Chiquita SECRETS Revealed; Editor's note; Stories pierce veil of secrecy Publication: Cincinnati Enquirer Date: May 3, 1998 By: Lawrence K. Beaupre --------------------------------------------------------------------- Two thousand miles from its banana plantations in Central America, Chiquita Brands International Inc. is one of Cincinnati's most prominent corporations. It is also one of its most secretive. Controlled by financier Carl H. Lindner Jr., whose aversion to the press is legendary, Chiquita nevertheless has been thrust prominently into the public realm in recent years. As the stories on A1 and in this section describe, Chiquita is involved in political, environmental, legal and labor controversies in many parts of the world. A year ago, The Cincinnati Enquirer decided to look beyond the company's press releases to gain a better understanding of how the Cincinnati-based banana giant operates. Reporters Mike Gallagher and Cameron McWhirter undertook a wide- ranging investigation into Chiquita's business practices. After conducting scores of interviews in the United States and reviewing numerous public and internal documents, Mr. Gallagher and Mr. McWhirter traveled late last summer to Costa Rica, Honduras, Panama, and the Caribbean islands of St. Lucia and Dominica. They also traveled to Brussels, Antwerp, Vancouver, New York and Washington, D.C. They spoke to a wide range of sources, including farm laborers and managers, environmentalists, government officials, financial experts, lawyers, professors and others. They interviewed numerous Chiquita executives, who spoke on the condition of anonymity for fear of retribution. Extensive documentation also was provided by sources or obtained elsewhere. Those records included more than 2,000 copies of taped voice mail messages. These were provided by a high-level source who was one of several Chiquita executives with authority over the company's voice mail system. The source also provided copies of the same tapes to the U.S. Securities and Exchange Commission, which has launched its own investigation into Chiquita. Chiquita executives often used voice mail as internal memoranda, often "copying" other executives, sometimes as many as five or six, with the same message. Many of the messages were highly detailed. Chiquita executives refused repeated requests for interviews. Instead, they designated lawyers from the Washington, D.C., office of Kirkland & Ellis to take questions and provide company answers in writing. There was none of the give-and-take of a normal interview. Chiquita, through its lawyers, provided hundreds of pages of comments and documents, though some of it was not responsive to the actual question asked. In several cases, Chiquita chose not to provide any response at all. We are confident that thorough reporting for more than a year has resulted in an accurate and eye-opening portrait. Readers with information or comments may contact us by e-mail at enterprise@enquirer.com or write to me at The Cincinnati Enquirer, 312 Elm St., Cincinnati, OH 45201. About the staff Mike Gallagher, 40, investigative reporter, joined the Enquirer in 1995. He reported and wrote the Enquirer's award-winning series in 1996 on problems with the cleanup of the uranium-processing plant at Fernald. E-mail: 75057,3062@Compuserve.com Cameron McWhirter, 34, has been an investigative reporter with the Enquirer since 1994. His award-winning projects have included an examination of dangerous flaws in the nation's interstate parole system. In 1996, the newspaper sent him to Bosnia to report on the war's impact. E-mail: cmcwhirter@enquirer.com David Wells, 46, local news editor at the Enquirer, has been with the newspaper since 1974. He oversees the local news department and personally directs the investigative team. Designed by Ron Huff and John Humenik. Graphics by Randy Mazzola. Maps by Ron Cosby. All photographs in this report by Mike Gallagher, Cameron McWhirter or taken from Enquirer files unless otherwise noted. Photo of Sam Zemurray by Elliot Elisofen, Life Magazine, copyright Time, Inc. Historic photos on C18 were taken from The Story of the Banana (United Fruit Co., 1921). Due to production limitations, Spanish grammatical markers have not been included in the text. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Enquirer investigation finds questionable business practices, dangerous use of pesticides, fear among plantation workers; Chiquita: An empire built on controversy Publication: Cincinnati Enquirer Date: May 3, 1998 By: MIKE GALLAGHER AND CAMERON MCWHIRTER --------------------------------------------------------------------- A year-long investigation by The Cincinnati Enquirer has found that Chiquita Brands International Inc., the world's largest banana company, is engaged in a range of questionable business practices. Chiquita, based in Cincinnati at 250 E. 5th St., has disputed suggestions that any of its practices are improper. The Enquirer investigation took reporters to the sweltering lowlands of Central America, where bananas are grown, as well as to Canada, Belgium, New York and Washington. Findings are outlined in a special 18-page section in today's Enquirer. These findings include: Chiquita secretly controls dozens of supposedly independent banana companies. It does so through elaborate business structures designed to avoid restrictions on land ownership and national security laws in Central American countries. The structures also are aimed at limiting unions on its farms. Chiquita and its subsidiaries are engaged in pesticide practices that threaten the health of workers and nearby residents, despite an agreement with an environmental group to adhere to certain safety standards. Despite that environmental agreement, Chiquita subsidiaries use pesticides in Central America that are not allowed for use in either the United States or Canada, or in one or more of the 15 countries in the European Union. A worker on a Chiquita subsidiary farm died late last year after exposure to toxic chemicals in a banana field, according to a local coroner's report. Hundreds of people in a Costa Rican barrio have been exposed to a toxic chemical emitting from the factory of a Chiquita subsidiary. Employees of Chiquita and a subsidiary were involved in a bribery scheme in Colombia that has come to the attention of the U.S. Securities and Exchange Commission (SEC). Two employees have been forced to resign. Chiquita fruit-transport ships have been used to smuggle cocaine into Europe. Authorities seized more than a ton of cocaine (worth up to $33 million in its pure form) from seven Chiquita ships in 1997. Although the company was unaware and did not approve of the illegal shipments, problems were traced to lax security on its Colombian docks. Security guards have used brute force to enforce their authority on plantations operated or controlled by Chiquita. In an internationally controversial case, Chiquita called in the Honduran military to enforce a court order to evict residents of a farm village; the village was bulldozed and villagers run out at gunpoint. On a palm plantation controlled by a Chiquita subsidiary in Honduras, a man was shot to death and another man injured by guards using an illegal automatic weapon. An agent of a competitor has filed a federal lawsuit claiming that armed men led by Chiquita officials tried to kidnap him in Honduras. Chiquita Chairman and CEO Carl H. Lindner Jr., his family and associates made legal but controversial contributions to political figures at a time the company desperately sought U.S. backing in a trade dispute over banana tariffs in Europe. In a statement issued through its attorneys, Chiquita said the company "has been an active and enthusiastic engine for a better way of life throughout the region (and) is a leader in preserving, enhancing and cleaning the environment through Central America." Throughout its investigation, the Enquirer sought to meet with Mr. Lindner and other Chiquita officials, including Keith Lindner, vice chairman, and Steven G. Warshaw, president and chief operating officer. They declined. Instead, the law firm of Kirkland & Ellis in Washington, D.C., was hired to provide company responses to reporters' questions. Chiquita, through its lawyers, provided hundreds of pages of responses, although refusing to address some questions and avoiding direct responses to others. Several high-level sources within Chiquita spoke with reporters on the condition of anonymity, fearing retaliation. They also provided extensive documents and other information including copies of more than 2,000 taped voice mail messages recorded by Chiquita executives. A high-level source told the Enquirer that he has also provided copies of those tape recordings to SEC investigators. SEC sources confirmed that they have the tapes and they are part of an investigation into Chiquita's business practices. SEC and Chiquita sources also confirmed that, in April, SEC investigators issued multiple subpoenas to Chiquita for documents. Enquirer reporters spent a month in Central America and the Caribbean late last summer, visiting plantations, government offices, villages and university research centers. They personally observed practices and spoke with residents, laborers, Chiquita managers and government officials. They obtained hundreds of internal and public documents and interviewed legal, financial and environmental experts in Cincinnati, Brussels, Antwerp, New York, Vancouver and Washington, D.C. Key figures in stories Baker, Lorenzo Dow - Massachusetts sea captain who helpd begin the banana trade in 1870. Bakoczy, Alejandro - chief of security for Chiquita. Binard, Phillippe - delegate general of the European Community Banana Trade Association. Birns, Larry - director of Council on Hemispheric Affairs. A Chiquita critic. Black, Eli - owner of United Fruit Co., who in 1970 changed the company's name to United Brands. Committed suicide in 1975 while the company was under investigation for bribing Latin American officials. Brester, Susan (Chappano) - Chiquita finance executive. Castejon, Amilcar - Honduran lawyer hired by Chiquita to oversee payroll and personnel records of COBALISA, a farm service company. Castro Diaz, Josque Moises - A 21-year-old villager living amid the San Alejo Plantation in Honduras. He was shot and killed by plantation security guards. Coleridge, Ged - Chiquita executive in Belgium concerned with shipping issues. Connoley Sevilla, John - former resident and schoolteacher in the destroyed village of Tacamiche. Escobar Galeano, Carlos Guillermo - bodyguard of Otto Stalinski and expected witness in his federal suit. He was shot to death near his home in Honduras on March 24. Escobar, Renaldo - Chiquita lawyer in Colombia involved in alleged bribery with Chiquita executive Douglas Walker. Flores Discua, Iris Gisela - a lawyer representing the guards and Chiquita's Tela Railroad Co. in a shooting case on the San Alejo plantation. Forton, Jorge - Chiquita executive in Medellin, Colombia, involved in alleged bribery with Mr. Walker and Mr. Escobar. Gleason, Carolyn - Chiquita's trade attorney and registered lobbyist in Washington, D.C. Hills, David - Chiquita lawyer. Holst, Eric - New York coordinator for the "Better Banana" certification program of the Rainforest Alliance. Hughes, G. Philip - ambassador to the Windward Islands under the Bush administration. Later a Chiquita consultant. Kistinger, Robert - Chiquita Banana Group president. Kondritzer, Gerald R. - Chiquita vice president and treasurer. Lindner, Carl H. Jr. - chairman and CEO of Chiquita Brands International Inc. Lindner, Keith - Carl's son and vice chairman of Chiquita Brands International Inc. Marquardt, Sandra - environmental consultant who formerly headed up Greenpeace International efforts to ban U.S. export of pesticides. McBride, Ann - president of Common Cause. Mendoza, Jorge - an official of Chiquita Tela Railroad Co. subsidiary in Honduras who was involved in the destruction of the Tacamiche village. Moore, Robert - president of the International Banana Association, a Washington, D.C., group that lobbies for the banana interests. Murray, Henry - former employee of Chiquita's Tela Railroad subsidiary who is leasing Tacamiche banana land. Obregon, Jose - general manager of the supposedly independent COBALISA, but carried on Tela payroll. Olson, Robert - senior vice president and general counsel for Chiquita Brands International Inc. Ordman, John - Chiquita senior vice president of finance. Palma, Arnaldo - general manager of Chiquita's Honduran operations. Paz, Benjamin - Chiquita official. Ploughman, Dale - Chiquita executive in Antwerp, Belgium, responsible for shipping issues. Raymer, Joel - Chiquita lawyer. Rodriguez, Eugene - Chiquita executive. Rodriguez, Manuel - Chiquita lawyer. Stalinski, Ernst "Otto" - former consultant for Fyffes, a Chiquita competitor, who claims Chiquita agents tried to kidnap him in Honduras in 1990. He has filed a federal suit in Cincinnati against the company. Stephens, Clyde - retired chief of Chiquita Banana Research division. Theodoredis, Roger - Chiquita executive in Cincinnati assigned to investigate problems at the company Polymer subsidiary in Costa Rica. Valerin Bustos, Greddy Mauricio - A worker killed by organophosphate intoxication while working on a Costa Rican plantation controlled by Chiquita. Veliz Tobar, Carlos Ermelindo - union official shot to death on Sept. 30, 1994, on a Chiquita-controlled plantation in Guatemala. Walker, Douglas - Chiquita vice president of operations, fired for participation in a Colombian bribery scheme. Warshaw, Steven G . - Chiquita Brands International Inc. president and chief operating officer. Welsh, Magnes - Chiquita's director of investor relations. Zemurray, Sam "the Banana Man" - architect of the modern banana industry. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; "At first we had thought it could be the solvent that people were smelling, but approximately 16 to 17 samples were taken outside of the plant for chlorpyrifos and 15 of them turned up positive in fairly high quantities." - Roger Theodoredis, Chiquita executive assigned to investigate the Polymer Plastipak problems; Smokestack emits toxins; 'We cry for our children' Publication: Cincinnati Enquirer Date: May 3, 1998 By: MIKE GALLAGHER AND CAMERON MCWHIRTER --------------------------------------------------------------------- A Chiquita subsidiary is exposing more than 500 men, women and children of Barrio Paris to a toxic chemical that the company knows is spewing from a San Jose factory smokestack in high quantities, internal company records reveal. Chiquita officials in Cincinnati have been aware of the problem for several months, but their efforts to solve it have been unsuccessful, according to company sources and internal voice-mail messages provided the Enquirer by a high-level company source. The plant manufactures plastic bags impregnated with a pesticide called chlorpyrifos. The bags are used to cover bananas ripening on plants to protect them from insects. Community leaders and neighbors in Barrio Paris have complained to the national health ministry that fumes have caused residents - including children and pregnant women - to suffer chronic respiratory problems, blistered skin and other serious ailments. The U.S. EPA classifies chlorpyrifos as a highly-toxic pesticide that is dangerous to humans if inhaled or if it comes into contact with skin for a protracted period of time. According to the EPA, universities and chemical manufacturers, chlorpyrifos can cause delayed nerve damage, multiple sclerosis, loss of use of limbs, lung congestion, paralysis, convulsions, dizziness, mental disorders, blurred vision, chest pain, loss of reflexes and death. For years plant officials of the Chiquita subsidiary, Polymer Plastipak, have denied those claims to Costa Rican health officials, according to more than a dozen letters from company officials and lawyers sent to the Ministry of Health since 1992. The company has conceded only that the plant emits a "bad odor." Despite company claims that the fumes are harmless, a 1997 Costa Rican national laboratory report asserted that the company repeatedly failed to conduct government-mandated air tests to determine whether the plant is discharging the pesticide into the atmosphere and causing health problems for nearby residents. The report, translated for the Enquirer, also stated that the company's use of chlorpyrifos results in "high risk for ... health of the neighbors." "It is proven that extended exposure to this pesticide (especially children and pregnant women)produces health problems to people," the report said. The March 20, 1997, report was prepared by Defensoria de Los Habitantes, a Costa Rican congressional agency created to ensure that other government departments protect citizens on health, environmental, and other issues. Testing at the plant, conducted by Chiquita after the Enquirer began questioning company officials about the problem, revealed high quantities of chlorpyrifos were being spewed into the air through the plant's smokestack. The pesticide also is being released inside the plant and into the atmosphere where the bags are cut and separated, the Enquirer has learned. In an Oct. 3, 1997 voice-mail message to Robert Olson, Chiquita's chief counsel in Cincinnati, Roger Theodoredis, a company executive in Cincinnati assigned to investigate the Polymer problems, confirmed that Polymer Plastipak was emitting chlorpyrifos into the atmosphere in "high quantities." "At first we had thought it could be the solvent that people were smelling, but approximately 16 to 17 samples were taken outside of the plant for chlorpyrifos and 15 of them turned up positive in fairly high quantities," Mr. Theodoredis said in the message. "I wanted to alert you to that. There appear to be two sources of chlorpyrifos getting out into the atmosphere. One is the smokestack which is part of the process. That is when the bags are formed in the extrusion process; heated exhaust air goes up the stack and apparently there is chlorpyrifos going up the stack. "The second, unexpected source of chlorpyrifos is taking place in another room of the factory in which the bags are cut. That cutting of the bags is causing chlorpyrifos to be emitted," he added. A tape recording of the voice-mail message was provided to the Enquirer by a company source who asked not to be identified because of fear of retribution. In the message, Mr. Theodoredis also told Mr. Olson of the long-standing problems between Polymer Plastipak and the Costa Rican Ministry of Health over the toxic fumes issue. "There is a history of contention between the plant and the Ministry of Health. On August 8th, for example, the Ministry of Health shut down the Polymer (Plastipak) plant for about 12 hours due to the smell issue. Currently the plant is working under a temporary suspension of that shutdown order." Chiquita denied to the Enquirer that there is any threat to nearby residents. In a statement issued through its lawyers, Chiquita made no reference to any concerns about chlorpyrifos levels it or the government may have had about Polymer: "Investigation by Chiquita and independent consultants (hired by the company) confirms that the Plastipak plant does not pose a threat to the surrounding community. Any concentrations of chlorpyrifos measured at the surrounding residences fall well within the Average Acceptable Ambient Air Concentrations used in the United States." Chiquita did not respond to Enquirer requests to provide the newspaper with copies of its complete Polymer test results. Additionally, the letter said: "Any concentrations of pesticides within the plant pose no health threat to workers." Chiquita officials refused to provide the Enquirer with any written test results, reports or findings of its independent consultants who performed the tests on the plant's emissions. And according to Defensoria and Health Ministry officials, neither Chiquita nor its Plastipak company executives have submitted the written findings of its consultants' plant emission testings to them for review. Residents of Barrio Paris described for the Enquirer health problems they attribute to the Polymer Plastipak plant and their fears for their children's health. "We have a very huge problem here," Blanca Brenes Morales, 62, president of the Barrio Paris Neighborhood Association, said through a translator. "They (Polymer) use a chemical that goes right up into the air and we breathe it. All of us knew when we moved here that we would live in an industrial area, but no one, not even the government, knew or agreed that they could poison us with their chemicals." Ms. Brenes said that whenever the fumes become heavy in the air, she calls Polymer plant officials. "They always tell me they are just changing their filters," she said. She said most of her fears center around the children in the neighborhood. "We don't really know how this poison will affect us in the future. We cry for our children." Ms. Brenes said she and many other residents of Barrio Paris are too poor to leave their homes and wouldn't be able to find comparable, affordable housing elsewhere. Criticisms in Defensoria's report were not only aimed only at Polymer Plastipak. Defensoria repeatedly criticized offices of the Costa Rican government's own Health Ministry for failing to conduct needed blood tests of the Barrio Paris residents to monitor the harmful effects of the chlorpyrifos. In 1993 the Health Ministry did take blood samples from the residents after repeated complaints that fumes from the Polymer Plastipak plant were making people ill. But necessary follow-up tests to confirm the levels of pesticide in the residents' bloodstreams never were taken because health ministry officials cited a lack of manpower, according to the Defensoria report. Polymer Plastipak officials in Costa Rica declined requests for interviews from Enquirer reporters. Since the 12-hour shutdown in August, Polymer and Chiquita officials have failed to provide the Health Ministry any documented proof of "substantive changes to either the mixture or its filtration system that would prevent further harm to the company's own workers or the residents who live near there," said Rodrigo Alberto Carazo, a director in Defensoria. Mr. Carazo said that Polymer officials have for years not only denied toxic fumes were affecting workers at the plant or nearby residents, but also that the "non-harmful smell problem had not been contained because of ongoing problems with a plant filtration system." "That has been their excuse for many, many years," said Mr. Carazo. "We've been receiving letters like that since at least 1993 or 1994." Plastipak's letters hold little sway with Gerardo Campos Cartin, 48, who cites his own doctor's findings that he has been contaminated by chlorpyrifos. Chiquita's plant in Barrio Paris is the only company in that section of the city using chlorpyrifos, according to Health Ministry records. Walking out to a children's playground located directly behind the Polymer plant, Mr. Campos talked of a respiratory disease he said his doctor has linked to the plant's poisonous fumes. "It is so bad that many times I cannot breathe without help (from drugs or a respirator)", Mr. Campos said through a translator. "When the factory is running and the smokestack belches out those fumes, I must run inside my house and hide under my bed. If I smell (the fumes) at all I begin choking. My skin also turns red with rashes and I become so sick I sometimes want to die." But Mr. Campos said his greatest fear is for Barrio Paris' children. "Look at this playground right here by the plant," he said, pointing to the swing set, teeter-totter, climbing bars and small basketball court. "All the children play here. They have no place else to go." In another development, the Enquirer also has learned from company sources that Chiquita plans to sell its Polymer operations. When asked through its attorneys about the plans, Chiquita officials did not respond. In internal company voice-mail messages obtained by the Enquirer from a high-level company source, several Chiquita executives and lawyers discuss plans to sell its Polymer operations, including the Plastipak plant in Costa Rica. "We don't really know how this poison will affect us in the future." - Blanca Brenes Morales, 62 (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; "The one thing that (the Enquirer) asked me that I hedged on was how much did Chiquita pay you, CI (Conservation International), to do this study. I said I'll have to check, even though I actually know... I don't feel that it's really any of his (the reporter's) business." -- James Nations, Conservation International; Some pesticides highly toxic Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Chiquita uses products with low EPA toxicity classification for mammalian and aquatic life," the company stated to the Enquirer through its attorneys. However, the Enquirer found numerous examples on Chiquita's own list of approved pesticides of products that have been designated by U.S. government agencies as possibly cancerous to humans, or toxic to animals or fish. Those pesticides, all used by Chiquita and its subsidiaries in aerial spraying in Latin America, include: Propiconazole, sold as Tilt: Propiconazole has been classified by the U.S. Environmental Protection Agency (EPA) as a "possible human carcinogen." According to published documents by the U.S. Department of Agriculture, Forest Service, the pesticide "can cause skin irritation and substantial, but temporary, eye irritation. The petroleum solvent in some formulations can cause a chemical pneumonitis (lung complications) if breathed into the lungs. Prolonged inhalation of vapors may irritate throat and nasal passages and cause central nervous system effects, which can include headache, dizziness, confusion, and nausea. If swallowed, abdominal pain, nausea, gastritis, breathing difficulty, or diarrhea can occur." The department recommends workers exposed to the chemical wash hands "before eating, drinking, chewing gum, using tobacco or using the toilet. Do not get in eyes, on skin, or on clothing. To avoid breathing vapor or spray mist, wear a NIOSH(National Institute of Occupational Safety and Health)-approved organic cartridge respirator" Azoxystrobin, sold as Bankit: The EPA has ruled this new product is "highly toxic to freshwater fish and invertebrates, highly toxic to estuarine - marine fish, and very highly toxic to estuarine - marine invertebrates." The product labels, observed in Chiquita storage facilities in southeastern Costa Rica, read clearly "MARINE POLLUTANT" and bear a symbol of a fish with an "X" through it. Benomyl, sold as Benlate: This pesticide, classified by the EPA as possibly cancer-causing for humans, has been in wide use in the United States and around the world for years. But the pesticide has come under increasing attack from people who claim it has harmed them. In 1989 and 1991, manufacturer E.I. du Pont de Nemours & Company, known as DuPont, recalled a dry version of the pesticide, Benlate 50 DF, after American farmers reported severe crop damage after using the product. The company faced several lawsuits in Texas, Hawaii, Florida and other states. In 1996, a Florida jury awarded $4 million to John Castillo, a boy born with no eyes. His mother, while pregnant with him, was accidentally drenched in the pesticide on a Florida farm. The jury found both DuPont and the farm negligent. That farm was not connected to Chiquita and did not grow bananas. Chiquita uses the wet, soluble version of the pesticide. Thiophanate-Methyl, sold as Topsin: The U.S. Department of Agriculture found the pesticide to be moderately to highly toxic for various types of fish. The U.S. Fish and Wildlife Service has found that the pesticide is hazardous to 10 endangered species in the United States. The pesticide was listed as a possible carcinogen for humans, according to the U.S. Department of Agriculture. It was also found to damage the thyroid gland. The department has ruled that people not wearing protective equipment cannot return to a field sprayed with thiophanate-methyl for at least 12 hours. Tridemorph, sold as Calixin: Tridemorph is a hazard to fish, according to the EPA. Mancozeb, sold as Dithane: Mancozeb is "moderately to highly toxic to fish and aquatic invertebrate animals," according to the Forest Service of the U.S. Department of Agriculture. The department recommends "Do not apply when weather conditions favor drift (wind carrying pesticides away) from treated areas. Do not apply in a way that will contact workers or other persons, either directly or through drift. Drift and runoff may be hazardous to aquatic organisms in neighboring areas." The department recommends that workers not enter treated areas for 24 hours after spraying. