assassinated union leaders who posed threats to the corporation’s bottom-line as the company bought land and expanded its influence in Colombia.

This case highlights the harrowing reality of how corporations further unrest, benefiting from operations in conflict-affected areas. The Plaintiffs successfully demonstrated that Chiquita paid the AUC, a group responsible for carrying out a reign of terror that killed thousands of civilians and led to widespread atrocities.

The case against Chiquita

Evidence presented in the case revealed Chiquita’s complicity in the AUC’s operations, including use of Chiquita’s ports for weapon imports and banana boats for cocaine exports. Despite the AUC’s designation as a terrorist organization, Chiquita continued to utilize the AUC as a tool to secure corporate expansion and profits from 1997 until 2004. Chiquita disguised payments to the AUC by classifying them as business costs. When payments to the AUC were brought to the attention of Chiquita’s Board of Directors six years after the initial payment, the board decided to disclose the payments to the U.S. Department of Justice while claiming they were made under duress. However, Chiquita continued to disburse payments through its Colombian subsidiary, Banadex. The AUC, responsible for thousands of civilian deaths, used these funds for violence, including the murder of trade union representatives. Chiquita eventually pled guilty to a felony charge of making payments to a designated Foreign Terrorist Organization in 2007 after a U.S. Department of Justice proceeding, paying a $25 million fine for that crime. In the process, there was no mention of the business interest that this served for Chiquita — suppressing the voices of human rights defenders — nor was there mention of those killed and their families.

Until last week, the families of those who were killed had gone over two decades without remedy for the harms done to them. The verdict awarded $38.3 million in damages to the families of eight of the nine ​bellwether” murder cases presented during the trial. Thousands of victims’ families still have not had their day in court and, according to EarthRights International, this trial represents just 1% of Chiquita’s victims. ​The verdict does not bring back the husbands and sons who were killed,” said Agnieszka Fryszman, the Plaintiff’s attorney, in a statement, ​but it sets the record straight and places accountability for funding terrorism where it belongs: at Chiquita’s doorstep.” This verdict goes beyond remedy. It sets a powerful precedent by emphasizing that corporations cannot operate with impunity. 

The resilience and determination of the Plaintiffs and their legal teams underscore the importance of holding corporations accountable for their actions, no matter how long it takes.

Chiquita’s ​storied” past: United Fruit and mass murder

These abuses were not the first time that Chiquita has been complicit in massive human rights violations. Throughout the company’s history, including the years it operated as the United Fruit Company (UFC), Chiquita has showcased a long history of extraction, worker repression, suppression of labor movements and corporate dominance in Latin America. In 1928, UFC orchestrated the massacre of over 1,000 striking workers in Colombia who were being paid only $1/​month. Perhaps most famously, the United States overthrew the democratically-elected government of Guatemala in 1954 to protect UFC’s grasp on the nation’s economy, installing a pro-business military dictatorship instead, which set the stage for the Guatemalan Civil war and the genocide of hundreds of thousands of Indigenous Maya.

Chiquita racked up these atrocities with impunity. It was only in the 1990s, as the company began to lose market share, that the company began to concern itself with sustainability and corporate social responsibility (CSR). The 2000s marked a new era, with The Chiquita Story” on their website proclaiming “[a]lthough Chiquita’s history includes storied moments in its past, the company now proudly focuses on extending labor rights, protecting our environment and investing in the communities in which we live and work.”

The human rights context

Despite decades of unremediated harms, Chiquita has taken up a leadership position as a corporation committed to social responsibility, even while apparently funding death squads.

Chiquita has publicly endorsed the Universal Declaration of Human Rights (UDHR). Intimidation and other tactics to stifle worker organizing are a direct violation of Article 23.4 of the Universal Declaration of Human Rights, which clearly states that ​everyone has the right to form and join trade unions.”

Hiding human rights abuses behind complex supply chains through the use of multiple subsidiaries is not an uncommon tool used by multinational corporations to exert power. In the case of Chiquita, payments were made to the AUC through its Colombian subsidiary, Banadex. Shortly after disclosing payments to the Justice Department, Chiquita sold Banadex, effectively attempting to sever any direct or corporate ties. The parent-subsidiary corporate relationship creates legal protective mechanisms to deflect accountability. Corporate hypocrisy itself is hardly a startling revelation. Instead, what’s notable is the role that this rogue corporation has had in the development of the vast network of voluntary corporate initiatives that have set the agenda for defining sustainability and ethical standards for business.

Chiquita was a founding member of and has a strong presence on the Steering Committee of the United Nations’ World Banana Forum (WBF), ​a space where the main stakeholders of the global banana supply-chain work together to achieve consensus on best practices for sustainable production and trade.” The most recent WBF agenda consisted of conversations on labor standards, certifications, climate change and more. Multi-stakeholder initiatives such as these provide a forum for civil society and business to discuss key issues facing the sector. However, research has shown how inadequate these bodies are at addressing the power imbalances that exist between stakeholders, and how they tend to blur the lines between the role of stakeholders and essential rights-holders. They also send a concerning message: corporations are up to the task of regulating themselves.

Death squads and ethical certifications

Ethical certifications played a key role in Chiquita’s pivot to ​responsible corporate citizen” during the 1990s. More broadly, this is a key role certifications have played in the public discourse: offering a seal of approval in an attempt to assure buyers and activists alike that all is well in the company’s supply chains. Yet even as the labels proclaimed good ethics and sustainability, Chiquita was deliberately sending money to the AUC. Court documents show that the funds totaled three cents on the dollar per box of bananas exported at that time, a sum which likely exceeded the amount Chiquita invested in CSR programs. (The price per box of bananas in this period was at or below $5 per box; Rainforest Alliance licensing fees were $0.02 per box. There is no line item to quantify the company’s CSR investment, but the 3% of exports paid to the AUC far exceeds the benchmark for CSR spending of 0.1% of total revenues and 1.8% of total profits cited in the Berkley Economic Review.)