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; "They don't want us doing any research. For example, water pollution. It is better (for a company) to suspect that the water is polluted than to know that the water is polluted." - Professor Luisa Castillo, Costa Rica's National University Pesticide Program; Industry resists curbs, but bananas safe Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Commercial banana growers like Chiquita use numerous pesticides to combat fungus, insects and other pests that could destroy the fruit. And they use those pesticides often. The reason is simple. Bananas sold in the United States or Europe are almost all one type: the Gran Cavendish, the large banana that consumers have grown to expect. On miles of plantations from Guatemala in Central America to Ecuador thousands of miles to the south, the fruit is genetically identical. Because the tropical plants are planted in close proximity and come from the same genetic source - a system known as "monoculture" farming - an outbreak of pests, fungi or disease can quickly wipe out a plantation. It would be as if scientists cloned one person who was likely to get a disease. If that person got the disease, soon all of the clones would catch it as well, unless they were given massive amounts of medicine. In the case of bananas, you use pesticides. "You're creating an extremely artificial situation. You're creating a situation that is ripe for some kind of a pest or fungal problem to sweep your plantation," said Dr. Thomas Lacher, Jr., an associate professor at Texas A&M's Department Wildlife and Fisheries Sciences and co-author of a recent article on risks to the environment by the banana industry. He said the multinational companies, including Chiquita, use pesticides now that are dangerous and toxic or "pretty hot" when applied. But these pesticides don't just go on the plants. Applied by air or by workers with backpack sprayers, pesticides drift through the air. They get into the soil and onto workers, villagers and animals. Scientists and environmentalists stress that the industry's pesticide problem is not endangering the consumer, but endangering the workers and villagers where the bananas are grown. "What makes you ill or can even kill you as a worker may not affect you as a consumer," according to Colorado State University Professor Douglas Murray, author of Cultivating Crisis: The Human Cost of Pesticides in Latin America. Over the decades, the banana industry has faced a series of problems related to the use of pesticides. One of the most highly publicized cases involved Dibromochloropropane, known by the acronym DBCP, which was widely used in the 1970s to combat tiny parasitic worms that attack the roots of the banana plant. DBCP, through improper application and toxicity, allegedly caused sterility in male workers, according to lawsuits filed in U.S. courts. By 1997, more than 24,000 banana workers, mostly in Costa Rica and many of them employees of Chiquita or its subsidiaries, signed up for class action law suits against the manufacturer, Dow Chemical, and users of the pesticide, including Chiquita. The lawsuits stated that many men had become sterile and medical evidence linked their sterility to the pesticide. The companies, including Chiquita, which said it used the chemical only in the early to mid-1970s, have fought efforts to get the case tried in a U.S. jurisdiction. In June, Dow Chemical offered $22 million in a global settlement - which worked out to a few hundred dollars per worker. "We continue to dispute our liability," Dow Chemical spokesman Dan Fellner told the Enquirer. "Unfortunately, many of the users and purchasers of DBCP did not read the labels or follow the instructions." The plaintiffs accepted the offer from Dow, but cases against the banana companies are pending. "If we ever get in a courtroom, we'll kill them," said one of the plaintiff attorneys, Charles Siegal of Dallas. In a statement issued through its attorneys, Chiquita did not mention litigation but stated it stopped using DBCP in 1977, "two years before the EPA banned DBCP in 1979." EPA records show it ordered DBCP phased out for use in the United States in 1977. The product was banned in Costa Rica in 1978. The EPA ordered a complete ban on the product in 1979, meaning any product that tests positive for even a trace of the pesticide may not be brought into the United States. As consumer consciousness about pesticide use increased over the years, the banana industry changed pesticides when problems were brought to the public's attention in North America and Europe. For example, in 1990, the pesticide Aldicarb was banned by the EPA after levels above EPA safety guidelines were found in potatoes being brought to market. Later, excess levels were found by FDA checks of some bananas coming to American ports. Quickly, the pesticide was dropped by the entire banana industry. Professor Luisa Castillo, head of the National University's Pesticide Program in Costa Rica, said she and other scientists had complained about Aldicarb to banana growers for years, with little result. Chiquita stated that it used the pesticide for only one year. "Aldicarb was very popular, but it was causing a very high number of pesticide poisonings to workers, and it was also causing fish kills and other problems here," she said. "We had already pointed out this problem with Aldicarb, but nothing had been done. It was only in the moment that the residue appeared in the fruit that immediately they (growers) stopped using Aldicarb." Industry supporters said that banana companies don't misuse pesticides. "Pesticides are very expensive, so you only use them if you absolutely have to," said Robert Moore, president of the International Banana Association (IBA), a Washington D.C.-based group working for the interests of the American banana industry. Since the Aldicarb scare, the banana industry has met safety standards for U.S. Food and Drug Administration spot checks at the ports. According to FDA reports, administration tests from 1992 to 1994 showed traces of pesticides in the bananas sampled but rarely in unsafe amounts. The FDA checks only a fraction of the bananas brought into the United States. In 1996, it conducted tests on fewer than 800 shipments. During the same period, tens of thousands of shipments brought more than 22.3 billion bananas into the country, according to the IBA. Polly Hoppin, director of agricultural pollution prevention at the World Wildlife Fund and an expert on pesticides said the FDA checks don't reveal much about what is going on at the plantations. Professor Scott Witter at Michigan State University's Institute of International Agriculture said that most pesticides applied these days may show up in FDA banana sampling, but virtually always within safe amounts for consumers. But for the thousands of people working on or living near the banana plantations, pesticides threaten their health. "The people who tend to take it on the nose are the Costa Ricans or the Hondurans or the Ecuadoreans who work on the plantations when they are doing the spraying," he said. "They're in the field. Their water supplies get contaminated. Their kids play in the dirt that's contaminated that day. I've yet to witness a really wonderful program where they say, OK, we're spraying today, everybody needs to stay inside." Chiquita, through its lawyers, has stated that "There is no soil contamination problem on Chiquita farms." Scientists complain that figuring out how exactly pesticides are affecting people and the environment on banana plantations is extremely difficult, because gathering any hard data is constantly resisted by banana companies. "They don't want us doing any research," said Professor Castillo at the Pesticide Program. "For example, water pollution. It is better (for a company) to suspect that the water is polluted than to know that the water is polluted." The large banana companies resist independent scientific studies on their plantations, because they don't want the public to know, she contended. "They are always saying that hard data can affect them in the international market," Professor Castillo said. "So if it is known that there are pollution and health problems, then people won't want to buy the product. From our point of view, we feel we have to know the situation in order to change it and that we hope that the more educated consumer will change things." Professor Lacher at Texas A&M said he and his co-authors on his recent paper about agrochemicals in the banana industry tried to get the multinational companies to cooperate, but could not get anyone to talk with them. "We didn't publish the industry perspective, but you can't get access to industry information," said Mr. Lacher. "If everything is proprietary, there's nothing we can do about it." Mr. Lacher said the industry is defensive on the pesticide issue. "Nobody's saying you shouldn't grow bananas," he said. "Nobody's saying you shouldn't apply chemicals. But what you need to do is look at what the major sources of risks are." Scientists aren't the only ones feeling a cold shoulder. Several years ago, the Intergovernmental Group on Bananas of the United Nations' Food and Agriculture Organization set up a special committee called the Banana Improvement Project. In a 1995 report, project officials stated that they hoped the major companies would provide the project with money and technical assistance to tackle difficult problems facing banana production, including Black Sigatoka - the destructive, airborne disease that threatens the entire banana industry and has led major companies to increase aerial spraying on their farms. At the Intergovernmental group's meeting in Rome last May, the Banana Improvement Project wrote its own epitaph in the meeting report. "The lack of financial support from the banana industry is surprising and extremely disappointing," the report read. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; 'Better banana' program under attack Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Despite Chiquita's promotion of the ECO-OK - "Better Banana" certification, the program has come under increasing attack for what has been perceived by some environmentalists and scientists as a sell-out to corporate interests. Chiquita quickly became a major force in the program, as the only major banana producer to participate. While the Rainforest Alliance has continued to try and present the program as open to everyone, Chiquita's participation overshadows all others, according to scientists, environmentalists and former employees of Chiquita. In material and advertisements in the United States and Europe, Chiquita has been quick to use its Rainforest Alliance certification to link its products to environmental safety. Of the 81 farms certified on the program worldwide by January 1998, 74 - 91 percent - were directly owned Chiquita subsidiaries. Connie Smith, who was Chiquita's Central American environmental coordinator before leaving her post in 1996, said the certification program ran into problems because banana companies were too competitive to cooperate. Once Chiquita began to dominate the program, the two other large companies, Dole and Del Monte, lost interest in the idea. "It all started out on good intentions," said Ms. Smith, who lives with her family in San Jose, Costa Rica. "It was going to be an industry-wide voluntary program....But (the banana multinationals) are big competitors....The ECO-OK became an issue of competition- If we get the certification and they don't that will differentiate (our bananas).' That should never have happened." The program was orginally called "ECO-O.K.," but the alliance later changed the name to "Better Banana." Ms. Smith said the connection today between Chiquita and the Rainforest Alliance "does have a tendency to make people wonder" about the program's validity. She said "the program needs to be re- evaluated." Eric Holst, coordinator of the Rainforest Alliance's "Better Banana" program in New York, said the alliance receives no donations from Chiquita, but it does accept corporate donations from other companies that it is not certifying. It does charge a fee for certification. The money is paid directly to its Costa Rican partner, Fundacion Ambio, the group that performs the inspections on Chiquita subsidiary farms. Mr. Holst said Fundacion Ambio conducts scheduled inspections on farms once a year in Costa Rica and Panama. Mr. Holst said the group reserves the right to conduct spot checks and conducts between one and 10 a year. No certified plantation ever has had its certification revoked for violations. Violations are usually not written up and are not made public, Mr. Holst said. If inspectors find violations, plantation managers are notified and asked to correct the problem. Specific information about the inspections or any violations is proprietary and not available to the public, Mr. Holst said. This fiscal year, Fundacion Ambio has a budget of $312,000, according to Mr. Holst. About 25 percent of that budget comes from Chiquita's fee payments, he said. Mr. Holst said all of Chiquita's subsidiary farms in Costa Rica are certified under the Rainforest Alliance's program. Those certifications do not include many associate farms that sell fruit to Chiquita. In a statement issued through its attorneys, Chiquita stated that as contracts are renewed, it is asking associate farms to apply for certification with the alliance. About half of Chiquita's subsidiary plantations in Panama are certified. Thirteen Chiquita subsidiary farms in Colombia have also been certified. None of Chiquita's subsidiary farms, or the farms of its associate growers, in Honduras, Guatemala or Ecuador are certified yet, because the program was first tested in Costa Rica. Chiquita has publicly committed to bringing all of its plantations into the "Better Banana" program by 1999. Rainforest Alliance officials said they are lining up local environmental groups in those countries to begin inspections. In 1996, Chiquita paid the Washington-based environmental group Conservation International to send a team of eight environmental experts to visit its certified farms in Costa Rica and Panama. In response to questions by the Enquirer, Conservation International issued a two-page letter to Chiquita, which was then forwarded to the Enquirer. It declared Chiquita's environmental efforts as "an innovative system that looks for environmental improvements in the effects of monocultures (single-crop farms), serves as a guide for the establishment of environmental measures, and promotes gradual changes in land use practices. This program should be continued and supported for its goals." James Nations, vice president of Mexico and Central America Programs for Conservation International who led the Chiquita- commissioned study, told the Enquirer that he found the certification "very positive" and "a very above-board system." After the discussion with the Enquirer, Mr. Nations called Magnes Welsh, Chiquita's director of investor relations, according to Nov. 13 tape-recorded voice mail-message provided to the Enquirer through a company source. He told Ms. Welsh that "I gave (the reporter) a very positive story." "The one thing that (the Enquirer) asked me that I hedged on was how much did Chiquita pay you, CI, to do this study," Mr. Nations told Ms. Welsh. "I said I'll have to check, even though I actually know. Now, I want to know from you, and also I'm going to ask people here, Pete and Karen (CI staffers), what they think about this idea of actually releasing that information. Because I don't feel that it's really any of his (the reporter's) business. So let me know what you think about that." Mr. Nations did not return follow-up calls from the Enquirer. Chiquita does support other environmental work outside of the "Better Banana" program. For example, the company is funding the nonprofit organization Amigos de Las Aves (Friends of the Birds), a group run by two expatriate Americans who work to raise macaws in captivity and then release them into the wild. The group stated in an e-mail response to the Enquirer that it received about $20,000 so far from Chiquita, as well as weekly free bananas to feed their birds. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; Death on farm shows danger Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Pesticides can kill more than pests. Take Greddy Mauricio Valerin Bustos, a worker on Plantation 96, a farm in Costa Rica owned by Chiquita's subsidiary, the Chiriqui Land Company. On the morning of Nov. 13, 1997, the 18-year-old had been working since 5 a.m. collecting "piola," the thin rope used to support the banana plants. At about 7:30 a.m., according to the police, he was found writhing on the ground, choking and vomiting up a white substance. He was dead by 9:17 a.m. Police investigators interviewed one of the co-workers who brought his body to the medical clinic. "He was working in an area called Los 50s, that had been sprayed with the agrochemical Counter (the brand name for the pesticide terbufos, an organ-ophosphate) three days ago," Miguel Herra Miranda told police, according to a translation of the investigation report. "He (Mr. Valerin) didn't have any experience in this kind of job and he wasn't using any protective gear like gloves and mask either." The autopsy report, obtained by the Enquirer, determined that Mr. Valerin died from intoxication from organophosphates, which caused internal bleeding and brain damage. Chiquita, in a statement through its lawyers, said the company acknowledged that the Costa Rican government coroner declared the cause of death to be organophosphate poisoning. The company also stated it operated the farm safely and the death was "an isolated incident." "Although Chiquita has attempted to understand the details surrounding Mr. Valerin's collapse, Chiquita is unable to explain (and will not speculate) how Mr. Valerin might have died," Chiquita stated. Under an agreement with the New York-based environmental group the Rainforest Alliance, Plantation 96 is certified under the "Better Banana" program to meet certain environmental and worker safety guidelines. But often problems can be hard to detect because the program requires inspectors visit plantations only once a year, with possible spot checks afterward, said Eric Holst, New York coordinator of the "Better Banana" program. "That's one of the weaknesses of certification. You can't be there every day," Mr. Holst said. As a rule, Chiquita and its subsidiaries do not provide protective gear for workers unless those workers are directly involved in the application or storage of pesticides. The vast majority receive no protective clothing, though they are exposed to pesticides in their work on the plantations. Carl Smith, publications director and an expert on pesticide exports at the Foundation for Advancements in Science and Education (FASE) in Los Angeles, said the use of many pesticides like terbufos are legal in the United States but only under strict safety regulations. When these chemicals are exported to Central America, where worker safety and environmental laws are less stringent, the result can be dangerous for the workers and the environment. "When you look at conditions of use in areas like Central America, there are a lot of compounds that are awful dangerous," he said. "It's one thing if a guy is wearing a full moon suit with a respirator and gloves. It's another thing if teenagers are walking around the stuff with no shirt." Nearby Plantation 96 is Plantation O3, a farm that has an exclusive contract to sell bananas to Chiquita. Like other farms in the area, the farm, owned by Proyecto Agroindustrial de Sixaola, S.A, (PAIS), ships bananas with Chiquita labels and in Chiquita boxes. The plantation grows bananas only for Chiquita and to contractual specifications set by Chiquita. In a statement issued through its attorneys, Chiquita said it was not responsible for anything that happened on the farm, but said it does exert pressure in its contracts to monitor safety and environmental standards. "Chiquita - although it is not in any way required to do so - is insisting that independent growers adopt Chiquita's own strict environmental standards and practices if they want to renew contractual relations with the company," the company stated. On the farm, Enquirer reporters saw a work team applying terbufos, a nematicide classified as extremely hazardous to humans by the World Health Organization. Terbufos is under "restricted use" in the United States by the U.S. Environmental Protection Agency (EPA). Nematicides are pesticides used to kill nematodes, tiny worm parasites that can destroy a crop's roots. According to EPA guidelines, once the pesticide is put on the ground, no one should be allowed in the area for at least 24 hours unless wearing protective clothing and a respirator. Children playing But with the air thick with the heavy smell of pesticides, the Enquirer team observed children from the nearby village playing in the area amid open bags of terbufos and plants just treated with the pesticide. No warning signs were posted and no workers tried to stop the children from playing in the area or passing through. The Enquirer saw signs with a warning in Spanish, "DANGER, nematicide application in this area," leaning against the wall of a packing plant about a mile away. When asked about Plantation 03, and PAIS, Chiquita issued a statement through its attorneys declaring "The Pais farm is owned and operated by a Costa Rican quasi-governmental institution. Chiquita does not own or operate the farm. What the Enquirer says it observed at Pais should not have happened." The company stated that it has since renegotiated its contract with the owners of PAIS and requires the company to adhere to Chiquita standard operating procedures regarding environmental safety. Enquirer reporters also observed pesticide workers at Finca O3 taking off their masks because of the stifling heat. Mr. Smith of FASE said the protective clothing is a fundamental problem in tropical agricultural, which neither "Better Banana" nor any other program has solved. He said the limited safety equipment that has been created for these materials is often heavy rubber, suitable for northern, colder climates. In the tropics, a mask, rubber gloves, a rubber apron, rubber boots, long pants and a sweatshirt make for incredibly uncomfortable work days on a sweltering plantation. Such heavy clothing itself could be unsafe because of the danger of heat exhaustion, Mr. Smith said. "The equipment doesn't even exist that is suitable for tropical climates," he said. Even workers who wear protective clothing properly are not safe, workers told the Enquirer. On Cocobola plantation, owned by one of Chiquita's Costa Rican subsidiaries - Compania Bananera Atlantica Ltda. (COBAL) - in northeast Costa Rica, pesticide worker Emilio Colero, 41, told Enquirer reporters that he was concerned about his health. He was issued protective clothing when he applied the ground pesticides. But he said through a translator that "when I bend over, some of the herbicide liquid gets on my neck. I get a rash every time until I take a shower." Mr. Colero said his wife is constantly concerned about him, but he works in pesticides because the pay is better than other field jobs. He makes 680 Costa Rican colones per hectare, and sprays about three or four hectares a day. That salary is about $15 a day. Through its attorneys, the company issued a written statement that Chiquita strictly adheres to safety recommendations of the pesticides that it uses. The company said also that it has reduced its use of nematicides like terbufos by more than 50 percent since 1995, "demonstrating its continuing commitment to minimizing the environmental impact of its farming operations." New chemicals applied Another problem is at Chiquita packing plants and those of affiliates, where the bananas are brought to be boxed before shipment. In these processing centers, the bananas are washed of chemicals that have been applied in the fields. After this washing process, the bananas then are sprayed with new chemicals, either thiabendazole or imazalil or both, to keep the fruit from rotting. As Chiquita boxes state clearly, "Thiabendazole and - or Imazalil applied to fruit to preserve quality in transit." Workers then pick up these pesticide-covered bananas, usually with their bare hands, and place them in boxes for shipment. Scientists, union officials and workers told reporters of rashes on the arms of women in the packing houses. Chemical runoff from washed bananas and newly applied pesticides also flows into water passing through plant operations and back into irrigation canals. Those canals then flow into nearby rivers. Chiquita stated through its attorneys that it has conducted comprehensive tests of water running off its farms and "Chiquita never has detected a level of pesticides that posed any threat to the environment or people." The Enquirer visited packing plants on certified plantations of Chiquita's subsidiaries in Costa Rica. Most did not have containment or treatment systems to remove chemicals from the water supply. Almost none of the workers had gloves. Thiabendazole is a fungicide that the EPA has determined is harmful to fish. According to the Pesticide Users' Health and Safety Handbook, government laboratory studies have also pointed to the fungicide as a possible cause of anemia and a possible cancer-causing agent in mammals. Imazalil is classified as a moderately toxic compound by the Extensions Toxicology Network, a cooperative information group on pesticides set up by Cornell University and other universities and funded by the U.S. Department of Agriculture. According to a Network document, lab animals fed imazalil have suffered symptoms including "muscle incoordination, reduced arterial tension, tremors, and vomiting." Professor Luisa Castillo, who heads Costa Rica's National University Pesticide Program, said the two chemicals are a major concern for environmental scientists in Costa Rica. Scientists in her program have conducted studies of rivers in national parks downstream from banana plantations, some of which were operated by Chiquita. "We have found high levels of imazalil and thiabendazole in the water, and we have also found toxicity (by those two pesticides) toward aquatic organisms," Ms. Castillo said. Her program's studies have not pinpointed the specific source of this pollution. She said one of the key components of any sincere attempt to improve the environment would be to stop those chemicals from getting into the water supply. "I would immediately put water treatment plants in the packing plants and not allow that water to flow into the natural courses of water because it is quite polluted," Ms. Castillo said. In a statement issued through its lawyers, Chiquita stated that it has spent at least $3.3 million installing special chambers at its packing plants to apply thiabendazole or imazalil to the bananas, reducing the amount of these pesticides used and the amount to which workers are exposed. The company stated that it has installed these chambers on a number of its farms. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; Industry attacks report critical of farm growth Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- A report critical of banana farm expansion for causing environmental and social problems at the beginning of this decade was kept from the public for years by the Costa Rican environmental ministry - after the banana industry, including Chiquita, attacked the study. Now that the report has been released, banana plantation owners continue to criticize the internationally-respected group that wrote it. In the early 1990s, almost 100 square miles of Costa Rican grazing land and forests in the northeastern section of the country were bought by banana companies like Chiquita and turned into banana fields. According to Costa Rican government statistics, 70,740 acres were in banana production nationwide in 1990. By 1995, that number had jumped to 131,117.5 acres, an increase of more than 85 percent. A Catholic bishop near the region, labor leaders and conservationists publicly expressed concerns about the expansion's effect on the environment and the treatment of workers. In response, the Costa Rican ministry for environmental affairs commissioned a report on the banana industry from the Central American office of the International Union for the Conservation of Nature (IUCN) in 1991. The IUCN, one of the oldest international conservation groups, runs conservation projects around the world and counts agencies of 74 governments as members, including the United States, Panama, Japan and the United Kingdom. The 129-page report - parts of which were leaked in 1993 - discussed various problems caused by an increase in banana cultivation. Deforestation One of the biggest problems cited was deforestation. The huge increase meant the loss of thousands of acres of cattle farms and more than 13 square miles of primary rain forest, according to the report. Another issue was that the increase in banana plantations led to a dramatic rise in pesticide use in an area permeated by rivers and creeks that flow into the Caribbean, according to the report. The new plantations also were located near many sensitive forest preserves and conservation areas. Environmentalists were concerned about pollution from pesticides causing fish kills and other environmental problems, the report said. The report also dealt with unemployment prompted by the expansion. While workers were brought in initially to build the plantations, many were fired afterward because it took fewer people to maintain the farms. As a result, many people moving to a remote area of the country found themselves unemployed. Goal was awareness The goal of the report was to raise awareness of these issues among government officials, the public and the banana industry leaders. "What we would like to see is a more environmentally and socially aware banana industry," Enrique Lahmann, regional director of the IUCN, said. But the public didn't get to see the report for years. When some draft findings were leaked, the banana companies declared open opposition and set up their own commission, Comision Ambiental Bananera, to coordinate the industry's response.A new administration came into office in 1996 and the report was released in early 1997. Asked if the government endorsed the report, the Costa Rican embassy in Washington D.C. sent the Enquirer an old press release from CORBANA, a state-owned banana company, condemning the report. Asked if that represented the government's position, the Costa Rican embassy referred all questions to MINAE, Costa Rica's environmental department. That agency did not respond to repeated phone calls, e- mails and fascimile transmissions. In its 1997 official statement on the final IUCN report, the commission reiterated its longstanding recommendation that "the (environmental) minister must not endorse the diagnostic report as an updated document" and suggested that it only be considered "an historical document" (translation). If the document was not considered updated, it could not be considered by the environmental ministry in its policy decisions as relevant to the banana industry today, the statement said. Mr. Lahmann said powerful American banana interests have operated in Costa Rica for more than 100 years, and their political influence was applied to hold the report for years. "There is no question that the banana industry has a lot of weight in national politics in Costa Rica," Mr. Lahmann said. Chiquita officials refused to be interviewed by the Enquirer about this project, including the IUCN report. Through attorneys the company released a statement that it never tried to keep the report from the public. The statement condemned the IUCN report as "unbalanced" and "not based on scientific method but, instead, solely on casual observation." The research team was comprised of 16 scientific and academic teams looking at different aspects of the expansion like pesticide use, agro-ecology, legal issues, social impact, refuse, economics and forestry. The "environmental diagnostic" included analysis of high- grade maps of the region as well as satellite photographs. Visited region The teams made numerous visits to the region to interview workers, conservation groups, medical personnel, local government officials, health ministry officials and environment ministry officials. The teams also held numerous talks with administrators from all the major multinational companies, including Chiquita's main Costa Rican subsidiary, Compania Bananera Atlantica Ltda. (COBAL). "I don't think that it is unscientific. Well-known professionals participated in the report," said the IUCN's Mr. Lahmann, who has a Ph.D. in oceanography from the University of Miami and who is an expert in wetlands pollution. Mr. Lahmann said that while the IUCN came under a lot of criticism from the banana companies, the report helped raise awareness of environmental issues in Costa Rica. "I wonder if that would have happened without this report," he said. Chiquita dismissed the IUCN as "a confederation of environmental interest groups." The IUCN is a federation of conservation groups and government agencies with several important U.S. institutions as official members. These members include the U.S. State Department's Bureau of Oceans, International Environment and Scientific Affairs, the U.S. Fish and Wildlife Service, the U.S. Department of Agriculture, Forest Service and the Nature Conservancy. Conservation International, which Chiquita itself described as a "highly respected independent environmental organization" when it paid the organization last year to critique the company's own environmental program, also is a member. Chiquita also said the IUCN would not endorse the report. Mr. Lahmann said preliminary drafts carried a label that the opinions expressed in the report were those of the consultants during discussion. Once the environment ministry officially released the report this year, it was endorsed publicly by the IUCN, according to Mr. Lahmann. Report suppressed While Chiquita stated that it had nothing to do with keeping the IUCN report from the public, the company has kept an environmental report in Honduras from public review. In 1995, the Honduran Centro de Estudios y Control de Contaminantes (the Center for the Study and Control of Contaminants) audited the banana industry throughout Honduras, including Chiquita plantations. Dr. Luis Munguia Guerrero, CESCCO's director, said the audit found serious problems on Chiquita's farms, but he said he could not release the report because of a confidentiality agreement signed with the company. He said, however, that Chiquita could release it if it chose. The Enquirer asked Chiquita to see the report. The company declined to release it. In a response issued through its attorneys, it stated that "CESCCO conducted an initial audit of the banana industry in 1995, identifying several general areas in which improvement was needed ... For its part, Chiquita has taken affirmative steps to address issues raised in the 1995 CESCCO report." (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; Unregistered toxins used despite claims Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Chiquita's environmental partner, the Rainforest Alliance, claims that Chiquita's "Better Banana" certified farms "only use products that are registered for use in the United States, Canada and Europe," according to the alliance's "General Production Standards" and agreed to by Chiquita. But the Enquirer found that Chiquita systematically uses chemical products on its certified farms that are not registered for use, meaning they are not allowed to be used, in the United States, Canada or one or more countries of the European Union. These pesticides include: Bitertanol, sold as Baycor: In documents provided to the Enquirer, Chiquita stated that it has used this product since 1993. According to documents provided to the Enquirer by the manufacturer - the Bayer Corporation - the pesticide is not, and never has been, registered for use in the United States. U.S. Environmental Protection Agency (EPA) spokesman Albert Heier confirmed that bitertanol is not approved for use in the United States on bananas or any other crop. The pesticides' full impact on people or the environment is not known at this time because the EPA has not conducted tests on the product, Mr. Heier said. In a statement issued to the Enquirer through its attorneys, Chiquita stated that company policy "allows only for the use of agrichemicals that are approved by the United States Environmental Protection Agency (EPA) for use on bananas." Denise Kearns, spokesperson for the EPA on pesticide issues, said that the EPA has set a "tolerance level" for bitertanol, that is the level of detectable pesticide residue at which the EPA will allow a crop to be imported into the United States. But this level, set after scientific review, does not constitute approval for use in the U.S. on bananas or any other crop, Ms. Kearns said. Bitertanol also is not registered for use in Canada, according to Antony Simpson, spokesman for Health Canada's Pest Management Regulatory Agency, the Canadian government's counterpart to the EPA's Office of Pesticide Programs. The pesticide is approved for use in the European Union. Chlorpyrifos, sold as Lorsban. This product is widely used by Chiquita to put in plastic bags that hang over the banana bunches as they grow. It is registered for use in the United States. However, the EPA is reviewing safety levels for all organophosphate compounds, and chlorpyrifos is one product that could be severely restricted because of health and environmental risks, according to published reports by the Washington State Department of Agriculture. Last year, the EPA declared chlorpyrifos as a "Restricted Use Product," a restriction allowing for use only under special circumstances with specific EPA approval. Chlorpyrifos is not authorized for use in Finland and Sweden, according to European Union government reports. Carbofuran, sold as Furadan: This pesticide is used to combat nematodes, small worms that attack the banana plants. Chiquita has used the product since 1975. The product is listed by the EPA as "severely restricted" in the United States. According to EPA documents, the product's high risk of danger to people and the environment make it "a pesticide for which virtually all registered uses have been prohibited by final government regulatory action," but it can still be used in some special cases. The product also is severely restricted in Canada, according to Health Canada. Its use is not authorized in Finland. Ethoprop, sold as Mocap: This organophosphate also is registered for use in the United States but is being reviewed by EPA. Like chlorpyrifos it has been singled out as facing severe restrictions, according to the Washington State Department of Agriculture. Ethoprop is not registered for use in Canada, according to Health Canada. It is not authorized for use in Finland, Sweden, Denmark and Luxembourg, according to European Union government reports. Terbufos, sold as Counter: This product is registered for use in the U.S., but it is being reviewed by EPA for possible restrictions. It is not authorized for use in Finland, Sweden, Denmark, Ireland, the United Kingdom and Portugal according to European Union government reports. Azoxystrobin, sold as Bankit: This fungicide used in aerial spraying is not registered for use in Canada, according to Health Canada. Imazalil, sold as Fungaflor: This fungacide, applied to bananas before shipment, is not registered for use in Canada, according to Health Canada. Tridemorph, sold as Calixin: This fungicide used in aerial spraying is not registered for use in Canada, according to Health Canada. It is not authorized for use in Finland, Sweden, Denmark and Portugal. Where chemicals are approved for use Chiquita's environmental partner, the Rainforest Alliance, has regulations to which Chiquita has agreed that state the company cannot use chemicals on its alliance certified banana farms that are not authorized for use in the U.S., Canada and Europe. But according to Chiquita's own list of approved pesticides, it does. Chemicals: Azoxystrobin Sold as: Bankit Type: Fungicide Used for: Black Sigatoka Authorized for use in: U.S.: Yes Canada: No European Union*: Unknown Chemicals: Bitertanol Sold as: Baycor Type: Fungicide Used for: Black Sigatoka Authorized for use in: U.S.: No Canada: No European Union*: Yes Chemicals: Carbofuran Sold as: Furadan Type: Nematicide Used for: Nematodes Authorized for use in: U.S.: Yes Canada: Yes European Union*: No Chemicals: Chlorpyrifos Sold as: Lorsban Type: Insecticide Used for: Insects Authorized for use in: U.S.: Yes Canada: Yes European Union*: No Chemicals: Ethoprop Sold as: Mocap Type: Nematicide Used for: Nematodes Authorized for use in: U.S.: Yes Canada: No European Union*: No Chemicals: Imazalil Sold as: Fungaflor Type: Fungaflor Used for: Crown Rot organisms Authorized for use in: U.S.: Yes Canada: No European Union*: Yes Chemicals: Terbufos Sold as: Counter Type: Nematicide Used for: Nematodes Authorized for use in: U.S.: Yes Canada: Yes European Union*: No Chemicals: Tridemorph Sold as: Calixin Type: Fungicide Used for: Black Sigatoka Authorized for use in: U.S.: Yes Canada: No European Union*: No * A "no" in this column means that one or more of the 15 nations of the European Union do not authorize the use of this chemical on its farms. Sources: U.S. Environmental Protection Agency, Health Canada and European Union reports. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Environment; Workers sprayed in the fields Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- In the fiercely competitive banana trade, Chiquita Brands has made a strong effort to set itself apart as the industry's "environmental leader." Chiquita's brochures, posters and company website proudly trumpet its partnership with the Rainforest Alliance, a New York-based environmental group known worldwide for setting up environmental - business partnerships. Since 1993, the two have worked on the "ECO-O.K. - Better Banana" program, an environmental certification to assure protection for workers and the environment on Costa Rican farms of Chiquita's subsidiaries, Compania Bananera Atlantica Ltda. (COBAL) and the Chiriqui Land Company. The program, originally called "ECO-O.K." but later changed to "Better Banana," has since expanded to Chiquita subsidiary farms in Panama and Colombia. But an Enquirer investigation into Chiquita's use of pesticides on plantations shows disregard not only of the company's stated environmental guidelines and partnership agreements with the alliance, but also the safety of its tens of thousands of field workers. The Enquirer found: Aerial spraying when workers are in the fields, is a practice condemned by the U.S. Environmental Protection Agency (EPA), scientists and even Chiquita's environmental partner, the Rainforest Alliance. The spraying violates the rules of the "Better Banana" program. The Rainforest Alliance's policy paper on the "Better Banana" program states, "All workers and neighbors must be warned when pesticides are being applied." According to the program's general regulations, workers and neighbors are not supposed to be exposed to aerial spraying. Chiquita's subsidiaries use pesticides in Latin America that are not registered for use in the United States, Canada or Europe. They do so even though Chiquita has issued public statements and agreed to an environmental contract with the Rainforest Alliance that on its farms certified by the alliance it will "only use products that are registered for use in the United States, Canada and Europe." Chiquita subsidiary farms use pesticides in aerial spraying that are highly toxic to fish and birds, contrary to Chiquita's stated environmental policies. These findings come as the "Better Banana" project is under criticism from scientists in Central America, Europe and the United States. Chiquita's showcase environmental program has been attacked as disingenuous, superficial and unverifiable. "The changes are more aesthetic than anything else," said Catharina Wesseling, a scientist with the Karolinska Institute of Environmental Medicine in Stockholm, Sweden, and author of the book Health Effects from Pesticide Use in Costa Rica. "They don't address the real problems." However, an executive of a Washington, D.C. - based conservation group, Conservation International hired by Chiquita to visit its certified subsidiary farms called the project "very positive." Scientists critical of the program say it doesn't adequately address a problem that the entire banana industry has been wrestling with for decades: use of pesticides that endanger the health of workers, villagers or the environment in Latin America. The U.S. Food and Drug Administration, which is responsible for checking pesticide levels on bananas imported for American consumers, said the overwhelming majority of bananas brought into the United States and tested by the administration show pesticide residue well within safety standards set by EPA. However, scientists and environmentalists said the methods and amount of pesticide use practiced by Chiquita and other large banana growers endangers banana workers and the environment where the bananas are grown. Aerial spraying Chiquita's "Environmental Charter" states that the company works "to protect the rainforest; to maintain clean water; to minimize the use of agrochemicals; to reduce, re-use and recycle waste; to support environmental education; and to ensure our workforce is well-trained and works safely." Those guidelines also are supported by the Rainforest Alliance. But the Enquirer has found that Chiquita subsidiaries have sprayed toxic cocktails, varying mixtures of potent chemicals, on their plantations without removing workers first. These aerial sprayings can take place more than 40 times a year on plantations that are threatened by a widespread banana disease. Often these pesticides fall on workers, nearby villages, rivers or forests. Eric Holst, coordinator for the Rainforest Alliance's "Better Banana" certification program in New York, said that aerial spraying while workers are in the fields would be a violation of the certification program. "We require that workers have protection from the application of chemicals. That clearly is a violation." Through its attorneys, Chiquita provided the Enquirer with a list of chemicals it has approved for use on its banana farms. For aerial spraying, the company uses the fungicides propiconazole, benomyl, mancozeb, azoxystrobin, thiophanate-methyl, tridemorph and bitertanol. Propiconazole and benomyl have both been found to be possibly cancer-causing for humans by the EPA. Mancozeb, azoxystrobin, thiophanate-methyl and tridemorph are considered hazards to fish by the EPA. Bitertanol is not allowed for use on farms in the United States, while azoxystrobin and tridemorph are not allowed for use in Canada. A source at Chiquita's headquarters in Cincinnati provided the Enquirer with tape recordings of internal voice-mail messages, several of which dealt with the issue of aerial spraying while workers are in the fields. After the Enquirer asked Chiquita's attorneys and a Rainforest Alliance official about the company's aerial spraying policy, Robert Kistinger, president of Chiquita Banana Group based in Cincinnati, said in an Oct. 29, 1997 voice-mail message to John Ordman, Chiquita's senior vice president of finance, that he wanted officials to figure out "how quickly we can begin to implement a procedure for taking our workers out of the fields when we spray ... It is something we have to think about getting done fairly quickly." For workers, the unannounced aerial spraying is a constant fear. "Some of the workers are affected by the aerial spraying, especially with rashes," Luis Perez Jimenez, 31, a leaf cutter on COBAL's Cocobola plantation, said through a translator. "They never tell us about the aerial spraying. We just see it coming and boom, it's here." Small crop dusters will fly low over the banana trees and emit clouds of pesticides that settle over the tall, leafy plants. They also settle on workers, nearby villagers, animals, and open water. As two Enquirer reporters witnessed, on recently sprayed farms the air is heavy with a stifling chemical stench. Breathing is difficult and the pesticide residue covers everything. At Cocobola, one of COBAL's larger farms, and nearby COBAL's Gavilan farm hundreds of employees can be working in the fields at any one time. The plantation, laced with irrigation canals, is adjacent to Rio Sucio, a large river in northeast Costa Rica. Mr. Perez, through a translator, said that a white film gets all over his clothes and body when spraying occurs. "I don't get any protective clothing," said Mr. Perez, whose job is to cut diseased leaves from plants. "The white stuff gets all over my arms and on my clothes. I get a lot of rashes." Jose Gomez, 45, another worker on the Cocobola plantation, also said the planes come over with no warning. "You're just working and then suddenly you see it coming," he told the Enquirer as he stood amid lush rows of banana plants. "I try to hide under the banana leaves when I hear the planes. If the chemicals get on me, I get rashes on my back. I try to be careful when the planes come. I try to protect myself under these leaves." Mr. Gomez, through a translator, said that he was afraid of the long-term impact of the pesticides on his health, but this job was the only work he could find in the region. Under the "Better Banana" certification program touted by Chiquita, workers who apply pesticides with spray packs are supplied with protective clothing and training on how to handle pesticides. But thousands of other field workers like Mr. Gomez, who do not apply pesticides, receive no protective clothing. Enquirer reporters observed, and were told by workers, union leaders and company officials, that field workers not directly involved in the application or storage of pesticides do not receive protective clothing. Speaking of the industry-wide problem of aerial spraying on banana workers, Sandra Marquardt, an environmental consultant in San Francisco who formerly headed up Greenpeace International's efforts to stop the U.S. export of banned pesticides, said, "These airplanes come over and just nail the suckers." Dole and Del Monte, the two other large U.S. banana companies, also employ aerial spraying. But neither has joined the "Better Banana" program or publicly acknowledged any alliance with an environmental group claiming to limit workers' exposure to pesticides. In response to Enquirer questions, Chiquita, through its attorneys, issued a three-page statement on aerial spraying but did not address the issue of workers being sprayed in the fields. The company stated that the spraying was necessary to combat a banana disease called Black Sigatoka.The airborne fungus causes streaks on the plants, makes the fruit smaller and eventually kills the plant if unchecked. The attorneys said the company has hired environmental consulting groups to conduct water monitoring of nearby rivers, and those groups have found almost no contamination. Despite the concerns ex-pressed by Mr. Kistinger in his October voice-mail message, aerial spraying of fields while workers were in them was still going on four months later. In a Feb. 23 voice-mail message to Mr. Ordman, Mr. Kistinger pointed out the company's political and public relations problem with continuing aerial spraying while workers are in the fields. "One of the key focuses that we have not been successful so far ... has been the issue of aerial spraying," Mr. Kistinger said. "The environmental groups, the social groups, the NGO (non-governmental organizations) say it is not right to be spraying people when they are working in the field. ... And so far we have been able to make very little progress in this regard." Prodding his executives to develop an alternative to spraying workers, Mr. Kistinger added that there is "enormous build-up of pressure" from the public in Europe to protect banana workers. Noting that steps must be taken to curb the practice, "even if they're small at this point" it is "very necessary to do from a public relations' standpoint." Chiquita recently has created an "environmental" website on which it has posted a position paper on aerial spraying. On the website, Chiquita states that spraying is necessary to protect the banana crop. But the company stated it is working on several methods of applying the pesticides from the ground, which it claims would reduce pesticide exposure to workers and the environment. Earth College science professor Jorge Arce Portuguez said Sigatoka has become the major pest threatening the banana industry in recent years. Earth College is an agricultural science college in central Costa Rica partially funded by the U.S. government and supported by dozens of major American universities. The industry's only answer so far has been to increase the potency and regularity of aerial spraying, he said. But the disease has adapted quickly, becoming resistant to many of the chemicals. "In 1990, we controlled Sigatoka with more or less 25 to 30 aerial sprayings per year," he said. "Now, seven years later ... we are dropping by plane more than 40 times per year." Anti-Sigatoka chemicals make up the bulk of pesticides used on most banana plantations, according to Lori Ann Thrupp, senior associate and expert on sustainable agriculture at the World Resources Institute, a Washington, D.C.-based think tank on environmental issues. Drifting pesticides In a 1996 edition of the science journal Ambio, Scott Witter, associate professor at Michigan State University's Institute of International Agriculture, and colleague Carlos Hernandez published a report on the Costa Rican banana industry that found that 15 percent of aerial pesticides completely drifted off the studied plantations because of wind; 40 percent drifted away from the plants and into the ground; and 35 percent washed off in the rain. Only 10 percent of the fungicide sprayed actually stayed on the plant. "There's considerable debate about how much drift there is," Professor Witter told the Enquirer. "We had in that article references for as much as 90 percent of it not ending up on the banana plants. Some of the transnationals say 'no, no, it's more like only 40 percent that's lost.' But still that's a lot of fungicides going off into the water supply. You have a lot of the poor folks who take their water directly from surface sources. They end up ingesting these. Costa Rica is blessed with a tremendous amount of rainfall, and so dilution in many instances becomes a solution to some of the pollution. But over time, it does tend to bio-accumulate." In a statement issued through its attorneys, Chiquita stated that it is aware of the drift problem and has worked in recent years to reduce drift by installing special pesticide spray nozzles on its airplanes and other measures. In the village of Bananito Norte, in the heart of banana country southeast of the coastal city of Limon, Esther Rodriguez Anchia lives with her husband and three children in a one-room wooden shack next to Chiquita's Super Amigo packing plant and Chiquita subsidiary plantations. When the crop dusters come over, her family is sprayed with the chemicals, she said. "There is no warning," Mrs. Rodriguez said through a translator. "It just comes, usually once a week but sometimes twice. My children get very rashy when the planes come. I just have them run inside, but we usually are stuck with the rashes. I'm very allergic myself, so it's much worse for me. I have to visit the doctor all the time.," she said. Mrs. Rodriguez, 52, said the aerial spraying has made her hate the village. "I would love to fly away from here," she said. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Life on a banana plantation; Growing Chiquita bananas: pesticides and hard work Publication: Cincinnati Enquirer Date: May 3, 1998 By: Cameron McWhirter and Mike Gallagher --------------------------------------------------------------------- On farms from Mexico to Ecuador, Chiquita and its affiliates grow millions of bananas every year for consumers in North America and Europe. The fruit is grown and harvested in a labor-intensive process that involves an army of workers, lots of equipment, crop-dusting airplanes, foam cushions, string, bags, special cartons, refrigerated trucks and trains, and tons of pesticides. While production methods vary slightly from plantation to plantation, the basic operations illustrated below remain the same. This illustration is a composite plantation, drawn from Enquirer reporters' visits to Chiquita subsidiary plantations and Chiquita- affiliated farms in Honduras and Costa Rica, as well as interviews with plantation workers and environmental scientists. 1. Commercial banana plants grow from 15 to 30 feet in height and are grown in long rows on large irrigated plantations. Most bananas consumed in the United States are grown in the lowlands of Central and South America. The average banana plant produces fruit about every nine months. The stem usually grows to contain about 150 bananas. When the manager decides, the fruit is cut green from the plant and dropped carefully on the back of a worker carrying a cushion to stop any bruising of the fruit. 2. Herbicides: To kill off other plants growing around the bananas, workers apply herbicides. The chemicals are toxic and wash into the ground and ground water during rains. 3. Nematicides: To kill off nematodes, small worms that attack banana plants from the roots, workers cover the ground around the plants with nematicides. These chemicals are highly toxic and make an area extremely dangerous for 24 to 48 hours after application. 4. Banana plants do not have strong trunks, they can easily be knocked over in a tropical windstorm. To prevent 'blowdowns,' workers tie the plants down with string. 5. Aerial spraying is an integral part of pesticide application in commercial banana farming. The main purpose is to combat Black Sigatoka, an airborne fungus that can destroy a plantation's crop. In areas that are infected with the fungus, including much of Central America, airplanes may spray fields more than 40 times a year. The spray lands on the plants' upper leaves, the ground, irrigation canals, streams and rivers and nearby homes, workers and residents, scientists told the Enquirer. Workers on Chiquita subsidiary plantations and other farms producing Chiquita bananas told the Enquirer that they receive no warning when the planes come over and they often hide under banana leaves to escape the pesticide dust. Nearby villagers complain the aerial spraying often drifts into their yards, sending children running into the houses to escape rashes. Many worker villages are located close to banana plantations. 6. The water used in the in the packing plants to wash pesticides off the bananas comes from the irrigation canals and then is routed back out into the water supply. Chiquita has built berms in recent years on some plantations to limit pesticides from flowing directly into rivers. But many irrigation canals, laced throughout every plantation, remain directly exposed to pesticides. 7. Plastic bags imbedded with the powerful chemical chlorpyrifos protect the the growing fruit from insects throughout its entire gestation. In previous years,the bags were simply discarded after use, though the major banana companies have now started recycling programs. 8. At harvesting, the stem is placed on a large overhead cable system that runs throughout the plantation. Workers place foam cushions among the fruit to stop bruising. The fruit is then pushed along the cable toward the "Empacadora," the packing plant. 9. In the packing plant, workers remove the cushions. Other workers then cut the stems into smaller bunches. 10. The bunchesare then put in a "pila de seleccion," a selecting trough, where selectoras, usually women, choose the bananas and cut them further down to shipping size with small hooked knives. 11. Larger troughs called 'pilas des leches," milk troughs, wash off the pesticides applied in the fields as well as natural fluids from the banana plant. 12. New pesticides are applied to the bunches after they are placed on a conveyer belt. The new pesticides, either thiabendazole or imazalil, are applied to prevent "crown rot," a fungus that attacks the extremities of the banana bunch. On some plantations, Chiquita has installed small plastic containment systems that save money on pesticide costs and reduce worker exposure to the pesticides. But most plantations do not have this system, according to Chiquita statements issued through its attorneys to the Enquirer. 