Chiquita began working with Rainforest Alliance in 1992 on an initiative called the ​Better Banana Project.” They were the first company to ​test the pioneering scheme created by the Rainforest Alliance,” according to the company’s website. Both academics and human rights advocates were early skeptics of this effort, dubbing it ​greenwashing” and noting that it did not address key issues in the banana industry. This tactic to create an ​intermediate” standard was explicitly developed to be more attainable than high-bar standards. The strategy worked and today, Rainforest Alliance is by far the dominant certification provider in the banana sector.

By 2000, 100% of Chiquita’s banana farms, including Banadex, their Colombian subsidiary, were Rainforest Alliance certified to meet basic labor standards and environmental guidelines. Payments to the AUC were issued through Banadex, their most profitable operation. Not only did Chiquita play a role in creating a standard that lowered the bar for the industry over the long term, but the Rainforest Alliance seal effectively helped them externally convey ethical credentials while conveniently ignoring the widespread violence and intimidation that was taking place.

Soon after, Chiquita’s Colombian operations were also certified to Social Accountability International (SAI)’s SA8000 standard, with auditing firms Bureau Veritas and Intertek signing off that they met the labor standards. Tracing the timeline of the payments, these audits would have been happening even at the same time that one of Chiquita’s own directors was warning ​We appear to be committing a felony,” referring to their continuing payments to the AUC, a known terrorist organization. Just months later, Chiquita received SAI’s Corporate Social Conscience Award, applauding them for ​setting the highest standards for the industry.”

In 2002, Chiquita joined the Ethical Trading Initiative (ETI), a multistakeholder initiative that claims to ensure member companies comply with international labor standards in their supply chains. The company’s reporting to ETI leans heavily on their SA8000 certification to demonstrate their track record on workers’ rights. Yet, even as their top management was negotiating with the DOJ over payments to a known terrorist group, their risk assessment presented for membership focuses on issues like sharp tools, agrochemicals, and second-tier suppliers. The massive threats to labor rights and freedom of association posed by the company’s own actions are not mentioned. Plus, there is nothing in the process of the ​checking your own homework” style of reporting that would solicit the input of community members who are being harmed, despite claiming to have robust grievance mechanisms in place.

In every case, the multi-stakeholder initiatives proved to be inadequate to reign in Chiquita’s corporate conduct and the audits on which the certifications relied failed to detect the atrocities committed by the AUC on Chiquita’s behalf.

Failure to remedy abuses

In the intervening years, the UN Guiding Principles on Business and Human Rights (UNGPs) have established a framework for responsible business conduct. The UNGPs establish that businesses have a responsibility to respect human rights and provide remedy when their conduct directly or indirectly leads to human rights abuses. At the center of business obligations under the UNGP is respecting human rights, ensuring corporations prevent, mitigate and, when necessary, remediate harms. In Chiquita’s 2019 Sustainability Report, the company clearly states that it ​fully support[s]” the UNGP. Yet that has not stopped Chiquita from seeking to halt the victims’ families attempts to win some measure of restitution or remediation. Further, while the ethical certifications and multi-stakeholder initiatives endorse the UNGPs, as of yet, none has censured Chiquita nor made continued certification or participation subject to remediating the harms caused to thousands of people in Colombia. This shows once again how corporate-driven, voluntary soft-law mechanisms fall short of holding corporations accountable.

Chiquita’s Sustainability Report highlights its ​Employees at the Centre” program that emphasizes training, support, and the health and safety of workers. However, this initiative, part of the broader ​Behind the Blue Sticker” campaign — which the company claims is built on three core pillars: Farmer’s Code, Being a Good Neighbor, and For the Greater Good — is nothing more than lip service when countless human rights violations remain unaccounted for and unaddressed.

After 2004, Chiquita sold off its Colombian subsidiary Banadex. Yet questions have been raised about the replacement supplier, Banacol, over both its independence and its continued ties to paramilitaries. Despite these issues, Banacol remains a Rainforest Alliance certified Chiquita supplier.

This ruling sets a strong legal precedent for multinational corporations that have long assumed the abuses in their supply chains would stay out of sight and out of mind.

A strong legal precedent

This landmark verdict is truly monumental as it marks the first time that a U.S. corporation has been held liable for committing human rights abuses abroad. With the case representing just a handful of the victims, thousands more still await their day in court, a day that Chiquita’s legal tactics have staved off for nearly 20 years. This ruling sets a strong legal precedent for multinational corporations that have long assumed the abuses in their supply chains would stay out of sight and out of mind.

As everyone who works for corporate accountability and human rights celebrates this verdict, we would also hope that the case underscores how voluntary corporate initiatives fail to prevent or mitigate well-documented atrocities. Instead, voluntary mechanisms offer a cloak of protection that allows abuses to continue behind the promises of a corporate seal. These programs are not merely ineffective through incompetence, they are in fact explicitly designed to function this way.

Throughout the 1990s and 2000s, Chiquita endeavored to redefine sustainability and ethics in a way that would focus on small things like the sharp tools and lack of mechanization, and not the glaring atrocities committed in banana-producing communities. This verdict should drive the conversation forward to ensure that there is no space for the funders of unremediated atrocities in any conversation on ethical and sustainable production. We need strong civil society and community-informed governance, not more voluntary corporate self-regulation.

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Manpreet Kaur Kalra is a development economics and legal scholar with an emphasis on Business and Human Rights.

Anna Canning is the Director of Communications for the Worker-Driven Social Responsibility Network, an anchored network of Partners for Dignity and Rights.

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