13. Boxes of banana bunches, freshly applied with pesticides, are put on large skids for shipment. On all the plantations visited by the Enquirer, most workers viewed by reporters did not wear gloves when handling the pesticide-covered bananas. 14. Trucks or trains are brought to the plant and loaded with the skids. The bananas are taken to port, where the large refrigerated containers are lifted onto ships. The ships then sail to various destinations, usually in North America or Europe. About ten days to two weeks after being harvested, the bananas are on display and for sale at local groceries. Pesticides in the banana ecosystem The ecosytem of a banana plantation is extremely wet and hot. The soil is very loose, helping the banana plants grow but also making it easy for pesticides to spread throughout the system. It often rains in these areas, flushing pesticides into the ground and water table. The banana industry's answer to this dissipation has been to apply pesticides frequently. Ways pesticides get into the environment: Air: Airplanes drop toxic chemicals regularly from the air. Pesticides fall on the plants, but also on workers, the ground and irrigation canals and streams. Ground: Workers apply pesticides to the ground around the plants. These chemicals seep into the ground with every rainfall. Water: Pesticides also get into water that is used to wash bananas in the packing plants. That water then flows back into the irrigation canals. Bags: Plastic bags with the insecicide chlorpyrifos cover all the banana bunches from their inception. The chemical leaks off the bags in rain storms and flows into the ground and water. Black Sigatoka is a banana plant disease that plagues most areas where Chiquita bananas are produced. The airborne fungus eats away at the plant leaves, turning them black. The disease shrinks the size of the frui and makes it ripen too quickly to be shipped to market. Eventually, the disease kills the plant. Some researchers are now trying to find a Sigatoka resistant banana that will still appeal to consumers, but nothing has been discovered thus far. To date, the industry's reaction to the problem has been to increase aerial spraying of powerful pesticides. The roots of the banana Humans have been cultivating bananas since almost the beginning of civilization. Varieties of the plant are referred to in ancient Chinese and Arabic manuscripts. Believed by scientists to have developed in southeast Asia more than 4,000 years ago, the plant eventually spread to other parts of Asia and into Africa. The species' scientific classification, Musaceae, comes from the Arabic word for the fruit, mu'uz. Spanish and Portuguese explorers are believed to have come into contact with the plant in their travels to West Africa, where they adopted a variation of a local term, banana. Spanish explorers brought bananas to the Americas in the 1500s. Today hundreds of banana varieties thrive in almost every tropical region of the world. But more than 90 percent of the bananas found at grocery stores in the United States and Europe are one variety, the yellow Gran Cavendish. The banana is one of the most productive plants in the world. In the right climate and weather it produces year round, and for decades at a time. The plant itself is actually an herb. What looks like a trunk of a banana "tree" is in fact densely packed leaves growing up from a base clump of roots. The plants that produce commercial Gran Cavendish bananas do not produce seeds for reproduction, and are 'sexless' perennials. Planted in rows on giant farms, they regenerate after each harvest. The plant grows a stalk, called in Latin America "la Madre" or the mother, which produces a purple stem with white flowers from its center. The stem transforms into a large 'hand' of as many as 150 bananas each. The "hand," which eventually bends over from the weight of the fruit, can weigh up to 140 pounds. The fruit is harvested before it is ripe, and cut into the bunches that are transported to grocery stands. Once the fruit is harvested, the stalk is cut and a little stalk , called "el hijo" or "offspring" in Spanish, sprouts from the same root to begin the process again. Bananas are comprised mostly of sugary carbohydrates, but it is also a source of vitamins A and C as well as potassium. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Politics & History; "About the EU tour that this minister in Panama wants to take is just highly dangerous . . "And I was saying that we should, if we could politely do it without ruffling too many feathers, get that minister's trip cancelled. So that would be exactly my program." - Keith Lindner, Chiquita vice chairman, on canceling the trip of Panamanian foreign minister; Contributions buy influence Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Carl Lindner is well known in this town as a big contributor to both Democrats and Republicans. What is he getting for his money? Mr. Lindner, chairman of the board and CEO of Chiquita Brands International Inc., is buying the power of the White House and Capitol Hill, according to advocates of campaign finance reform and opponents of Chiquita's trade battles with Europe. "Although he has given more to Republicans, he has also been a double giver. And double giving is the clearest evidence that this money is not about elections, it's about buying influence," said Ann McBride, president of Common Cause, the non-profit group leading the campaign for finance reform. "The way Carl Lindner has given has been to give to both parties so that no matter who wins, he'll have a place at the table." Mr. Lindner, a registered Republican who has spent at least two nights at the Clinton White House, certainly has a place at the table of the Democratic administration as well as both sides of the aisle in Congress. Mr. Lindner has made large contributions - totaling millions of dollars - to Republican and Democratic candidates over the years. But that largesse has come under scrutiny since 1993 when the European Union established trade preferences limiting how many bananas Chiquita could bring to Europe. Chiquita began asking the White House to intervene while also making large donations to the Democratic Party. In 1995, the U.S. Trade Representative's Office of the White House took the company's cause to the World Trade Organization (WTO), the first case by the United States brought before the newly created international body. The U.S. decision to take up an international case on behalf of one multinational company contributed to the recent debate about campaign finance reform. Dole and Del Monte, the two other large U.S. banana producers, did not file requests with the White House. Dole proposed a compromise in 1995 to avert the WTO action, but it was turned down. Mr. Lindner and other Chiquita officials declined repeated requests to meet with the Enquirer to discuss campaign contributions or any other subject. Through attorneys hired to deal with the Enquirer, Chiquita issued the following written statement: "Neither Carl Lindner Jr. nor any other Chiquita, United Brands, or American Financial official has ever asked for or received any promises in return for political contributions related to the WTO (World Trade Organization) proceeding or any other matter, nor have any such promises or quid pro quos (things given in exchange for something else) been anticipated or expected by Mr. Lindner or Chiquita." The White House also firmly denied any improper support for Chiquita's case because of Mr. Lindner's donations. "It's absolutely not true and has no foundation in reality," said Jay Ziegler, spokesman for the White House's trade office. But the Enquirer has obtained, through the Freedom of Information Act, correspondence between the White House, members of Congress and Chiquita dealing with the European banana issue beginning in 1994. Though many portions of the letters have been blacked out by the government, the correspondence demonstrates the influence that Chiquita exerts on the U.S. trade office. The correspondence shows that: Powerful congressional leaders sent letters to the White House pressuring the administration to support Chiquita's position. Chiquita supporters included U.S. Sen. John Glenn, D-Ohio, U.S. Sen. Mike DeWine, R-Ohio, U.S. Rep. and Speaker of the House Newt Gingrich, R-Georgia, U.S. Sen. Orrin Hatch, R-Utah, U.S. Sen. and Majority Leader Trent Lott, R-Miss., U.S. Sen. Christopher Dodd, D- Conn., and others who had received donations from either the Lindners, their controlled companies or company officials. Chief support appears to have come from Bob Dole, while he was still the senior Republican senator from Kansas. Many of these letters were faxed to the trade office by Carolyn Gleason, Chiquita's trade attorney, registered lobbyist and key liaison to the Clinton administration on this issue. On one letter from Mr. Dole dated June 21, 1995, then U.S. Trade Representative Mickey Kantor scrawled a note to his staffers: "Please give me a way to proceed. Pressure is going to grow. MK" Chiquita's lobbyist, Ms. Gleason, sent faxes to the trade office - at the office's request - providing policy position papers on the banana issue for U.S. embassy staff around the world. Other faxes show Ms. Gleason writing legislation on this issue for the trade office to submit to the Federal Register. Staff of the White House's trade office discussed how to manage the press to Chiquita's advantage. In an e-mail message sent June 14, 1996, Ralph Ives, deputy assistant U.S. trade representative and the Clinton administration's point man on the banana issue, wrote about a segment on the trade dispute that was being planned by public television's News Hour. "Chiquita is urging that we either try to kill this (preferable, but not sure how) or either Peter (Allgeier, a trade office staffer) or I agree to be interviewed....I will find out more after talking with Chiquita." The segment never ran. Producers at the News Hour told the Enquirer that they did some initial reporting on the subject but never planned to air a segment on the dispute. Mr. Lindner held at least two meetings with high-level staff of the White House. In addition, Chiquita's lobbyist, Ms. Gleason, had frequent contact with the office. In one letter, dated July 19, 1995, Mr. Lindner, and his son, Keith, wrote to Mickey Kantor that they hoped to meet soon to discuss "our larger case strategy and to discuss our mutual efforts in greater detail." They had meetings before and after the letter. Senators, including Mr. Glenn, also met with Mr. Kantor on Chiquita's behalf. Tape-recorded internal Chiquita voice-mails, provided to the Enquirer by a company source, also show the influence that Chiquita has with the White House's trade office. In a Jan. 30 message from Keith Lindner, Chiquita's vice chairman, to Steven G. Warshaw, company president and chief operating officer; Robert Olson, chief counsel; Ms. Gleason and others, Mr. Lindner recommended that Chiquita try to cancel the trip of Panamanian Foreign Minister Ricardo Alberto Arias to the European Union. "About the EU tour that this minister in Panama wants to take is just highly dangerous," Keith Lindner said, adding later, "And I was saying that we should, if we could politely do it without ruffling too many feathers, get that minister's trip canceled. So that would be exactly my program." Later that day, Ms. Gleason called Mr. Olson and others with a voice-mail message stating the trip had indeed been canceled. A Chiquita consultant met with the Panamanian minister and convinced him that the U.S. trade office could not meet with him on Monday, but only later in the week, she said. The later meeting meant the minister would not have time to travel to the EU. Ms. Gleason then learned that the U.S. trade office had scheduled a meeting for Monday. "USTR (the trade office) went ahead and scheduled a meeting on Monday," she said. "That has since been corrected." The trade office moved the meeting with Mr. Arias from Monday to Wednesday, meaning the minister would not have time to visit Europe, according to Ms. Gleason's voice-mail message. In a statement issued through its attorneys, Chiquita stated, "Chiquita never asked the United States Trade Representative to reschedule meetings with the Panamanian foreign minister." Minister Counselor Fernando Eleta at the Panamanian Embassy in Washington, D.C., said he could not believe "Chiquita would do something like that." He said he would withhold comment, however, until he had a chance to review the Enquirer article. Today, Chiquita plays a major role in formulating U.S. banana trade policy. At the U.N.'s Food and Agriculture Organization (FAO) ba-nana conference in Rome last May, the U.S. delegation consisted of three U.S. trade diplomats and four other people listed as "advisers." The advisers were Michael O'Brien, president of European Offices of Chiquita; Manuel Rodriguez, Chiquita's assistant general counsel from Cincinnati; Ms. Gleason; and Robert Moore, the head of a banana trade group that represents the entire industry. No one from Del Monte or Dole was represented on the U.S. delegation. According to the head of the FAO's Intergovernmental Group on Bananas, delegation advisers are chosen by the individual governments. Through Ms. Gleason, a partner in the law firm of McDermott, Will & Emery, Chiquita presents its views in meetings and telephone calls with Amy Wynton, chief of Agriculture for the State Department and other top Clinton officials. The Chiquita-State Department connection extends even further. When an Enquirer reporter called the U.S. Embassy in Honduras to ask about a former embassy staffer now working for Chiquita, embassy staff said they could not provide the information. According to an internal, tape-recorded voice-mail message obtained by the Enquirer from a company source, embassy staff informed Chiquita of the call later that same day. Washington favors Opponents of Chiquita's actions in Washington, D.C. say Chiquita has bought White House support for a cause that will hurt U.S. allies only to help the bottom line of the Cincinnati company. "It's a clear issue of buying trade favors," said Randall Robinson, the head of TransAfrica Forum, a Washington, D.C.-based lobbying group for African and developing world issues. "The President ought to be ashamed of himself." Mr. Robinson, initially a supporter of President Clinton, and his wife, Hazel Ross-Robinson, have taken up the trade issue because they feel that if Chiquita can remove Europe's banana protections, developing economies in the Caribbean and Africa will be severely damaged. Ms. Ross-Robinson, who lobbies for Caribbean countries in Washington, D.C., has organized visits by several political leaders to the Caribbean islands to meet with farmers and has brought farmers from the Caribbean and Africa to lobby Congress. Mr. Robinson, the leader of the successful boycott effort of apartheid South Africa in the 1980s, has twice dumped bananas as a protest in Washington, D.C. to call attention to what he sees as the White House sellout. At his urging, prominent black Americans, including Bill Cosby and Jesse Jackson, have written the White House to express concern about the Clinton administration's support for Chiquita's position. Mr. Robinson and other Chiquita opponents point to April 1994, when Mr. Lindner and his associates contributed hundreds of thousands of dollars to numerous state Democratic parties, shortly after then U.S. Trade Representative Kantor took the banana case to the WTO. The money was donated to state parties and did not have to be filed with the Federal Election Commission (FEC), making it harder to track because the donations were spread among many offices. Caribbean leaders saw the connection as a payback by President Clinton to Mr. Lindner. "There was no reason for them to go to the WTO," said Jamaican Ambassador to Washington, D.C. Richard Bernal. "We were given assurances by Ambassador Kantor that the U.S. wanted to resolve this. It was a breach of faith with the Caribbean." Recently, the Council on Hemispheric Affairs, a non-profit research institute focusing on Latin American issues, called on the Federal Election Commission to investigate Mr. Lindner's donations because, they said, Mr. Lindner has "bought himself a U.S. foreign policy." According to a Common Cause analysis of soft money donations, Mr. Lindner, relatives and officers of his companies gave a total of $3,164,460 in "soft money" donations to Republican and Democratic national fund-raising committees from 1988 through the first six months of 1997. Most of the money went to Republicans. Soft money donations can be given in an unlimited amount to political committees. Contributions to individual candidates for national office are restricted. In March 1998, Common Cause ranked American Financial Group and related companies as the fourth largest giver in soft money to both parties in 1997. (Tobacco firm Philip Morris was the top giver.) The group reported that American Financial, its subsidiaries and executives gave $310,000 in soft money to Republicans and $75,000 to Democrats in 1997 alone. Soft money donations are legal, but they have become the focal point in the debate about campaign finance reform. Ms. McBride said Mr. Lindner was "one of the biggest soft money givers and one of the pioneers in double giving." Mr. Lindner's donations have favored Republican candidates, but he also has given millions to Democrats, and stayed in the Lincoln bedroom twice at the invitation of President Clinton. Mr. Lindner was called by Vice President Al Gore in October 1994 while the White House was considering diplomatic action against the European Union on the trade issue. White House records reviewed by the Associated Press show that in the following weeks, Lindner companies and associates donated $250,000 to the Democratic National Committee. A Dec. 2, 1994, White House memo referred to the October calls made by the Vice President from the White House. Mr. Lindner, one of the persons named in the memo, was listed as giving $150,000, apparently part of the $250,000, according to the Associated Press. Another memo indicates that Mr. Lindner invited Vice President Gore to stay at his Florida estate. According to the White House, Mr. Gore did not take Mr. Lindner up on his offer. Mr. Lindner's and Chiquita's reach in Washington, D.C. goes beyond campaign contributions. Chiquita also has hired the influential lobbying group Public Strategies Washington, Inc., paying it $279,402.08 in 1996 alone. "Carl Lindner and Chiquita are giving hundreds of thousands of dollars to both Democrats and Republicans and are getting people to support them," said E. Courtenay Rattray, executive director of the Jamaican banana exporting company Jamco. "This is just money politics." But as Mr. Lindner's supporters have pointed out in the past, Mr. Lindner was involved in money politics long before the banana trade issue in Europe. He was a major contributor to Richard Nixon. He contributed heavily to Ronald Reagan's candidacy, and helped fund both of his inaugurations. He also gave heavily to George Bush's 1988 and 1992 campaigns. The Center for Public Integrity, a public interest group, stated in a report that Mr. Lindner was one of the major "career patrons" of Sen. Bob Dole. Mr. Lindner and Chiquita officials heavily supported Mr. Dole's 1996 presidential bid. Mr. Dole was also a frequent passenger on Mr. Lindner's private jet. Despite recent calls for campaign finance reform, Mr. Lindner still makes large contributions. According to FEC reports on 1996 election cycle donations, Mr. Lindner and other leading Chiquita and subsidiary officials gave to the congressional and Senate campaigns in at least 35 states. They also gave "soft money" contributions to political committees on both sides of the aisle. The bulk of the donations were given to Republican candidates, but substantial funds went to Democratic "soft-money" organizations. For example, Mr. Lindner himself gave money to the National Republican Senatorial Committee and also to the Democratic Senatorial Campaign Committee. The Clinton - Gore campaign, the Democratic National Committee, the "DNC Services Corporation" and other soft money groups also received hundreds of thousands of dollars from Mr. Lindner, his family and officials of his companies, according to FEC records stored on the computers of a non-partisan public interest group, the Center for Responsive Politics. For the 1997-1998 election cycle, FEC records show that as of April 1, Mr. Lindner's American Financial Group has given $150,000 in soft money to various committees, making the company the largest soft money contributor in Ohio. The second largest soft money contributor in the state is Mr. Lindner himself, with $125,000 in donations. Mr. Lindner, his relatives and company officials also have given thousands to various candidates and political action committees. Candidates receiving money so far in the 1997-98 election cycle include Mr. DeWine, Sen. Alphonse D'Amato, R-New York, Rep. Rob Portman, R-Ohio, Rep. Steve Chabot, R-Ohio, and Rep. John Boehner, R- Ohio. Gary Ruskin, who runs the Congressional Accountability Project, a Washington, D.C.-based interest group that tracks financial contributions in Congress, said that he sees Mr. Lindner's name repeatedly when reviewing campaign finance filings. "The guy is fascinating," he said. "He shows up all the time." Mr. Lindner's name often comes up in Capitol Hill discussions about campaign finance reform. The Senate Governmental Affairs Committee, planning hearings on campaign finance reform, issued subpoenas to Mr. Lindner and Chiquita for documents regarding campaign contributions last August. But the hearings were dropped in November, when chairman Sen. Fred Thompson, R-Tenn., announced that his committee would not pursue the issue, citing lack of cooperation from other politicians and lobbyists. The majority of Sen. Thompson's committee had first-hand knowledge of Mr. Lindner's political giving. Both Mr. Thompson and Mr. Glenn, the ranking Democrat, had received direct contributions from Mr. Lindner. So had five of the other 10 committee members. The World Trade Organization The World Trade Organization was created in January 1995 to implement the goals set out in several world trade agreements, particularly the General Agreement on Tariffs and Trade (GATT). The objective of GATT is to reduce trade barriers among countries that have signed the accord so that eventually nations can trade as freely as possible. The United States, the European nations and most of the major industrial economies of the world are members of GATT. One of the key functions of the WTO, headquartered in Geneva, Switzerland, is to resolve trade disputes between nations. A nation that feels another GATT member is not trading fairly can ask for a special WTO panel to investigate and resolve the matter. Only nations can bring this request to the WTO, so Chiquita had to enlist the help of the United States and several Latin American governments to present its case against the European Union's banana trade restrictions. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Politics & History; "If Chiquita come in, we are no way, they will do us in . . . We don't know who to believe anymore, and we don't know the future." - Humbert Nicholson, small banana farmer in Grande Rivere, St. Lucia.; Island economies on the line Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Chiquita's efforts to end European trade protections for bananas grown in the Carribean could devastate a string of tiny island nations whose economies depend on small independent farmers who know nothing else. "We afraid, but we are still planting bananas because that is all we know," said Nicholas Espirit, 42, who farms four acres in the north island village of Bells. "We scared about this Chiquita business. It's a pressure, man, it's a pressure." Mr. Espirit worries about how to feed his five children if the banana business - the vast bulk of the region's exports - goes bust. That scenario could happen if Chiquita gets its way in a world trade dispute with the European Union (EU). Currently, several developing nations - including the tiny Caribbean islands of Dominica, St. Lucia and St. Vincent- receive preferences for their bananas because they were former colonies of Europe. Since 1993, the European Union has imposed an elaborate importing system that granted preferences to former colonies that export bananas while limiting access to the European market for banana exporters with large operations in Central and South America. Chiquita, backed by the Clinton administration, wants to end those protections. Both Chiquita and the Clinton administration, which has formally taken Chiquita's objections to the trade dispute panel of the World Trade Organization (WTO), have stated repeatedly that their argument is with the Europeans, not the Caribbean. But farmers on these islands are convinced that if Chiquita gains a larger share of the highly profitable European market, their tiny economies will be crushed. Through its attorneys, Chiquita issued a statement that the banana regime set up by the European Union benefitted mainly "European banana distributors, rather than Caribbean or African nations." Removing the European protections won't just hurt these small islands. It would have a severe impact on at least 10 independent nations and European territories, from the Caribbean to Africa, a combined population of almost 35 million. The island nations of the Eastern Caribbean-Dominica, St. Lucia and St. Vincent - would be among the hardest hit if the WTO's ruling stands and the system is dismantled. "I'm not a very emotional man," Peter Carbon, Dominica's minister of agriculture and environment, told the Enquirer. "But if we lose bananas, there will be no country." The islands provide only a small percentage of bananas to Europe's protected market - at most 3 percent annually. All the countries and territories that receive the protections account for only about 15 percent of all the bananas that go to Europe, according to the EU. If Chiquita were to grab this market share, the European consumer probably would notice little change at the local grocery. But the business loss would have catastrophic implications for nations like Dominica, St. Lucia and St. Vincent. "The worst case scenario is you have increased poverty, increased hunger, educational opportunities for children declining," said Lawrence Grossman, an expert on the Eastern Caribbean banana industry and an associate professor at Virginia Tech. "What Chiquita will gain compared to what will be lost in the Caribbean, well, it truly creates a tragic situation." Bananas Bananas were introduced to the Eastern Caribbean by the British at the turn of the century. The crop did extremely well on the mountainous, humid islands. For the first time, farmers had a large export crop that would grow easily on the hillsides. Banana plants could not survive a hurricane, but they would grow back after only nine months or so. For small farmers, bananas have become a perfect crop because they can be farmed year-round. Today, the government of Dominica estimates that at least 20,000 people out of a workforce of 35,000 depend on the banana, or "le fig" as it is known in the patois of that part of the world. The estimates on St. Lucia and St. Vincent are considered about as high. While bananas help the region's economy, poverty still reigns. The per capita gross domestic product on Dominica is estimated at about $2,100, less than one-tenth the almost $25,000 per capita gross domestic product of the United States. Signs of poverty are visible everywhere on these islands, from the open sewers in the capital to the shack homes of villages. However, internal Chiquita documents obtained by the Enquirer show that the company has made major political efforts in the islands since 1994. That year the company sent representatives to St. Lucia to make the offer of a joint venture with local growers. Under the deal, Chiquita would have become the exclusive European distributor of these islands' bananas. Chiquita hired G. Philip Hughes, former ambassador to the islands under the Bush Administration, to meet with government and banana industry officials in the Eastern Caribbean, according to company records. His mission was to persuade them to create a joint venture with Chiquita and transfer the island's special banana export licenses to Chiquita. Those licenses allow growers to ship a certain number of bananas duty free to Europe. Mr. Hughes said he was hired by Chiquita as a consultant for about nine months. "I knew the leaders in the governments intimately and I knew the issues that they confronted economically," said Mr. Hughes, who currently is an executive for the Association for International Practical Training, based outside Washington D.C. Chiquita had a lot to gain from the venture, as it listed in one of its executive summaries on the issue: It would get the islands' European banana trade licenses, allowing Chiquita to send up to 2.5 million more tons of bananas to the lucrative European market. It would save money in shipping and in sending bananas to southern Europe while shipping its Latin American bananas to the wealthier markets of Northern Europe. In its documents sent to island officials, Chiquita stress-ed that it would provide the islands with technical support, offer slightly more for bananas and other benefits. Mr. Hughes, the former ambassador, had "reconnaissance meetings" with government officials in the Eastern Caribbean as well as Washington and New York. But despite lobbying efforts by Mr. Hughes, officials on St. Lucia and other islands turned down Chiquita's offer. "Chiquita was offering a terrific deal," Mr. Hughes said. "But they had one problem: the mind-set of the Caribbean leaders... The leaders really had a negative mind-set about Chiquita. They really considered it almost their enemy." When the island governments rejected the offer, Chiquita's agents went to the growers' associations and in some cases to the farmers themselves. The banana growers associations refused the offers because they didn't trust Chiquita's intentions, according to Rupert Gajadhar, chairman of the St. Lucia Banana Growers Association. Mr. Gajadhar said the offer from Chiquita agents was attractive to some farmers and caused a split in the farmers movement. Tensions between some farmers and the government led to violence, strikes and riots. In 1993, two farmers were shot and killed and another 25 were wounded when police opened fire on a roadblock set up by the Banana Salvation Committee, a grassroots group of banana farmers. Mr. Gajadhar said he believed the salvation committee today is supported by Chiquita and that the group's leader, Patrick Joseph, meets regularly with Chiquita officials. Mr. Joseph, a newly elected senator for the Labour Party, told the Enquirer that he has met many times with Chiquita, but denied the company was funding his operation. "I always maintain that if Chiquita had given me money, and it means that it would help the cause that I am fighting, I would accept the money," he said. "But so far they haven't offered me money. Neither am I asking them for any." Mr. Joseph said he and his supporters see the Caribbean banana industry as a lost cause. Chiquita will destroy West Indian banana production because it can grow bananas cheaper in Central America. He said the government should focus its energies on helping banana farmers find some other work. "We do live in a capitalist society, and in capitalism the strong eat up the weak. Basically, that's what it is about," he said. Mr. Hughes said the company was simply trying to obtain island licenses so it could sell more bananas under the banana protection scheme created by the European Union. But many banana farm leaders on St. Lucia see Chiquita as a sinister force out to crush West Indian banana growers for the sake of profit. Elias John, president of the St. Lucian National Farmers' Association, said farmers initially thought the Chiquita agents simply wanted to buy their bananas. But then farmers began to believe Chiquita wanted to get control of the islands' banana import licenses to Europe. "When we begin to get the truth, things were coming out about the amount that they used for the American (presidential) campaign and all that. We lost our faith and began to realize they were just after us to destroy us," he said. Gripping a rusty cutlass while propping himself next to a banana plant, farmer Humbert Nicholson surveyed his 15-acre hillside farm in Grande Rivere, St. Lucia. "If Chiquita come in, we are no way," said the 53-year-old farmer. "They will do us in." Standing in worn rubber boots caked with mud, wearing grimy pants and a shirt so old the armpits have worn out, Mr. Nicholson is a typical Eastern Caribbean banana farmer - hard working and poor. "We don't know who to believe anymore," Mr. Nicholson said. "And we don't know the future." Decision could devastate islands If the Caribbean banana industry collapses, the problem also could hit the United States in a powerful way: a dramatic increase in illegal drugs coming through the region. "At the end of the day, when you have destroyed the economies of the islands and other countries, what is the fallback position? Crime, drugs, mass migration, insecurity of property," said Grayson Stedman, 56, the owner of a Dominican banana plantation and former chief financial officer of a local banana farmers' cooperative. This view isn't just being espoused by citizens of the Caribbean. In 1996, U.S. Gen. John Sheehan, commander of the U.S. Atlantic Command responsible for drug interdiction efforts in the Caribbean, told a Washington, D.C. policy forum that the Caribbean banana industry must be maintained for U.S. interests. "If you start deteriorating the economic infrastructure in the region, it is going to become my problem," he told the group. The Caribbean islands are strategically located along key drug- shipment points from Colombia. Drug Enforcement Agency officials report that Colombia supplies most of the cocaine and much of the marijuana for the U.S. illegal drug market. Desperate farmers with empty fields and hungry children could make eager recruits for the drug cartels, officials say. Caribbean Islands worry about enonomic future, farms The economies of the Windward Islands in the Eastern Caribbean have been dependent on bananas for much of this century. If European Union banana protections opposed by Chiquita are overturned, the islands expect their already weak economies to collapse. Below are two islands that will be hit the hardest. Dominica Population: 83,000 Size: 290 square miles Top crops: bananas, citrus, mangoes A former British colony, Dominica has been independent since 1978. St. Lucia Population: 159,639 Size: 238 square miles Top crops: bananas, coconuts, cocoa A former british colony, St. Lucia has been independent since 1979 Economies threatened Other countries and territories that would be impacted if their preferential access to the European Union was overturned include: Jamaica (Caribbean) population: 2.6 million crops: sugar, coffee, bananas Ivory Coast (West Africa) population: 15 million crops: coffee, rubber, bananas Cameroon (West Africa) population: 14.7 million crops: cocoa, coffee, cotton, bananas St. Vincent and the Grenadines (Caribbean) population: 120,000 crops: bananas, coconuts Martinique (Caribbean) population: 403,000 crops: bananas Guadeloupe (Caribbean) population: 412,000 crops: bananas, sugar Canary Islands (Atlantic) population: 1.6 million crops: bananas (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Politics & History; U.S. helps Chiquita fight tariffs in Europe Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON McWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- The busy produce section of the GB supermarket in Evere, a middle class neighborhood in Brussels, holds the key to understanding the bitter dispute between Chiquita and the 15-nation European Union (EU). Chiquita - alone among America's giant banana companies - has waged an international five-year campaign to overturn the EU's banana trade restrictions. The restrictions are a complex system of tariffs and quotas that place limits on how many Central American bananas can be brought into Western Europe. The reason for the campaign is simple: The amount of profit that Chiquita realizes for its bananas is greater in Europe than anywhere else in the world. And Chiquita dominates the European market. In the Evere GB, a typical store in the European Union's capital, Chiquita bananas sold for 89 Belgian francs per kilogram on April 24, or about $1.10 a pound. The average American price is about 50 cents a pound (some U.S. stores sell bananas as low as 19 cents a pound). Next to the Chiquita bananas sit the GB brand bananas, selling for 20 francs less, or about 85 cents a pound. Shoppers - from elderly pensioners to teenagers- overwhelmingly reach for Chiquita. Despite the higher price, Chiquita sells well, making up more than half of the 120,000 to 150,000 kilos sold every week by GB, Belgium's largest supermarket chain. Chiquita has dominated the European market for decades. Its brand recognition means the company's product commands a high price from the 250 million consumers who live in the European Union. "The quality is not better," said Johan De Vos, GB's auditor responsible for purchasing bananas. "Other bananas have the same quality. It's only the name, only the name....In Belgium we can sell Chiquita for a high price." Europe accounted for a majority of the company's net revenues in the 1980s. Although major setbacks in the past five years have sharply reduced profits, the continent still generates more net revenue for Chiquita than any other market. At the beginning of this decade, Chiquita had hoped to turn Europe into an even greater financial engine by selling even more of its relatively expensive bananas there. The EU was consolidating its trade policies, and Eastern Europe was opening its markets after the fall of Communism. As the leading banana exporter to a continent with almost twice as many consumers as the United States, Chiquita was brimming with optimism. The company had seen sustained profits and growth ever since Cincinnati financier Carl Lindner took complete control in 1984, in great part due to growth of sales in Europe. Wall Street expected expanded operations there would swell Chiquita's profits even further. "Our leadership in the European marketplace enables us to continue our growth in the high-potential markets of Eastern Europe, and to benefit from the transition to a single market economy in the European Community," Mr. Lindner and his son Keith, then president and chief operating officer, wrote to stockholders in the company's 1991 annual report. But far from the predicted bonanza, the 1990s have been a financial disaster for the company. Chiquita blames losses as far back as 1992 on the EU's banana trade protections first drafted that year and implemented in July 1993. The protections have blocked Chiquita from importing as many bananas as it wants into Europe from Central America. The EU also has placed tariffs on the bananas that Chiquita does bring in. The company claims to have lost more than $355 million since 1992, most of it as a direct result of the banana protections, according to Chiquita annual reports and the U.S. Trade Representative's Office, which has argued the company's cause since 1994. The issue led the Clinton Administration to take Chiquita's case to the World Trade Organization (WTO), an international trade court in Geneva, which last year ordered Europe to alter its system. But others, including former high-ranking Chiquita officials, say Chiquita's losses also are due to errant business decisions and poor planning by company officials. Still others argue that Chiquita, which has hired lobbyists and lawyers on both sides of the Atlantic to fight the European protections, may have won Pyrrhic victories in court rulings that will do little to help its bottom line in the near future. Sinking in the 90s In 1992, Chiquita reported losses of $221.7 million, a number that shocked Wall Street and sent Chiquita stock plummeting from the high forties into the teens. The company claimed that increased competition prior to the new protections led to much of that loss. In 1993, it reported losses of $51.8 million, and in 1994, $84.3 million. The company's stock continued to skid. In 1995, the company turned a profit of $27.9 million, mostly through selling assets and laying off workers, according to its own reports filed with the Securities and Exchange Commission (SEC). In 1996, the company was again in the red, with losses of $27.7 million. For 1997, the company eked out a net profit of $300,000, but because of payments to owners of preferred stock, the per share result for the year was a loss of 29 cents. Net sales dropped slightly also, to $2,433,726,000 in 1997 from $2,435,248,000 in 1996. On April 22, the company announced its first quarter profit this year was $41.1 million, down $2.2 million from the previous year. Chiquita's stock closed Friday at $14.25 per share. The stock is trading roughly for what it was worth in 1987, while the overall stock market has seen one of the largest growth periods in its history. Analysts have little good to say about the company's performance. "You tend to crawl before you walk, and you tend to walk before you run," said John McMillan, industry analyst for Prudential Investments in New York. "There's no doubt that Chiquita is still in a hospital bed." Tim Ramey, industry analyst for Deutsche Morgan Greenfell in New York and long a critic of Chiquita, told the Enquirer recently that "Chiquita has been a disaster of management...They have an amazing ability to shoot themselves in the foot." No one argues that Chiquita has been losing lots of money. What they argue about is how the company has been losing it. Chiquita traces its problems to the creation of the European Union banana protections. The EU Council of Ministers, the main law making body of the EU, ended years of internal debate in 1993 by reaching a compromise on how the EU would collectively import bananas. Some countries in the EU advocated free trade of bananas. Other countries advocated a system to protect banana trade for developing countries that were former colonies. These nations were dependent on the banana trade for economic survival but could not produce bananas that successfully competed with production from larger corporate farms in Latin America. Prior to the EU policy, many individual countries had provided these protections for their former colonies. The two sides battled to a compromise. Regulation 404, as it was called, guaranteed a certain section of the European market was reserved for these poorer nations, mostly in the Caribbean and Africa. Under the system, Central and South American countries, where Chiquita grew most of its bananas, had heavier tariffs imposed on all their bananas and a limit to how much they could import to Europe. The system also created a complex array of import "licenses" that favored European importers. An important provision was that these protections would last for 10 years, and then an open market on bananas would go into effect throughout the EU. The changes still left Chiquita as Europe's largest banana importer, but it restricted the amount that the company imported and imposed higher tariffs on bananas that it brought in from Latin America. Chiquita issued statements through its attorneys that "the EU banana import regime challenged by Chiquita is illegal and an unfair trade practice. Chiquita was right to oppose it." Poor business decisions? Opponents of Chiquita on the trade issue, politicians and former Chiquita employees argue that Chiquita made unsound business decisions and now it wants developing world banana growers to pay for them by cutting out European protections. They point to the huge capital investments that Chiquita made in the early 1990s in anticipation of an Eastern European banana boom that never happened. In 1990, the company reported to the SEC that it had a long-term debt of $494.1 million. In 1991, the figure jumped to $1.23 billion - an increase of more than 135 percent in one year. The next year it climbed to $1.41 billion. Since then, the company's long-term debt has remained more than $1 billion. For 1997, the company reported its long-term debt at approximately $1.1 billion. Much of this money was used to buy and lease ships and expand plantations in Central America in anticipation of a huge growth in European sales, according to Clyde Stephens, who retired as chief of Chiquita's Banana Research division in 1991 after working for the company for decades. "I thought this was crazy," Mr. Stephens said. "But I was ordered from the top to go along with it....And they went ahead and just spent untold millions of dollars in expansion. Pretty soon the whole damn thing blew up on them. Now to this day, they are stuck with a lot of these properties they bought that they never should have bought. "They invested heavily in ships because they said, 'Hey, we're going to Europe and we're going to break that European market wide open. And we're going to Eastern Europe. Those bankrupt countries are going to be in the money.' And the Soviet Union. It was a gross mistake, and they're paying for those mistakes right now," he added. Eastern Europe has opened up to banana imports, with sales moderately increasing, according to the U.N. Food and Agriculture Organization. But many Eastern European consumers don't have enough money to afford bananas as a steady part of their diet. The belief that Chiquita caused its own financial problems is also widely held by banana producers in the former colonies. These competitors say they stand to lose their market share if the banana regulations are overturned. "Chiquita has made some errors when the common market was created," said Mbarga Atangana, European representative of the Association of Cameroon Banana Producers. "They want now that all the growers in the ACP (African-Caribbean-Pacific) countries pay for their mistakes." Economic studies done Europe show that Chiquita made mistakes in not preparing for the creation of the European protection system, while other American companies did. Dole, by strategically purchasing banana plantations in EU- protected countries like Cameroon, has been able to acquire chunks of Chiquita's market share. A 1995 report by auditors Arthur D. Little, who were hired by supporters of the European banana restrictions, said that Chiquita's market share in Europe had dropped from 25 percent in 1991 to 18.5 percent. Almost all of that decrease had been lost to Dole. Since the new banana restrictions, Chiquita has bought some plantations in the Ivory Coast and other places where banana imports have low tariffs to Europe. Chiquita did not provide specific numbers on its European market share. The EU "has severely attacked and cut into Chiquita's market position. There is no doubt about it. Whereas Dole was very pragmatic," said Jeroen Douglas, project officer for Bananas for Solidaridad, a Dutch Christian group that aids development in poorer countries. Dole, Chiquita's largest competitor, refused to comment for this series. But analysts like Mr. Ramey of Deutsche Morgan Grenfell point to Dole's relative success in the stock market in recent years, with profits up. As of April 21, Dole's stock was trading at more than $45 per share. Accounting for a stock split in 1995, the stock has increased more than 77 percent since 1990, according to Bloomberg News. Meanwhile, Chiquita stock was trading at about $14 per share on April 21. At the close of 1990, the stock was trading at $32 per share, a decrease in value of 56.25 percent, according to Bloomberg News. Chiquita has not had a stock-split since 1988. "Dole has said, 'We can't do a whole lot to fix the political solution,' " Mr. Ramey said. "Instead, they said, 'Let's just adapt to the situation.'...Meanwhile, Chiquita continues to stagnate while they are fixated on this WTO (World Trade Organization) decision." Chiquita fights Chiquita was the only major banana producer to fight against the EU banana restrictions. And it has fought fiercely, marshaling top lobbyists in Brussels, Washington, D.C., and elsewhere. It has hired top lawyers in Washington, D.C. to petition the Clinton administration and Congress to fight the EU protections. Meanwhile, a coalition of European human rights activists, small importers and others have banned together to counter Chiquita's efforts. Since 1994, the White House has been a strong supporter of Chiquita's position, successfully arguing its points at the World Trade Organization (WTO). In 1996, the White House won a WTO ruling and the EU's appeal of that ruling ordering the EU to change its system to be less restrictive. The White House position is simple at this point: Europe has to change the system. Ralph Ives, deputy assistant U.S. Trade Representative and the Clinton administration's point man on the banana issue, said the administration doesn't care whether the changes help Chiquita or not, just as long as they are consistent with principles of international free trade. "Our line for the last four years has been we just want the EU to adopt a system that is consistent with the International rules of trade," he said. "So we haven't been wedded to any particular system....This is hurting Latin America. It's hurting growth in bananas. It's hurting our companies. So just abide by the rules." Politics and money But Chiquita's competitors think the Clinton administration's aggressive pursuit of this issue is a direct result of Mr. Lindner's healthy contributions to the Democratic party. Tim Cuniff, Del Monte's director of marketing for North America, said Chiquita is trying to cover its own financial mistakes by blaming it on the European restrictions. "Lindner paid a ton of money supporting presidential campaigns, and he thought that he was going to get some type of favors," he said. "Now he's got to start calling in some marks to show that he was doing right by his shareholders." European supporters of the banana protections also see political contributions as the driving force behind the White House efforts. "The government of the United States has itself invested a lot of time, people and money to this conflict when there is no domestic export to the European Union so this is, from our point of view, a little bit strange," said Alvaro Gonzalez de Cossio, Brussels delegate for ASPROCAN, the association for banana plantations on the Canary Islands. "You can see that the lobbyists there have worked very well for the big company, for Chiquita." Changes coming Politics aside, the EU must change its system or face severe trade sanctions under the WTO ruling. The EU has stated that it plans to change the system, but just how it will comply is uncertain. Mr. Gonzalez of ASPROCAN said that if the EU proposes changes that his farmers don't like, the organization will work to block ratification in the European Council. Under the current representation, Spain, Portugal, France and the United Kingdom would have a blocking minority in the council. "It doesn't matter if the council has done something that makes the Americans and Chiquita very happy," he said. "If we don't like it, there will be a major political problem." Banana trade experts say the contentious nature of the dispute means that Chiquita is unlikely to prevail anytime soon, if ever. Phillippe Binard, delegate general of the European Community Banana Trade Association, an organization that represents Chiquita and other large producers, as well as smaller banana producers, said Chiquita's victories at the WTO may mean little to Chiquita's bottom line. "These political battles will go on for the next two or three years," he said. "But it's not surprising. The system has been seriously challenged from the very beginning, but it has not stopped us from operating within the limits that have been put on us from the beginning...The (Banana protection) regime will not disappear, this is for sure." In January, the EU Council announced a proposal that kept its system intact but altered the way its licenses were given out. Mr. Ives at the White House said the Clinton Administration was not satisfied with the EU proposal and would continue to fight for "full compliance" before the WTO. "It would be very naive to assume that the WTO decision will be a meaningful help to anybody in the near to medium term," said Mr. Ramey at C.J. Lawrence. "It (the WTO-EU negotiation) is going to be marathon foot-dragging." What is the European Union? The European Union is a group of 15 nations, most of them in Western Europe, committed to political, economic and monetary union. In coming years, more countries are expected to join. The goal is to become a United States of Europe, with no trade barriers or economic restrictions between the member states. After World War II, countries in Europe began to talk about reducing political and economic barriers to reduce the chances of another world war. In 1992, the nations involved (then only 12 countries) signed the Maastricht Treaty, which recognized the formal union with a government headquartered in Brussels. It also committed the member states to full economic integration with a single currency by 1999. The fifteen members states are: France, Germany, the United Kingdom, Italy, Spain, Sweden, Finland, Denmark, the Netherlands, Belgium, Austria, Portugal, Ireland, Greece and Luxembourg. The EU government operates through executive commission with a rotating president and a council, whose members are appointed by the states, as well as a European Parliament, whose members are elected directly by the people of Europe. While the goal of the EU is unity, the process of getting to that unity has often been divisive, with individual countries balking at certain policies. Such was the case with the current banana trade policy. Value of Chiquita stock Year-end close and close on Friday, May 1, 1998 CHART Source: Chiquita Brands International, Inc. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS revealed; Violence & drugs; "I was very restless that night. I couldn't sleep that whole night. I didn't know what it was, but I knew something had happened. At 3 a.m., people came over to tell me my son had been shot." - Felicita Diaz, mother of Josque Moises Castro Diaz; Villagers fear brutal guards Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Security guards here have used violence and brute force to impose their authority, according to villagers living amid the dense African palm forests of this plantation. The farm is a joint venture between Chiquita's main Honduran subsidiary, the Tela Railroad Co., and a group of Latin American businessmen. Tela owns the farm land and manages the operations, according to company records. People living here say they have been harassed by gun-toting guards who detained them on allegations of stealing or trespassing in the miles of fly-infested palm forests. But the complaints go beyond harassment: people have been shot, one person fatally. In the early morning hours of Aug. 16, 1996, plantation guards driving in a security truck opened fire on three men as they came home from visiting a nearby village. One man, 21-year-old Josque Moises Castro Diaz, was shot off the horse he was riding and killed instantly. His cousin, Lisandro Antonio Juarez Coto, then 14, was shot in the back as he bicycled ahead of the horse. Mr. Juarez's brother, Cesar Augusto Juarez Coto, then 26, was not injured and ran into the forest. Four San Alejo security guards have been charged with homicide and are awaiting trial in a Honduran jail. Mr. Castro, the oldest of eight children, was the key source of income for his family, bringing in as much as 800 lempiras (about $62) a week during picking season from his job picking African Palm nuts for the Chiquita joint venture. Off season, he would make about 400 lempiras (about $31). His mother, Felicita Diaz, 46, said through a translator that her son was a "church-going man of the family" who never got into trouble before the night of the shooting. "I was very restless that night. I couldn't sleep that whole night," she said. "I didn't know what it was but I knew something had happened. At 3 a.m., people came over to tell me my son had been shot." A year after the incident, the spot where the young man died was still marked with flowers and mementos. With their main breadwinner gone, the family is struggling to make ends meet. Lisandro Juarez, now 15, showed the Enquirer the huge scars where the bullet entered and exited his back, passing just an inch from his spine. He said he was bicycling home with his brother and cousin when the security truck passed them, doubled back and then started firing. Next thing he knew, he was shot. "I was just laying on the ground, and I couldn't feel my body," he said through a translator. "So I just began crying to my brother, 'Help me, help me, I can't get up! I can't feel my body!" His brother bicycled home with the boy on his back. They then drove to the hospital, and learned their cousin was dead. Mr. Juarez' father, Lisandro Juarez Fuentes, 66, is still angry. "I'm furious with them," he said through a translator. "If they had killed my son, I certainly would have killed the people who did it. I don't like fact that they killed a relative and wounded my boy for sport. There is a lot of rancor here." The four guards were identified in court documents as Redin Santiago Turcios, Angel Maria Reyes, Santos Rosalio Argueta and Raul Antonio Gutierrez. Iris Gisela Flores Discua, a lawyer who represents Tela and also the four company guards, has argued in court filings that the guards fired in self-defense against people who shot at them. But reports by police investigators state the guards had shot up their own truck in an apparent attempt to make it look like they were attacked. Also, police found no evidence to show the victims were armed. Police ballistics also showed that one of the guns used by the security guards in the shooting was an AK-47 assault rifle, a weapon that under Honduran law may be used only by military personnel. A police report filed with the court reads in translation that "with the reconstruction that was made, it is established that the people driving the car saw the offended from the beginning and therefore could prevent the criminal act from happening; ....It has been proven by the Judgment from Ballistics that all six empty cartridges found in the place where the situation happened match the AK-47 rifle confiscated from the San Alejo's Security Chief." Chiquita officials refused to be interviewed for this series and directed all questions to outside attorneys. In a statement issued through its attorneys, Chiquita distanced itself from the shooting, that it described as "a tragic event of the utmost seriousness." "The security guards involved in the August 16, 1996, shooting at San Alejo were under the direction and supervision of a joint venture company managed by Chiquita's joint venture partner - not Tela Railroad Company or Chiquita....The security guards involved in the shooting were not employees of Chiquita or Tela Railroad Company," the statement read. The company also stated that "immediately after the incident, the joint venture dismissed the four security guards who were involved." According to documents filed with the court by Ms. Flores Discua, all four men were fired four days after the shooting, not because of the murder of Mr. Castro but, as the signed letter stamped "Tela Railroad Company" states, they did not show up to work "and their whereabouts are unknown" (translation from Spanish). They did not show up to work because they were in jail, where they remain to this day, according to the country's main human rights organization, Comite para La Defensa de Los Derechos Humanos en Honduras (CODEH). Court records filed by Tela and obtained by the Enquirer state that the guards involved were employees of the "Palm Operations of the Tela Railroad Company." In a document filed with the court 10 days after the shooting, Ms. Flores Discua, "acting in my condition as a legally appointed representative of the Tela Railroad Company and the Division of African Palms San Alejo"(translation) asked the court to charge three villagers - Josque Moises Castro Diaz (then dead), Lisandro Antonio Juarez Coto (shot in the back) and Cesar Augosto Juarez Coto with attacking the guards first. In the document, the Tela attorney identified the guards as "security agents working for the company whom I represent." (translation) She also filed documents with the court identifying herself as the defense attorney for the accused. A statement issued by Chiquita to the Enquirer made no reference to the lawyer retained by Tela for the case or the guards' connections to Tela. The company statement maintained that "it is unclear how the altercation developed or whether security personnel were acting in self defense." Court delays have kept the case from being tried, and the guards remain in the central jail of La Ceiba in northern Honduras, according to CODEH. In the statement issued by Chiquita through its attorneys, the company stated that shots fired on Aug. 16 "may have come from an automatic weapon, the possession of which is prohibited by Honduran law. Based on that investigation, Chiquita and its joint venture partner concluded that it was necessary to restructure the security operation of San Alejo." The company stated that the security operation has since been "completely rebuilt," with more than 10 people, including the chief of security, being dismissed. The company stated it and its joint venture have since hired an outside security firm to assist. Leonel Milla, 22, hasn't seen much of the changes on the San Alejo plantation. In another shooting incident, he reported to officials of CODEH that his right foot was blown apart by a security guard's gun in the afternoon of April 2, 1997, as he, his cousin and two friends tried to push-start their broken-down truck. Mr. Milla's cousin and one friend were arrested and charged with stealing, he said. Their charges were dropped after one night in jail, and Mr. Milla was never charged in the incident, he said. "We had nothing and they still shot us," Mr. Milla said through a translator. "They just ran out after us shouting 'Stop, you sons of bitches.' " Mr. Milla said he ran from the guards for a simple reason: fear. Plantation guards had already shot Mr. Castro. "I didn't want to end up dead too," he said. Since the shooting, Mr. Milla has to hobble wherever he goes. "Tela never paid for any treatment or care or anything," he said. Government doctors have told him that further operations might help him walk a little better. Chiquita did not respond to Enquirer questions about this specific incident. Other villagers in the 16 communities spread out amid the plantations said the harassment continues. In September 1996, leaders from the various communities signed a public letter complaining about San Alejo security guards' treatment of villagers and livestock. Adalid Garcia, 45, a cattleman from the tiny village of Citronella amid the plantation, said security guards harass him and his cows and pigs. He produced photographs of dead pigs. He said one had been shot and one had been poisoned. Through its attorneys, Chiquita released a statement that the plantation has a problem with trespassing animals, who can damage the palm plants by eating their roots. The statement said that company security has detained animals on occasion, in accordance with Honduran law, and sent farmers to the local court, where the court, not Chiquita, issues a fine. "Security personnel at San Alejo have never impermissibly fined or arrested neighboring persons," the statement read. "If, however, persons or livestock are trespassing or damaging San Alejo property, the security personnel have the right to detain them." In a further response, Chiquita stated through its attorneys that it was "aware of an incident in which a security guard shot a bull owned by Mr. Adalid Garcia (an ex-employee) as the bull charged at the guard. The bull survived." Andres Pavon Murillo, 34, a regional coordinator for CODEH, said his group has received numerous complaints from citizens about mistreatment by the plantation security. Tela or its joint venture have done little to solve problems, he said. He said most of the disputes arise over control of the roads. Security has guard houses at the main entrances so people cannot leave or enter without their approval, even though the miles of unpaved roads are publicly owned, he said. Mr. Pavon took Enquirer reporters to an open area on the plantation, which he described in Spanish as "a security training ground." The area, on San Alejo palm land, was littered with thousands of spent and discarded rifle shells, including those fired from one or more automatic weapons. CODEH concluded spme of the shells probably were fired from a AK-47 assault rifle. While it was not determined who fired the weapons, ownership and firing of such weapons by anyone other than the Honduran military is a violation of Honduran law. Through its attorneys, Chiquita stated that after the shooting of Mr. Castro, evidence "suggested" that the plantation's chief of security had an automatic weapon. "His possession of the automatic weapon, which had not been issued or purchased by his employer, had been without the knowledge or permission of his employer or Chiquita," the statement read. Chiquita stated that the man was dismissed. Chiquita denial "Chiquita completely denies and rejects any assertion that it has ever committed any illegal or violent actions against any person in any country or that it has ever instructed others to do so." - A Chiquita attorney Shooting at San Alejo 1. In the early morning hours of Aug. 16, 1996, three young villagers who lived amid the San Alejo plantation were returning home after visiting a nearby village. Josque Moises Castro Diaz, 21, was riding a horse with his cousin, Cesar Augosto Juarez Coto, 26. Mr. Juarez's brother, Lisandro Antonio Juarez Coto, 14, was riding a bicycle. In the darkness, a truck carrying plantation security guards passed them on the road. According to police reports, the truck stopped down the road, turned around and came back to the three men, shining its headlights. 2. The guards opened fire with an automatic weapon, which police reports indicate was an AK-47 assault rifle. Mr. Castro was shot off the horse and killed. His cousin, Mr. Juarez, ran into the woods. 3. The security guards then drove up to the 14-year-old boy on the bicycle and shot him in the back, severely wounding him. The guards then sped away from the scene. Mr. Juarez returned for his brother and carried him home. He was then taken to the hospital and recovered. Source: Honduran police reports (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS revealed; Violence & drugs; "I would tell him, why don't you give us our back pay and salary that is rightfully due us? I gave you 31 years of my life. Why are you paying me back this way? It is a betrayal. Don't you know what's going on down here?" - Miguel Angel Tejada Pineda, a fired Honduran union official who worked for Tela; Workers lead precarious lives in squalid camps Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Chiquita television advertisements in the United States show smiling, tanned workers strolling through verdant, flowering jungles drenched in sunshine. No one ever has made a commercial about Barrio Brooklyn, a squatter's camp down the road from the seven large plantations of Chiquita subsidiary Compania Bananera Atlantica Ltda. (COBAL) at San Alberto in east-central Costa Rica. Here Juana Isabel Guerrero Montero, 38, lives with her seven children in a 10-foot by 10-foot hovel made of castoff wooden planks, tree trunks and plastic sheeting. Ms. Guerrero had been a contract worker on Chiquita-controlled farms on and off for the last 15 years. Last year, she was let go before her most recent contract with the company expired. Pregnant, she tried to keep working. But after the seventh month of her pregnancy, her boss refused to move her to work that allowed her to sit down. When she complained, he fired her, she said. In a statement issued through its attorneys, Chiquita stated that it is "policy and practice not to discuss with the media - or with anyone else - its relationships with particular employees or the circumstances in which a person may leave the company." Ms. Guerrero's job at San Alberto was to be a "selectora," selecting and cutting the huge banana stalks into the bunches sold in supermarkets. The job required her to stand and bend over constantly. On a good day, if her packing plant filled two trailer trucks for shipment, she made about $12, she said. "I didn't mind working hard. I have worked for Chiquita for a long time," she said through a translator. "But I was getting so tired because I was pregnant. I asked my boss, please, let me do something else, but he said no." Ms. Guerrero's story illustrates living conditions for many banana contract workers on Chiquita- controlled farms from Guatemala to Ecuador. Unlike Ms. Guerrero, other workers receive housing and other benefits from the company. But all workers interviewed by the Enquirer said that they are increasingly worried about how to make ends meet. Even those who are fortunate enough to receive company housing lead precarious lives. Gladys Tellez, 40, has lived for years in a four-room house in the Chiquita-owned village of Cocobola. The Nicaraguan immigrant and her family would have lost their housing six years ago after her husband, Jose Maria Altamirano Pineda, then 40, died after a leg injury while working on the Cocobola plantation. In a response issued through its attorneys, Chiquita stated that Mr. Altamirano died on May 5, 1993, while he was a worker on "Chiquita's Cocobola farm in Costa Rica." The company stated that he died of bone cancer, not a work-related injury. Mrs. Tellez said her son was able to start work at the Chiquita's local packing plant, so they were able to stay at the house. "The company paid for his (her husband's) coffin, transportation to (the cemetery), and 25,000 colones," she said through a translator. At that time, 25,000 colones was worth about $175. "If my son is ever fired, we will have to move out immediately, and we would have nowhere to go," she said. Chiquita stated through its attorneys that it deposited an undisclosed amount in death benefits with Costa Rican judicial authorities, as well paying for the casket and the 25,000 colones. In squalid camps and towns among the sweltering flatlands of banana territory, workers interviewed by the Enquirer said that in recent years working to produce Chiquita bananas has meant less pay (either in real money or because of inflation), fewer benefits, less union representation, unenforced employment protections and little job security. An Enquirer investigation into Chiquita's business practices found that in the late 1980s and early 1990s, officials at the company's Cincinnati headquarters formulated policies that diminished union influence on farms controlled by Chiquita and created plans to limit workers' wages and benefits. These business practices include: Using computerized hiring logs in Honduras that alert Chiquita- controlled farms when to rotate some workers at supposedly independent companies before they can receive state-mandated salary and health benefits. The companies are all, in fact, controlled by Chiquita. Though the percentage of workers affected by this policy is unknown, the rotations also create an unstable workforce on the plantations, making union organization difficult, according to Amilcar Castejon, a former administrator for the company -that manages the farms. Firing union activists and suppressing union activity in Honduras, Costa Rica and Guatemala. In recent years, complaints have been lodged by unions in those countries. Severe strikes over Chiquita business practices have occurred in Honduras, Guatemala and Panama. Financing the Solidarismo Movement in Costa Rica. The movement is a workers' association, partially funded by Chiquita and other multinational companies, that supplants unions, takes management on its board,will not provide legal representation to protect dismissed workers and does not authorize workers to strike. Chiquita officials declined to comment for this story, referring all questions to their attorneys. In a statement issued through its attorneys, Chiquita officials said that it treated all workers, union or otherwise, fairly, and provided the workers and the regional economy with good jobs and other benefits. "We believe that our record of contributions to the quality of life in Central America is unsurpassed by any corporation," the company stated. Rotating workers Under Honduran law, workers become permanent employees of a company after six months, entitling them to company benefits like a 13th month of pay for every 12 months worked and severance if dismissed. Mr. Castejon, who was a records administrator for Compania Bananero Ltd., S.A. (COBALISA), a company secretly controlled by Chiquita, said the workers are fired, and then rehired shortly thereafter at another subsidiary farm of COBALISA. This rotation of workers keeps benefits down but also creates permanent instability for the workers, making it difficult to unionize, he said. "The jobs are not permanent. They are only for six months," said Mr. Castejon, who said he spoke to the Enquirer because he was angry at Chiquita's policy. "How are they (workers) going to have anything to do with the unions if every six months they are changing over the personnel? That's exactly why they are doing it, to avoid the unions." According to company executives who spoke to the Enquirer on a condition of anonymity, Chiquita and its subsidiaries save money in benefits every year by terminating Honduran workers and "flipping" them from one secretly controlled Chiquita farm to another. "Once many of those workers get close to the six month deadline to become permanent, we fire and then later flip them to our next farm," said an official of the Tela Railroad Co., Chiquita's main subsidiary in Honduras, who provided documents to the newspaper. The main use of this policy in Honduras is with farms under COBALISA, which employ about 15,000 workers. Workers are shunted from one farm to another in COBALISA to avoid payment of benefits, according to Mr. Castejon, as well as sources within Chiquita and Tela. The officials requested anonymity. COBALISA has employed thousands of non-union workers while Chiquita's directly-owned farms have been cutting thousands of union jobs in recent years. "Chiquita neither has a 'fire or rehire' policy nor does it engage in the 'mass firing' of workers," Chiquita stated through its lawyers to the Enquirer. "The countries where Chiquita operates are heavily unionized (or operate under analogous collective bargaining structures) and, as a practical matter, such a policy or practice would not be tolerated by these associations or the constituent labor force." However, a high-level Chiquita official has provided the Enquirer with tape recordings of Chiquita internal voice-mail messages that discuss rotating workers on the COBALISA farms. In an April 7 voice-mail message to Robert Olson, Chiquita's general counsel and others, Chiquita attorney David Hills stated: "COBALISA does have a permanent staff, a corporate staff of employees. But the workers that actually work on the banana farms are not employed by COBALISA. Instead they are employed on a rotational basis by the underlying farm companies." Computerized printouts the Enquirer obtained from a high-ranking Chiquita official, list COBALISA subcompanies and workers. The printouts, all in Spanish, also list date of entrance, date of termination and the "parameter date," time remaining before they reach the six-month period. While many workers on the printout passed the six-month date, others were being let go just prior to the six- month period. The Enquirer could not determine the exact number of workers being rotated. In a statement issued through its attorneys, Chiquita did not address the issue of rotating its workers, but said it did pay high salaries. The statement said: "Wage scales for Chiquita's workers are substantially higher than those for other agricultural workers in Central America. A chart showing Chiquita wages in various Central American nations is attached." The chart, dated Oct. 15, 1997, listed minimum salaries by law in Honduras, Panama and Costa Rica, then listed "Chiquita's Actual Average Salary." In all cases, the chart shows Chiquita was paying substantially higher than the minimum wage. However, the chart did not detail salaries by job category or whether the employees were management or union. The company's response also did not include any reference to workers on any of its secretly controlled banana farms throughout Latin America, including its COBALISA operations in Honduras. By not including in its salary chart the lower, non-union wages of its secretly controlled farms, Chiquita's average wage figures appear higher than they actually are. While helping to prepare Chiquita's response to the Enquirer, Magnes Welsh, Chiquita's director of communications, in an Oct. 31 voice-mail message, asked an executive of the Tela Railroad Co. - Chiquita's main Honduran subsidiary - if Tela's financial figures included those of the secretly controlled farms. "Does that number include COBALISA payroll, COBALISA worker social security, workers compensation, that sort of thing?" she asked. "If it does, we need to be able to subtract that number out." Besides many workers bringing home less money because they work on non-union farms, all workers in Honduras have seen a real loss in buying power through substantial inflation. Honduras - one of the poorest nations in the Western Hemisphere - has seen double-digit inflation throughout the 1990s, according to statistics from the Honduran Central Bank. In January, the Central Bank reported a inflation rate of 12.8 percent, down from 25.3 percent in 1996. Costa Rica and Panama also have experienced high inflation. In a statement issued through its attorneys, Chiquita said its main subsidiary in Honduras, the Tela Railroad Co., has good relations with its union, SITRATERCO (Sindicato de Trabajadores de la Tela Railroad Company), through a "Together Is Better" program of mutual cooperation. But officials of COSIBAH (Coordinadora de Sindicatos Bananeros de Honduras), an umbrella organization of banana unions that includes SITRATERCO, told the Enquirer that they didn't agree with Chiquita's view. They said the relationship has been combative, much like relationships between unions and companies in the United States. Battles often have ended up in court. In July 1994, after a month of labor unrest following Chiquita's announcement that it would close four farms and cut more than 800 jobs, Chiquita fired 58 union leaders. Several took severance packages, but 43 filed suit, claiming Chiquita had unlawfully fired them for their union activism. In 1996, Honduran courts ruled that the firing was improper and ordered the company to rehire the 43. The court also ordered Chiquito give workers back pay for their time off, according to court records and press accounts. The company did rehire the workers. But a few months later, it fired all 43, citing economic reasons. The group has sued again, but the case remains unresolved in the courts. In a statement issued through its attorneys, Chiquita said Tela has made efforts to improve relations with workers in recent years and the company "encourages open communications between employees and management." Strikes and union complaints against Chiquita and its subsidiaries also have occurred in recent years in Guatemala, Costa Rica and Panama. In Guatemala, recent labor disputes severely disrupted production at two farms under exclusive contracts to provide bananas to COBIGUA, a company secretly controlled by Chiquita. On Feb. 12, 22 workers - all members of a union executive committee attempting to organize on the farms Finca Arizona and Finca Alabama - were fired. The unions alleged the firings were illegal and filed complaints with the courts, because the company did not have a court order to override an injunction against taking such action. The U.S. - Guatemala Labor Education Project, a Chicago-based group concerned with labor issues in Guatemala, has written a letter of protest to Chiquita but has received no response. The Guatemalan Embassy in Washington D.C. issued a statement this month that "the Ministry of Labor is committed to continue mediating to bring the parties to an agreement through dialogue." In a statement issued through its attorneys, Chiquita said that it had no connection to the farms and "it is inappropriate for Chiquita to comment as to the cause of any labor unrest at these farms." In Costa Rica, the banana workers union has several court cases against the company for alleged illegal firings of union activists. In Panama, 4,600 workers in the Pacific Coast division for Chiquita's subsidiary, the Chiriqui Land Company, have been on strike since February. Miguel Angel Tejada, 52, one of the fired Honduran union officials who is suing Tela, said he wished Chiquita's top official would come down to Honduras to meet with the fired union officials. "I would tell him, why don't you give us our back pay and salary that is rightfully due us?" Mr. Tejada, who has worked for Tela for 31 years, said through a translator. "I gave you 31 years of my life. Why are you paying me back this way? It is a betrayal. Don't you know what's going on down here?" Solidarismo in Costa Rica Many banana workers in Costa Rica criticize a burgeoning labor movement that has supplanted unions on many plantations, including Chiquita farms. The movement, called Movimiento Solidarista Costarricense (also known as Solidarismo) is funded in part by companies, including Chiquita. Solidarismo officials say the nationwide movement is intended to foster a better working relationship between workers and employers through more informal discussions, cooperative planning and implementation of employee job improvement recommendations. More than 1,000 companies and 150,000 workers participate in Solidarismo associations throughout Costa Rica, according to Solidarismo records. Critics of Solidarismo, including traditional labor unionists, call the movement an attempt by big business to eliminate the strong unions in place in Costa Rica. Banana workers with ties to traditional unions said Solidarismo chapters on Chiquita farms often are controlled by the company since it helps fund the organization. Chiquita executives, along with worker representatives, jointly hold top positions in the movement's local chapters. Soldiarismo officials said they get money from Chiquita, but denied they are beholden to the company. Those officials also say, however, they have no authority to force Chiquita to institute any corporate changes, retain any employee or provide lawyers or financial assistance to a Chiquita employees who believe they have been wrongly fired or forced to resign. "Solidarismo is nothing more than a front for Chiquita to control or eliminate workers who dare to speak out for better wages or working conditions," said Gilbert Bermudez, general secretary of Sindicato de Trabajadores de Plantaciones Agricolas and founder of a coordinating committee of banana unions. "It can do nothing to protect the workers. It has no power; only what Chiquita allows it to do." Ms. Guerrero of Barrio "Brooklyn" said she paid dues to Solidarismo while working for Chiquita. She said she doesn't think the organization will protect her: she found that out when she was let go. Because she had no rights, no union representation, no money to hire a lawyer, Ms. Guerrero said she left her job. Now living in extreme poverty without an income, Ms. Guerrero said she would try to sign up with Chiquita again when her baby was old enough. "We need the money," she said. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS revealed; Violence & drugs; Drugs found on Chiquita ships; Lax company security in Colombia blamed for smuggling Publication: Cincinnati Enquirer Date: May 3, 1998 By: MIKE GALLAGHER AND CAMERON MCWHIRTER --------------------------------------------------------------------- Taking advantage of Chiquita's lax security system, Colombian drug lords are using the company's ships to smuggle large amounts of cocaine into Europe. Despite knowing of the problem, Chiquita's subsidiary officials have been reluctant to tighten security and inspections at the company's Santa Marta, Colombia, shipping center where most of the smuggling originates. High-level Chiquita sources told the Enquirer that the company does not willingly or knowingly ship the illegal drugs. Asked about the drugs smuggled on Chiquita vessels, Chiquita through its attorneys, declined to discuss "the specifics of its drug interdiction policies and procedures." Chiquita, however, solicited a letter from the U.S. Customs Service attesting to its cooperation. "Chiquita is a leader among commercial ocean carriers in cooperating with the U.S. Customs Service regarding the prevention of drug smuggling on company operated vessels," the letter said. Drug enforcement agents and customs officials in Belgium and the United Kingdom found a total of more than a ton of almost pure cocaine hidden in at least seven Chiquita ships in 1997, according to European custom services and Chiquita sources. The seized cocaine is worth up to $33 million in its pure form, and valued at more than $100 million if sold on the streets, according to Van Quarles of the U.S. Drug Enforcement Agency in Washington, D.C. In internal communications, company officials cite sloppy security and ship-loading operations by Chiquita employees in Colombia as the main reasons that smugglers can get the drugs on board the ships. The most recent drug seizure verified by the Enquirer was made in Belgium on the Chiquita Bremen on Oct. 31. When the ship reached Europe more than 500 kilos of cocaine were discovered in the insulation of a large container packed with boxes of fruit, according to Chiquita and Belgium's custom service records. The smugglers in Colombia had peeled back half of the interior wall of the container, removed the foam insulation, replaced it with packets of cocaine, and then resealed the wall, according to Belgian officials and Chiquita records. Based on standard quantity - purity - price estimates of the U.S. Drug Enforcement Agency (DEA) the cocaine found on the Bremen had value of up to $18 million in its pure form and more than $50 million if sold on the streets. In a written statement issued through its lawyers, Chiquita told the Enquirer that "the security and smuggling concerns that Chiquita faces in Colombia are not unique to the company or even the banana industry." However, the drugs are being found on Chiquita ships sailing to Europe and not those of its banana-shipping competitors, according to a Nov. 1 voice-mail message sent to John Ordman, Chiquita's senior vice president for finance, from Dale Ploughman, a Chiquita executive in Antwerp responsible for company ship transportation issues. "(Let's) see if we can tighten things up in Colombia," Mr. Ploughman said. "It seems like drugs that are coming into Europe are primarily on Chiquita vessels rather than on other people's vessels. Let's put it this way: they have only been detected on Chiquita's vessels and not on other people's vessels. But even so, it does seem that we have a high incidence of (drug) finds on our vessels." Spokesmen for the DEA, and customs agencies in Belgium and United Kingdom, confirmed that sei-zures of illegal drugs there in 1997 were made on Chiquita ships and not on those of its competitors, such as Del Monte, Dole or the Irish company Fyffes, that also ship fruit from South and Central America. U.S. Customs Service spokeswoman Erlinda Bird said a check of seizure records reveals no drugs have been found on Chiquita vessels at U.S. ports during the past three years. Ged Coleridge, a Chiquita official at the company's Belgium office, detailed the smuggling problem to Mr. Ordman in a Nov. 1 voice-mail report. "There's been about seven (drug) finds on our ships in the course of this past year which amounts to a total of at least about a ton of cocaine," Mr. Coleridge said. "And Customs is telling me that it is only the Chiquita ships. It's all ex-Santa Marta and it's only Chiquita ships." In his report, Mr. Coleridge then tells Mr. Ordman about another large cocaine shipment found on the Chiquita Bremen after it arrived in England. "(Belgium Custom agents) picked up a Frenchman wandering around the port," Mr. Coleridge said in the voice-mail. "He had a container number in his pocket on a piece of paper in his pocket. They located this container. It also had been sent to England and they advised the Customs in England and, lo and behold, they found 21 kilos (of cocaine) in that container." Criticizing Chiquita's security and fruit-loading operations in Colombia, and comparing it to Dole, Mr. Coleridge recommended increasing security at the company's Colombian facility. "Look at the installation that Dole has in Santa Marta versus the Chiquita operation in Santa Marta for containers ... Dole is a very well run and orchestrated operation where ours ... is somewhat of a mismatch," he said in the voice-mail. "So whether or not that is something to think about, I don't know. It's food for thought." However, Mr. Coleridge said that company officials in Colombia didn't want to make extra security checks. "(Chiquita Colombia officials) seemed to think at that stage it might be a little bit too dangerous for our chaps to be doing that," Mr. Coleridge said. "(They said they) check them when they arrive here (Belgium)." A Chiquita lawyer, who requested anonymity, said he believed that "if it became well-known that we have this problem, it could result in tighter scrutiny of our ships by foreign law enforcement officials, which could cost us time, money and customers. We compete in a global market with a perishable product that has to get to market quickly, or our competitors take our customers. It's that simple." Ship route of Chiquita Bremen Drug lords hid cocaine in banana containers aboard Chiquita Bremen in Santa Marta, Colombia, which then sailed to Antwerp and the United Kingdom where drug finds where made in each port. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS revealed; Violence & drugs; Mr. Stalinski and his attorneys "are just trying to shake us down for money so that they'll go away " - Steven Warshaw, then Chiquita's vice president, in a 1995 Enquirer interview; Chiquita sued over alleged kidnap plot Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Chiquita security forces tried to kidnap a former agent for a banana company competitor in Honduras in 1990, the agent contends in lawsuits filed in federal court in Cincinnati and the Inter-American Court in Washington D.C. Ernst "Otto" Stalinski, 47, a former consultant for Fyffes - an Irish banana company that did business in Honduras - filed suit in November in Cincinnati accusing Chiquita of fraud, attempted kidnaping, piracy, menacing and other charges. Chiquita officials have vigorously denied the allegations and Chiquita attorneys have filed a motion with the court to have the case dismissed. Mr. Stalinski and his attorneys "are just trying to shake us down for money so that they'll go away," Steven Warshaw, then Chiquita's executive vice president, told the Enquirer in 1995. The case, reported before by the Enquirer, has wallowed in Honduran courts for years but is now making its way toward trial in U.S. District Court. In February, Mr. Stalinski's lawyers filed a similar case in the Inter-American Court which presides over international legal issues involving foreign countries. In both cases, Mr. Stalinski charges that Chiquita has corrupted Honduran judges through bribes and threats, in an effort to have his case dismissed. The cases are pending. The lawsuits stem from 1990, when Mr. Stalinski began working for Fyffes in Honduras to woo banana growers whose contracts with Chiquita had expired. For decades, Chiquita has been the main banana multinational in Honduras. The federal lawsuit names Chiquita, its main Honduran subsidiary - the Tela Railroad Company - and Chiquita's Chief of Security, Alejandro Bakoczy, as defendants. The complaint alleges that Mr. Bakoczy, with orders from Chiquita officials, headed an effort to terrorize, kidnap and harm Mr. Stalinski. According to the complaint, Chiquita also allegedly hired paramilitary groups to destroy Fyffes' banana shipments and harass those growers under contract to supply bananas to Stalinski's company. The lawsuit further alleges Chiquita was involved in the destruction of shiploads of Fyffes bananas that were stolen from its ships and destroyed by people working for Chiquita during Honduras' 1990 "banana wars" as they were called, according to Honduran court records. In April 1990, three armed, uniformed men and an attorney working for Chiquita tried to arrest Mr. Stalinski at his hotel in San Pedro Sula, in northern Honduras, according to documents filed in the lawsuits. Mr. Stalinski said he escaped from the hotel with the aid of hotel employees. In his lawsuits, Mr. Stalinski accused the group and Chiquita of using a trumped-up arrest order to try to kidnap and harm him. Chiquita has insisted that it had a valid arrest order charging Mr. Stalinski with stealing bananas. Mr. Stalinski said the actions of Chiquita in Honduras "must be investigated to bring their secret actions into the spotlight of public scrutiny. "Chiquita is a company that makes its own rules," he added. "Money is its driving force. They tried to kidnap me because I became an obstacle that needed to be removed." If Mr. Stalinski's case does go to trial, it will be without the presence of a key witness in the case. Carlos Guillermo Escobar Galeano, 34, was Mr. Stalinski's bodyguard at the time of the alleged incident and had helped Mr. Stalinski escape the alleged kidnaping. On March 24, Mr. Escobar, 34, was shot to death near his home. Mr. Stalinski said he had planned to use Mr. Escobar in the case. Mr. Escobar's assailants, who shot him nine times, remain at large. Mr. Escobar, a former member of a Honduran military intelligence unit, worked for a furniture company at the time of his death. When Enquirer reporters visited Honduras for this project last year, they hired him as a driver. The Enquirer was referred to Mr. Escobar by a source in the Central Intelligence Agency. In a statement issued through its attorneys, Chiquita told the Enquirer that "no Chiquita personnel were in any way involved in his (Mr. Escobar's) death, and any allegations or innuendo to the contrary would be outrageously false, irresponsible and defamatory." Some allegations of the lawsuit filed against Chiquita by Otto Stalinski "In order to protect its monopoly situation, Defendant Chiquita caused officers, employees, agents and representatives in Honduras, within the scope of their employment and authority and acting on behalf of Defendant Chiquita to: a) threaten and intimidate plaintiff, as well as plaintiff's immediate superior and subordinates, with criminal violence; b) engage in piracy by having Chiquita's paramilitary forces board ships that were being loaded with bananas under the supervision of the plaintiff in Puerto Cortes, Honduras; c) at various times during this period, pursue with Chiquita's paramilitary forces, and subject to attackby gun fire from Chiquita agents, the plaintiff, as well as his subordinates and his superior in the Fyffes' organization; and d) under color of the law of Honduras, cause fraudelent court orders to be issued and enforced by Honduran police at the airport of San Pedro Sula to physically arrest and confine Plaintiff." (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS revealed; Violence & drugs; Union official murdered on plantation Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Honduras isn't the only country where there has been violence on Chiquita-controlled farms. On Sept. 30, 1994, in Guatemala, Carlos Ermelindo Veliz Tobar, secretary of agreements for the workers' union at a plantation called "Chinook," was shot to death in broad daylight by two men who drove onto the nearby Kickapoo plantation. The men then drove off and escaped. No arrests have been made. Police in Guatemala continue their investigation. Both Chinook and Kickapoo farms are controlled by a company called COBIGUA and sell bananas exclusively to Chiquita. Through its attorneys, Chiquita declined to define its relationship with COBIGUA, citing competitive reasons. However documents provided to the Enquirer by Chiquita sources show that COBIGUA, in fact, is controlled by Chiquita. Chiquita issued a statement through its attorneys that the company had no knowledge of, or any involvement in, the shooting of Mr. Veliz. The country's presidential human rights committee, COPREDEH, also investigated the murder and issued a report quoting a union official that the case was not an act of violence against the union movement and was probably the result of personal problems. But the banana workers' union, Union Sindical de Trabajadores de Guatemala (UNISTRAGUA), has issued a formal statement labeling Mr. Veliz's death "an assassination" (translation) and demanding the government find his killers. The union also attacked the COPREDEH report and stated that the murder was not a personal matter, but instead an attempt to quell union activity. The union noted that COBIGUA's security force has strict control over all vehicles entering and leaving the plantations. However, the killers drove onto the plantation, repeatedly shot Mr. Veliz and then drove away with no COBIGUA security guard recording the arrival or departure of the vehicle, according to the union statement. A U.S.-based human rights group with offices in Guatemala also has investigated the killing. The group sent representatives to interview workers on the farm. The U.S. - Guatemala Labor Education Project, a Chicago-based non-profit group supporting workers' rights in Guatemala, concluded that facts of the killing make it appear anti- union in nature, according to Robert Perillo, the group's representative in Guatemala. On Nov. 4, 1994, Stephen Coats, executive director of the project, wrote to Carl Lindner, Chiquita's chief executive officer, asking him to inquire into the shooting. "One of the disturbing aspects of this case is that security guards failed to record in their log the arrival or departure of the vehicle, suggesting possible collusion between plantation personnel and the killers," he wrote. Mr. Coats went on to state that he hoped Chiquita officials would tell "the owners" of the Chinook farm to improve security since other workers said they had received death threats. Mr. Coats did not know that Chinook was controlled by Chiquita through COBIGUA, but he did know the farm sold its bananas exclusively to Chiquita. "Given the element of danger and fear involved, we would appreciate your response to our request as soon as possible," Mr. Coats wrote. Chiquita never responded, according to Mr. Coats. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS revealed; Violence & drugs; Village destroyed; Armed soldiers evict residents in Chiquita plan to eliminate union Publication: Cincinnati Enquirer Date: May 3, 1998 By: CAMERON MCWHIRTER AND MIKE GALLAGHER --------------------------------------------------------------------- Nothing remains of Tacamiche but a few concrete foundations. No one lives here any more but lizards and crows. The churches are gone. The homes of the banana workers are gone. Even the streets are overgrown with tall grass. After six decades as a community among Chiquita's banana fields in northeastern Honduras, the village was plowed under in February 1996 by about 500 Honduran soldiers. Former residents have not forgotten their village, nor have they forgiven Chiquita and its subsidiary for the fact that soldiers with bayonets and bulldozers forcibly evicted more than 600 people before wiping Tacamiche off the map. Villagers had been told to leave. When they refused, Chiquita's subsidiary Tela Railroad Co. obtained a court-order to evict them. When they still refused to leave, Tela brought in the army. Tela announced in 1992 it planned to close the Tacamiche plantation because it was no longer suitable for banana production. A company-wide strike forestalled the closure. In 1994 Tela once again announced it was closing the Tacamiche farm, claiming the plantation's land was bad. The company stated it had to close the farm, plus three others - all located in Honduras' Sula Valley - and sell off the land. The company said it would evict the villagers from those farms. Tela officials' claims that the Tacamiche land "was no longer conducive to the cultivation of bananas in the quantity and quality required by Tela and Chiquita for the world market" were based on internal Tela soil tests, according to Chiquita officials in a written response to the Enquirer. But the Enquirer has obtained a 1989 Chiquita legal document outlining a plan to close company-owned farms in Honduras to eliminate costly unions. While the document does not name the farms to be closed, it does refer to "a specific group of farms in the (Honduran) division." At the time, almost all of Chiquita's banana plantations in Honduras, including Tacamiche, were located in the Sula Valley. The Enquirer also has learned that Chiquita has leased the Tacamiche land with an intent to sell it to a trusted former employee, who continues to grow bananas on the land. When asked about the leasing, Chiquita, in a statement issued through its attorneys, stated that the former employee, Henry Murray, is using a farming method called "crop-timing": planting bananas so they can be picked and sold when the market is at a premium. Mr. Murray sells his bananas exclusively to Chiquita. Chiquita stated that crop-timing "can be profitable on a small scale, but it has not been demonstrated to be successful over the long term and is not suitable for a large scale producer like Tela." To clear the way for the leasing and future purchase of the land, Chiquita and Tela insisted on the removal of Tacamiche village despite the impact on its inhabitants, whom the company referred to as "squatters." Tacamiche village was de-stroyed but three other villages were not. All the four Tela farms were closed. "Chiquita left us without any past," said John Sevilla Connoley, 43, a lifelong resident of Tacamiche and the former village's schoolteacher. "They erased all evidence of our childhood." In August 1997, Mr. Sevilla Connoley visited his former village for the first time since the eviction. "This is the street where I lived. These roads, I walked them as a child looking for firewood. I know them like I know my heart." Speaking through a translator, Mr. Sevilla Connoley said the eviction ripped him away from his roots. The village had been created by Chiquita, then called the United Fruit Co., in the 1930s to house workers for its farms. The company acquired the land in 1936 for $1 from the Honduran government as part of a larger land deal. Until Tacamiche was destroyed, the majority of the villagers continued to work for Chiquita in the fields, and many had lived in the village most of their lives. Several other villages also were set for demolition, but Tacamiche was the first to go. After getting a final court order for eviction, Chiquita asked Honduran military police to remove the 123 families in 1996. The decimation of the village on Chiquita's orders was a hot political issue in Honduras and was condemned by human rights groups around the world. Chiquita has responded that the Tacamiche closing was a regrettable but unavoidable decision based on hard economic reality: the land was no good. But an April 12, 1989, legal memorandum by Manuel Rodriguez, a Chiquita lawyer, detailed a plan to close Honduran farms in order to reduce labor costs. The memo deals with farm closures in the company's Honduran division but does not mention any farm by name. Under a section titled "Labor Issues," Mr. Rodriguez states: "Only feasible grounds for termination of employees is 'liquidation, or permanent closing of company or establishment."' Mr. Rodriguez also stated, "(Chiquita subsidiary) Tela should seek (Honduran government) approval for sale, and immediately thereafter sever the workers. Should be simultaneously as possible; though for legal reasons, closing of farms must be completed first. "Tela has never implemented closing of farms and termination of workers in the size and nature of this proposed project," the memo continued. "Review with local (Honduran) counsel the procedure to effectuate terminations; our recommendation is to terminate all the workers at affected farms, rather than follow procedures of labor contract and - or (Honduran) Labor Code." The Enquirer made repeated attempts to contact Mr. Murray for comment on the Tacamiche closing and his proposed purchase of the land. He did not respond to the interview requests. Mr. Rodriguez also did not return Enquirer calls for comment. In a March 16 internal voice-mail message from Robert Olson, Chiquita's general counsel, to Mr. Rodriguez, Mr. Olson said he did not want Mr. Murray talking to the Enquirer. Mr. Olson also said that if the Enquirer did reach Mr. Murray, he should not tell the reporters that Chiquita officials had told him not to speak with them. A Chiquita statement, issued through its lawyers, described Mr. Murray as the prospective buyer of the Tacamiche land and "an associate producer" of Tela. Chiquita defines an associate producer as an independent grower with a contract to supply Chiquita with bananas. Chiquita records obtained by the Enquirer show that Mr. Murray was a long-time employee of Tela. Company records reveal Mr. Murray was the administrator in the early 1990s of a Honduran company, gropecuaria Petare S.A., that was secretly controlled by Chiquita. Tacamiche gone The Tacamiche villagers did not dispute the company's right to the almost 3,000 acres of plantation surrounding the village. What they did dispute was Chiquita's claims that the company owned the 925 acres of the village proper. Honduran courts, however, upheld Chiquita's claim to the entire property. In 1994, the 6,000-strong Honduran union for Chiquita banana workers, SITRATERCO, struck over the proposed closings but settled several months later. Chiquita offered workers jobs on other farms or buyouts but did not make offers to the hundreds of villagers who were relatives or descendants of Chiquita workers who lived in Tacamiche. In statements issued through its attorneys to the Enquirer, Chiquita said the company requested Honduran military police to evict the villagers as "appropriate legal action to protect its property and business interests." Chiquita tried to enforce its court eviction of the village several times, but villagers refused to leave. The military came into the village in February 1996 with tear gas, bulldozers and rifles. In a statement issued through its attorneys, Chiquita stated that the February eviction "took place peacefully and no one was hurt." Tacamiche villagers dispute that claim, arguing that shots were fired and tear gas used. Photographs of the event show soldiers with assault rifles forcibly removing women and children as bulldozers destroy the village. Several villagers claimed to the Honduran and international media at the time that they were beaten. Chiquita in its written statement said that it eventually issued more than $360,000 in relocation costs and buyouts to set up a "new" Tacamiche on the land of a sugar company several miles away. Each family was paid about $500 by Chiquita as a "relocation subsidy." The company also paid money to build houses or move those that had been knocked down. Chiquita emphatically denied through its attorneys that it paid the military police who raided Tacamiche. However, in an Oct. 11, voice-mail message by Tela employee Jorge Mendoza to Chiquita attorney David Hills in Cincinnati, Mr. Mendoza detailed in-kind payments to the military for their services. "We did have feeding expenses for the personnel and soldiers who were in all that process. There they were paid, uh, the food was bought by us from a restaurant....Car rents were paid for some of the movements that were to be done when all the necessary equipment was not available and some cars were rented by us. Fuel was administered to the army trucks that were mobilizing the soldiers and this was done before, during and after this thing was calming down." In its official statement, the company claimed that many of the "squatters" were in fact new people who had come into the village to cause trouble. Villagers disputed this allegation. Regardless of such arguments, Tacamiche was a public relations disaster for Chiquita. The situation was covered widely in the Honduran press. After the Tacamiche incident, Chiquita stopped plans to remove other nearby villages. For the Tacamiche villagers, now ensconced in their "new" village miles away from their home, Chiquita's decision to destroy their homes is unforgivable. "Once you are no longer useful, they discard you," said Juan Pablo Barahona Romero, 66, who said he had worked for Tela since 1946 before being evicted and fired. "If the president of Chiquita were ever to come down here, all I would tell him is that we want our land, to recover the place that we have always known, where we have lived our whole lives." Mr. Romero was let go from Chiquita after the eviction. His severance package for a lifetime of service was about $3,200 plus a house in the new Tacamiche. (Copyright 1998) --------------------------------------------------------------------- Power, money & control; Chiquita SECRETS Revealed; "At the end of the day this has cost us a tremendous amount of money from the standpoint of our reputation in the marketplace once again with the Honduras fruit. And once again, no one ends up paying the piper is what it comes down to." - Robert F. Kistinger, Chiquita Banana Group president; Overripe fruit hurts reputation, bottom line Publication: Cincinnati Enquirer Date: May 3, 1998 By: MIKE GALLAGHER and CAMERON McWHIRTER --------------------------------------------------------------------- Chiquita lost millions of dollars and hundreds of thousands of boxes of bananas, damaging relations with corporate customers worldwide because of a breakdown of its quality control operations in Honduras late last year. The problem contributed to Chiquita's 1997 fourth quarter losses of more than $56 million. Chiquita did not report the problem publicly, and it was not legally required to do so. Company officials did not say how much of the $56 million loss resulted from its Honduran problems. The fruit that was shipped from Honduras - one of Chiquita's largest operations in Central America - arrived overripe at its ports around the world and resulted in many customers' refusal to accept or keep the bananas. Chiquita's sales people today are still dealing with the aftermath of the problem as they try to persuade customers to accept once again the Honduran fruit, according to company records. Asked about the problem by the Enquirer, Chiquita responded through its attorneys that "the process of harvesting and shipping perishable products is a delicate one, and we carefully monitor quality at each stage of production. Nevertheless, temporary supply disruptions can occur in the produce industry." Internal, tape-recorded voice-mail messages of Chiquita employees obtained by the Enquirer showed the company lost business over the Honduran fruit problem. Chiquita stated to the Enquirer that it did not lose any customers because of the problems. The company's reputation was hurt with customers around the world. Chiquita Banana Group President Robert F. Kistinger chastised employees of Chiquita's main Honduran subsidiary, the Tela Railroad Co., because of their failures, according to Chiquita records obtained by the Enquirer. In a Nov. 5 voice-mail message to Benjamin Paz, a Chiquita official, Mr. Kistinger said: "To me, the bigger issue here is ... the total lack of discipline, the lack of responsibility, the lack of accountability on the part of the people in Honduras not to allow things like this to happen because it's just not right ... I'm prepared to make changes in Honduras. This type of behavior is just unacceptable." The ongoing Honduran fruit problem reached a crisis point in October and November when customers in Greece, Syria, Turkey, Canada and Russia either refused to accept or returned boxes of overripe Chiquita bananas. Chiquita had to negotiate a lower price for the bananas or look for other buyers for the problem fruit. In many cases, the company had to destroy hundreds of thousands of boxes of the worthless product, according to company records. After Cincinnati-based company officials threatened to replace their Honduran managers, the quality of the Honduran banana shipments began to improve in December and January, according to company records. Chiquita's efforts to stop the substandard fruit from being boxed in Honduras, regain customers and generally improve the quality of the Honduran fruit shipped to Europe, Canada and Russia has come with a large price tag, according to Mr. Kistinger and Jeff Filliater, a Chiquita marketing executive. First, Chiquita bolstered its quality-assurance program by putting high-level company employees on the Honduran docks to check each load of fruit before it was placed on company ships. Secondly, Chiquita's new efforts resulted in 70,000 to 100,000 boxes of bananas left rotting on Honduran docks each week because the fruit did not survive the greater scrutiny imposed by the company's Cincinnati officials. The cost to Chiquita for each box of unusable or returned bananas depends on its contracts with independent growers, time of year, quality of fruit, the company's own production costs, etc. Chiquita's cost per box averages between $5 and $7, sources said. Mr. Kistinger, in a Nov. 5 voice-mail message to Mr. Paz, said: "At the end of the day this has cost us a tremendous amount of money from the standpoint of our reputation in the marketplace once again with the Honduras fruit. And once again, no one ends up paying the piper is what it comes down to. "(This is a) process we have to stop and change because apparently no one is paying attention by slapping them on the wrist," he said. "And this is incredibly significant. It's in a short period of time involving a tremendous amount of fruit and some very key customers. You know and I know that you can deliver somebody good fruit for 20 weeks straight and then one or two bad weeks taints your whole reputation and that is what the Honduran division has successfully done." Providing examples of how serious the Honduran situation was, Taras Kowalczyn, a Chiquita logistics expert, told Arnaldo Palma, general manager of Chiquita's Honduran operations, in a Nov. 6 voice- mail message: "We (recently) had two shipments leave out of Honduras," Kowalczyn said. "The first shipment was going to the Med (Mediterranean) mainly to Turkey, Greece and Syria. The last shipment ... was going to St. Petersburg (Russia)." Referring to the Mediterranean shipment, Mr. Kowalczyn said, "Of the 136,000 boxes that were loaded for that ship we find approximately 23,500 boxes that were either destroyed, had claims (problems) on them or some other action ... "There were 6,900 boxes destroyed at the berth prior to even being sent to a customer. Primarily these were found to be in the very, very late stages of ripening ... Another approximately 16,500 boxes were, in fact, shipped to customers and we have found that since then customers are either calling in complaints, claims on these items or in turn just want to return them," he said. That represented 17 percent of the entire shipload, he added. Mr. Kowalczyn suggested a way to lessen Chiquita's financial losses on the returned fruit: "We could just try and send them to someone else to mitigate our losses." Describing the fallout over the problem fruit, Mr. Kowalczyn said, "Right now there is an issue that our customers have with Honduras fruit. Some of it's perception, some of it's based on the reality that ... the number of claims and complaints we've been getting on Honduras fruit has escalated proportionately week in and week out and (has) kind of hit a crescendo ..." And even though Chiquita has instituted tighter quality control measures on the Honduras fruit, Mr. Kowalczyn said the company's sales staff was having a hard time recouping past customers. Many customers said that they would only do business with Chiquita if they were guaranteed not to get Honduran fruit, he added. "The customers told our sales people ... they would rather go to the Del Monte's and Dole's of the world who have plenty of fruit in the marketplace and purchase it from them since they have very little confidence in the Honduras fruit," Mr. Kowalczyn said. The quality of Honduran fruit improved after the company criticized its Honduran employees and changes were made for stricter fruit inspections. But Mr. Filliater, the marketing executive, told Mr. Kistinger of ongoing problems in a Nov. 11 voice-mail message. "The major issue is that they're (Honduran workers) leaving behind (on the docks) somewhere between 70,000 and 100,000 boxes a week in Honduras right now," Mr. Filliater said, referring to the boxes of substandard Honduran fruit found unacceptable for shipment. A result of all that leftover problem fruit, he said, was that Chiquita packing stations were ordered to reduce cutting and boxing of bananas. Mr. Kistinger, in several voice-mail messages to company employees, including Chiquita's Honduran officials, pleaded for an effort to regain and maintain shipments of high-quality fruit. "We have to work together to regain what we have lost. This is a serious problem for all of us." (Copyright 1998) --------------------------------------------------------------------- Power, money & control; Chiquita SECRETS Revealed; "We can only fire him (Renaldo Escobar) with cause because of his involvement in the Colombian problem if we file a criminal charge against him with Colombian authorities. Clearly we would not want to do that because we would be implicating ourselves" - David Hills, Chiquita lawyer, discussing how to deal with a subsidiary company lawyer involved in a Colombian bribe scheme; Bribe scheme covered up Publication: Cincinnati Enquirer Date: May 3, 1998 By: MIKE GALLAGHER AND CAMERON MCWHIRTER --------------------------------------------------------------------- An Enquirer investigation has found that Chiquita made business decisions in Latin America to cover up a bribery scheme involving company and subsidiary employees, helped foreign growers try to evade taxes, and ran into tax problems. Corrupt activities committed by U.S. companies abroad may fall under the U.S. Foreign Corrupt Practices Act (FCPA). The act, passed in 1977, followed a series of international scandals in which American companies operating overseas were caught bribing foreign officials, paying kickbacks for contracts and committing other acts that would be illegal in the United States. The act prohibits United States companies or their employees from offering a bribe to influence a foreign government official's acts or decisions. The act also requires that U.S. companies maintain accurate records of their foreign operations. Bribery The bribery incident involved paying government officials in Turbo, Colombia, to help the company's Colombian subsidiary Banadex obtain use of a large government storage facility. Company records and high-level sources within the company described how, after learning of the scheme, company officials took action to hide it. U.S. Securities and Exchange Commission (SEC) investigators have issued subpoenas to Chiquita seeking documents reflecting how Chiquita obtained access to the Colombian government-owned storage space. Chiquita, through its lawyers stated, "Chiquita's policy is not to make illegal payments to any government officials." Sources told the Enquirer that two Chiquita executives have been forced to resign: Douglas Walker, vice president for operations, and Renaldo Escobar, a company lawyer in Colombia. Jorge Forton, a Chiquita executive in Medellin, Colombia, who is now in the United States, also is being forced to resign, but company officials, including Chiquita President and Chief Operating Officer Steven G. Warshaw, have allowed him to stay on temporarily while he seeks other employment in the U.S. High-level Chiquita sources said Mr. Escobar and Mr. Walker were given generous severance packages and have signed confidentiality agreements preventing them from discussing any company business, including the Colombian incident. After leaving Chiquita, Mr. Walker was hired by Corporex Companies, Inc. in Northern Kentucky. As part of Mr. Escobar's severance package, he has been hired as an outside lawyer in Colombia for Chiquita, company records revealed. One high-level Chiquita executive provided the Enquirer with recorded, internal company voice-mail messages to back up his information. Citing fear of losing his job and company retaliation, the executive requested confidentiality. Prior to leaving the company, Mr. Escobar, in a Dec. 13, 1997 voice-mail message to Chiquita lawyer Manuel Rodriguez, described how and why Banadex - Chiquita's Colombian subsidiary - became involved in the incident that included payments to Colombian customs agents. He also explained Chiquita's need to obtain the Colombian-owned storage facility. Mr. Escobar's message was spoken in Spanish and translated for the Enquirer. The customs area Chiquita was allowed to use after paying Colombian customs agents is both an enclosed and open area "in which the imported cargoes we bring in (to Colombia) are stored," Mr. Escobar said. "While the nationalization process takes place, we bring fertilizers, fungicides, etc., in pretty big amounts." The "nationalization process" is when cargo arriving in Colombia from other countries is kept stored at an indoor - outdoor facility controlled by Colombian customs officials. The cargo remains in the customs area until it is inventoried, recorded and all taxes are paid to the Colombian government. The customs agents then release the cargo so the company that owns it can deliver it to its operations in that country. "If we didn't have the customs (storage) area, we would have to ask a third party to give us the service of having this cargo in storage while the nationalization process happens," Mr. Escobar said. It would cost Banadex more than $1 million a year to obtain a similar storage facility for imported cargo during the nationalization process, he said. Responding to suggestions by Chiquita officials in Cincinnati that they may want to "shut down" the Colombian government storage operation due to concerns that the way that the use of the property was obtained would surface, Mr. Escobar, in his voice-mail message responded: "I'm afraid there's an excess of prevention in this, almost paranoia. I personally don't find it logical to shut down ours (storage operation) so a third party will give the service. It is better to leave it as is, or let it die by itself, but not using it, frankly, makes no sense to me." Discussing how payment was made to Colombian customs agents to secure the storage area, Mr. Escobar said: "What happened, remember Manuel, was that the company, for security reasons, delivered what had to be delivered to the customs agents, who gave it to a third party and this party to its final destination, which means a lot of time without being traced. "I see no risk, maybe one in a thousand, that this thing could mean that we are in trouble," Mr. Escobar said. "If whomever found about this inside the company decides to make a scandal out of it, that's another thing that you will be able to analyze better than me." In a Nov. 17, 1997 voice-mail message from Mr. Walker to Robert Olson, Chiquita's general counsel in Cincinnati, Mr. Walker confirmed the bribery issue as the reason he was leaving the company. In the message, Mr. Walker also expressed concern that other Chiquita employees were learning of it after promises the matter would be kept confidential. He said one of his best friends, a Chiquita finance executive, had asked him about gossip that he (Walker) was fired for being involved in a Colombian bribery scheme. Mr. Walker, Chiquita's vice president of operations, in his voice- mail message, said his friend had heard that "Jorge Forton and myself had been fired for bribing a Colombian official for a warehouse facility in Turbo. So he has it pretty close to accurate if not completely accurate." Noting that he had signed a confidentiality agreement with Chiquita prohibiting him from discussing the matter with anyone, Mr. Walker said in his voice-mail message: "So here I am by contract totally precluded from being able to address with my closest friends information they're hearing in the most mundane fashion through the office and obviously it's extremely disturbing to me, extremely frustrating to me, and I don't know what at this point you guys can do about it, but I hope you're able to do something." Mr. Walker did not return repeated telephone calls from the Enquirer. In a Dec. 10, 1997 voice-mail message to Mr. Olson and Chiquita President Warshaw, Chiquita lawyer David Hills described a conversation he had with outside lawyers in Colombia regarding Renaldo Escobar and the ways in which his employment could be severed due to the Colombian incident. Mr. Hills advised against firing Mr. Escobar because the only way to legally do that would alert Colombian authorities to the fact the bribery occurred. Additionally, he added, notifying Colombian authorities would publicly tie Chiquita to the bribe. Mr. Hills' message, in part, said, "We can only fire him (Escobar) with cause because of his involvement in the Colombian problem if we file a criminal charge against him with Colombian authorities. Clearly we would not want to do that because we would be implicating ourselves. So basically, the only thing we can ask Renaldo to do is to basically have a, we're basically asking him to resign, which doesn't put us in the best legal position." Chiquita, in a written response through its lawyers to the Enquirer, declined to discuss the Colombian incident, the resignations of the employees, or whether the company violated the U.S. Foreign Corrupt Practices Act. "Chiquita's 'Code of Conduct for Associates' requires employees to comply at all times with the laws that affect the company's business," the response said. "It is Chiquita's policy and consistent practice to take appropriate disciplinary action where employees fail to abide by this standard of conduct. Employment information, however, is strictly confidential. "Chiquita respects the privacy and personal interests of its employees. As a result, it is Chiquita's policy and practice not to discuss with the media - or anyone else - its relationships with particular employees or the circumstances in which a person may then leave the company's employment." Tax schemes Other internal documents indicate that Chiquita may have helped foreign brokers and banana growers evade or avoid taxes in their respective countries. For example, an Oct. 17, 1991, internal report marked "Confidential" from Marco A. Garcia, a former Chiquita financial analyst, to Mr. Hills, explained how Chiquita maintained financial records in Miami for the purpose of helping Ecuadoran growers, with whom it had contracts, evade taxes. The report detailed the growers' financial transactions with a Chiquita subsidiary called Agricola Del Guayas. Under a section called, "Purpose of Offshore Books - Miami account," it reads: "Competitive pressures. Growers want dollars offshore to evade taxes and to avoid converting to Sucres (Ecuadoran currency) at the official rate which is 5% to 8% less than the free market rate." In another case, a series of tape-recorded voice-mail messages among Chiquita lawyers, company executives and employees reveals Chiquita's plan to help a broker avoid paying taxes on an anticipated commission payment from the company. According to Chiquita records, a company called Corporacion Midori S.A. in San Jose, Costa Rica, was hired in 1996 to help sell some of Chiquita's Honduran and Colombian companies, land and equipment. Prior to agreeing to broker the sales deals, representatives of Midori and a Chiquita subsidiary called Chiquita Brands Inc., of Delaware, signed a contract to allow Midori to search for potential buyers and negotiate possible deals, according to Chiquita records. Midori then signed a similar contract with one of Chiquita's Colombian subsidiaries, the records show. Eugene Rodriguez, a Chiquita executive coordinating the Midori deal, told Chiquita officials in Cincinnati in an Oct. 11, 1997 voice-mail message that the company had agreed to pay Midori its commission "offshore" in "a deal where they don't have to pay taxes." In his voice-mail message to Mr. Hills, Mr. Rodriguez said: "Actually we asked the guys to provide a deal for us, an offshore deal. A deal where they don't have to pay taxes...They (Midori) didn't want to pay taxes. And we always said that they would have the payment offshore." A high-level source within Chiquita who was involved in the Midori payment scheme confirmed how the deal was arranged. An offshore account would be used to pay Midori so the Colombian government would not have access to any paperwork, such as invoices, etc., to prove how much, if anything, Midori would be paid for its commission, he said. But in early October, a problem arose after Midori negotiated the sale of a Chiquita banana operation in Colombia called Shangri-La. When Midori asked about its commission, experts in Chiquita's tax department in Cincinnati questioned whether Chiquita was legally obligated to withhold 35 percent in taxes from the commission per Colombian tax laws, according to several internal Chiquita voice-mail messages. To avoid jeopardizing the sale, Chiquita officials devised a plan to pay Midori its commission without withholding the Colombia- required tax. Midori had complicated the commission payment problem by signing a broker's agreement to sell Chiquita's Colombian property with both Chiquita Brands Inc. and its Colombian subsidiary, according to company records. That problem had to be overcome if Midori's commission was to be paid without withholding the Colombian tax, according to Mr. Hills in an Oct. 11 voice-mail message to John Ordman, Chiquita's senior vice president of finance, and others. To solve the legal dilemma, Chiquita officials came up with a plan to pay Midori its commission without taking out taxes. The plan was described in an Oct. 20, 1997 voice-mail message from Mr. Hills to Mr. Ordman. Chiquita would obtain every copy of Midori's contract with Chiquita's Colombian subsidiary. All copies of the contract would be sent to Cincinnati headquarters where officials would "annul it, kill it, mutually terminate it," said Mr. Hills. Chiquita wanted to hide the fact that Midori's commission was going to be paid offshore, according to an Oct. 20, 1997 voice-mail message to Mr. Hills from Scott Wittman, a Chiquita tax specialist. "We have consulted with counsel (and) gotten their input on this transaction. They feel that we have a position that we can take. It says because this agreement is between CBI (Chiquita Brands Inc.) and Midori that the withholding tax would not apply. "The one thing they caution us on is definitely do not include in the (land sale) agreement anything related to the brokerage commission and the fact that it is getting paid offshore. We obviously don't want to highlight that," Mr. Wittman said. Company records did not reveal the amount of the proposed land deal or the proposed broker's fee. At the last minute, Midori's deal to sell the Shangri-La property apparently fell through, according to a March 23 voice-mail message from John Ordman to Mr. Hills. Mr. Ordman said that more than five months after the Midori commission tax issue surfaced, Chiquita still owned and controlled the Shangri-La property. "It's not a perfect secret," Mr. Ordman said. "There are people who know that Chiquita owns Shangri-La. But it is not generally known in Colombia, and it's particularly not generally known among the popular groups, if you will, in Colombia. There is probably no place that I can think of that this company has more exposure to an easy $10 million loss than Shangri-La. If Shangri-La were to be invaded by squatters, or as you know, it is in a bit of a guerrilla-active area, it could really become extremely difficult to protect. We've had some near misses there in the past. It's one of the things that really keeps me awake at night." In a Chiquita response to Enquirer questions issued through its attorneys, the company stated that information provided to the Enquirer was false and that "any implication of wrongdoing on the part of Chiquita in connection with these alleged transactions is false." Chiquita further stated that "Chiquita has not sold the property referred to by the Enquirer and has not terminated any contract with Midori." Honduran tax problem Chiquita's main subsidiary in Honduras also has run into a tax problem there. In early 1997, the Honduran tax department completed an investigation of the Tela Railroad Co. to pay hundreds of thousands of dollars in asset taxes from at least 1992, according to Chiquita re-cords and Honduran officials. After unsuccessful attempts to get the company to pay, Honduran tax officials took their case against Chiquita's subsidiary to court, according to several voice-mail messages of Chiquita tax specialist David Hochwalt to Mr. Hills, Mr. Ordman and others. That action was confirmed for the Enquirer by Jorge Ramirez Mendoza, a Honduran tax department spokesman. In November, Chiquita "threw in the towel" and agreed it had, indeed, failed to pay asset taxes of 8.7 million lempiras (about $700,000 U.S.), since 1991, according to Mr. Hochwalt, in a Nov. 14, 1997 voice-mail message to Mr. Olson, Chiquita's general counsel and senior vice president. The company paid its disputed taxes in late November. To keep from paying an additional hundreds of thousands of dollars in penalties and interest on the unpaid taxes, Chiquita lawyers asked Honduran officials to eliminate those charges under a Honduran tax amnesty plan, according to Mr. Hochwalt In a statement issued through its attorneys, Chiquita said that the company's subsidiary and the Honduran government had "divergent views" on the taxes owed and the company was challenging the amount in court. The subsidiary eventually "elected to participate in a national tax amnesty program by paying the tax in dispute (about $700,000). Participation in the program eliminated the risk of interest or penalties that might have resulted if the (legal) challenges had not succeeded." "If whomever found about this inside the company decides to make a scandal of it, that's another thing that you will be able to analyze better than me." - Renaldo Escobar, a Chiquita lawyer, discussing the possible fallout from the Colombian bribery scheme Chiquita's problems with brokered land deal in Colombia Chiquita officials in Cincinnati approved hiring a San Jose, Costa Rica company to find buyers for the banana giant's non-core assets in Colombia and Honduras. Problems arose when the Costa Rican company - Midori - found a buyer for Chiquita's Shangri-La plantation in Colombia, but insisted its commission be paid off-shore as a way to avoid paying taxes. The land sale apparently fell through. Key Chiquita players Chiquita Brands International is the world's largest banana company, employing more than 36,000 workers and selling its fruit in 40 countries. The company deals in fruit juices, ready-to-eat salads, margarine, shortening, vegetable oils and canned food. But its signature product has always been the bright yellow banana that it bills as a "perfect" food. Carl Lindner, 79, self-made multi-millionaire , is Chairman and CEO of Chiquita Brands International. He took control of the company in 1984 . Keith Lindner, 38, made president and chief operating officer of the company in 1991. Later moved to the position of vice-chairman. Steven G. Warshaw, 43, president and chief operating officer of Chiquita Brands International Inc. (Copyright 1998) --------------------------------------------------------------------- POWER, MONEY & CONTROL; Chiquita SECRETS Revealed; "Both Chiquita and our government have assured us that Chiquita has nothing to do with COBALISA other than to make contracts with them to purchase their bananas." - Edgardo Zepeda, president of the Honduran banana workers union; Locals front for Chiquita Publication: Cincinnati Enquirer Date: May 3, 1998 By: MIKE GALLAGHER AND CAMERON MCWHIRTER --------------------------------------------------------------------- In addition to using interlocking trusts to hide control of Latin American companies, Chiquita has used a system in which local citizens are named as company shareholders but secretly sign over their shares in blank, thereby allowing the Cincinnati-based banana giant to exercise control. The company used this method to avoid restrictions of national security laws and limits on land ownership by foreigners, and to reduce political and union pressure. Called "nominee ownership," the system was first widely used by Chiquita in Honduras in 1990. It has since been spread by the company to operations in other Latin American countries, including Guatemala and Colombia, according to company records obtained by the Enquirer. A report entitled "Honduras operations, Legal Structure Description and Rationale" written in February 1992 by Chiquita's legal department to the company's lawyers and executives in Honduras, explained how the system worked. "The farms ... are set up with five Honduran nominees as owners, and with their shares signed in blank over to the Chiquita company." Signing shares in blank is analogous to a person endorsing a check without designating a payee. Under the Honduran civil law system, a nominee system may be illegal if the purpose or intent is to circumvent the law. However, no cases could be found in the Honduran legal system where this specific issue was decided in court. Chiquita arranged for a company called Compania Bananera Limitada S.A., (COBALISA) in La Lima, Honduras, to be the management - service company to handle personnel, cash flow, tax issues and other functions of the supposedly independent Honduran companies. Amilcar Castejon, a Honduran lawyer who was in charge of COBALISA's internal records, spoke openly to the Enquirer in February when he said Chiquita set up the farm companies and is hiding its control "to get rid of its Honduran labor union, which would save the company millions of dollars; hide its assets, because the country's agrarian law limits foreign ownership of agricultural land; and shield itself from liability for such things as worker lawsuits and child labor violations." Mr. Castejon said he was hired by Chiquita to oversee all COBALISA payroll and personnel records, time sheets, benefit reports and other internal financial and corporation records at COBALISA. Chiquita officials in Cincinnati declined to discuss COBALISA. Velmi de Irias, COBALISA's personnel director, denied any connection to Chiquita. However, documents ob-tained by the Enquirer list top COBALISA officials as employees of the Tela Railroad Co., Chiquita's primary Honduran subsidiary. The Enquirer also has obtained written correspondence and other company records identifying Jose Obregon, COBALISA's general manager, as a Tela employee, including a Jan. 22, 1997, letter with a Tela letterhead discussing COBALISA personnel matters. Mr. Obregon's paycheck also is paid directly out of Chiquita's Cincinnati headquarters, Chiquita records show. A high-level Chiquita executive provided tape recordings of company voice-mail recordings showing Mr. Obregon's connection to Chiquita in Cincinnati. The source told the Enquirer that he is one of several executives with authority over company voice-mails. He requested anonymity. In an April 6 message from Chiquita lawyer David Hills to Robert Olson, Chiquita's general counsel and senior vice president, Mr. Hills said: "Bob, Jose Obregon is the general manager of COBALISA in Honduras ... I looked into his HR (human resources) status and he is actually an employee of Chiquita Brands Inc. "He (Obregon) has had previous postings in Panama where he was the chief financial officer for (Chiquita's) Chiriqui Land Co. He was then sent to Honduras where he was, I believe, the chief financial officer of Tela before he became the general manager of COBALISA ... " Also, in an Oct. 25, 1997 message from Tela executive Ernesto Interiano to Mr. Hills, Mr. Interiano said: "Jose Obregon is not on Tela's payroll; he is being paid by Cincinnati. . . It is a direct payment between Chiquita headquarters and him. "And I want to confirm to you that Raul Schrunder, who is the person in charge of agricultural operations in COBALISA, is one of our employees, Tela's employee. He is, in fact, on our payroll." Chiquita officials refused to answer several Enquirer questions about the connection between Mr. Obregon, Chiquita and COBALISA, citing competitive reasons. The company response did state: "Chiquita has not violated the Honduran Agrarian Reform Law or the National Security provisions of the Honduran Constitution." Chiquita's control of COBALISA was unknown by the Honduran labor community, said German Edgardo Zepeda, president of Coordinadora de Sindicatos Bananeros de Honduras (COSIBAH), which coordinates unions that represent Honduran banana workers. "Both Chiquita and our government have assured us that Chiquita has nothing to do with COBALISA other than to make contracts with them to purchase their bananas," he said through a translator. How Chiquita's secret Honduran banana companies are structured Above: Chiquita officials in Cincinnati created a chart in 1993 to show how COBALISA - a management service company controlled by Chiquita - would manage some of its secretly controlled companies and farms located throughout Honduras. Right: This internal company document also reveals how Chiquita planned to control newly acquired farm land and companies. "The farms under this entity are set up with 5 Honduran nominees as owners, and with their shares signed in blank over to the Chiquita company. The nominee form of ownership has been the traditional method of setting up legal ownership of new farms." (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; 'How can you take money from a corporation . . . doing that kind of thing to perfectly good and totally innocent people?'; Catholic leader rips Chiquita; Cincinnati banana giant responds to Enquirer probe Publication: Cincinnati Enquirer Date: May 4, 1998 By: MIKE GALLAGHER and CAMERON McWHIRTER --------------------------------------------------------------------- In response to revelations about Chiquita Brands International's overseas business practices in Sunday's Enquirer, a prominent Catholic bishop has called on Catholic institutions not to accept donations from Carl H. Lindner Jr. or Chiquita. Chiquita, meanwhile, issued a statement Sunday defending itself "as a good corporate citizen notwithstanding the unfair and inaccurate assertions of the Enquirer." But Bishop Thomas Gumbleton, an auxiliary bishop of Detroit, said the Enquirer's findings reflect what he saw firsthand on Chiquita farms he visited in Honduras last year. A member of the U.S. Catholic Conference's Social Justice Committee, Bishop Gumbleton is an internationally known spokesman and investigator for the Catholic Church on human rights and social justice issues. The Catholic Conference is the social policy arm of the National Conference of Catholic Bishops. On Sunday, Bishop Gumbleton called for Catholic leaders to reject donations from Chiquita and Mr. Lindner, the company's chairman and chief executive officer. He said such gifts involved "blood money earned off the backs of the poor peasants of Central America." The bishop made his comments after reading the Sunday Chiquita stories on the Enquirer Web site. In the 18-page special section Sunday, the Enquirer described the findings of a yearlong investigation into the Cincinnati-based banana giant. Among those findings: Chiquita secretly controls dozens of supposedly independent banana companies in Latin America. It uses elaborate business structures to hide its control, avoiding restrictions on land ownership and national security laws. The structures also are aimed at limiting unions on the farms. Chiquita's subsidiaries engage in pesticide practices that endanger the health of banana workers and nearby residents, despite an agreement with an environmental group to adhere to certain safety standards. Those practices include aerial pesticide spraying while workers are still in the fields. Security guards of Chiquita subsidiaries and their joint-venture partners have used brute force to enforce their authority on plantations. The violence by these guards has resulted in the death and wounding of unarmed peasants, including children. Chiquita is "an evil institution for exploiting the poor," Bishop Gumbleton said. "I saw (people) living in a dismal situation. What I would ask the Catholic leaders of Cincinnati and elsewhere is 'How can you take money from a corporation or . . . (a chairman) of a corporation who is doing that kind of thing to perfectly good and totally innocent people and depriving them of a chance to get a decent livelihood?' " In October, Mr. Lindner and his family donated $1.5 million to the Archdiocese of Cincinnati to provide computers for inner-city Catholic schools. Efforts to reach Cincinnati Archbishop Daniel E. Pilarczyk and archdiocese spokesman Dan Andriacco were unsuccessful Sunday. Telephone calls to Mr. Lindner and Steven Warshaw, president and chief operating officer of Chiquita Brands International Inc., were not returned. Robert Olson, Chiquita's general counsel, spoke with an Enquirer reporter but would not say whether the company would issue a statement in response to Bishop Gumbleton's comments. Bishop Gumbleton said the 2,000-mile distance that separates Chiquita's banana farms and its Cincinnati headquarters is no excuse for allowing the problems in Latin America to continue. "It doesn't take a big effort for Carl Lindner to go down there and just find out what's going on at his plantations. "I don't believe that a person like Carl Lindner is the only corporate leader in this country doing this kind of thing," he said. "But the evidence uncovered by (the Enquirer), and what I have personally observed, makes it clear that he and his company must make changes to protect the very lives of the people who made them so wealthy." Chiquita Brands statement On Sunday, May 3, the Cincinnati Enquirer published a sensational and highly inaccurate story impugning the reputation and business practices of Chiquita Brands International. Chiquita is known globally as a leading international producer of wholesome and healthy foods and as a good corporate citizen - investing in local communities, building schools and improving the quality of life for tens of thousands. We are proud of the success we have had in providing benefits and wages in Latin America that far exceed those available from other jobs and protecting the environment in a manner that has earned praise from the most prominent independent environmental organizations. Chiquita is proud of its work and denies the false implications of the Enquirer's article. The information contained in the Enquirer's story was selectively edited, incomplete and presented out of context and portrays a false and highly inaccurate image of Chiquita. Chiquita and other independent sources made extraordinary efforts to provide facts and documents which demonstrate the true record. Unfortunately, the Enquirer ignored the hundreds of pages of documents detailing the facts regarding Chiquita's sound business practices. Instead, the Enquirer has affiliated itself and worked in concert with persons having financial, political and economic motives to damage Chiquita. Chiquita adheres to the highest standards of product quality and social responsibility, applying world-class standards regarding associate relations, product quality and environmental controls. Chiquita will continue to meet its obligations as a good corporate citizen notwithstanding the unfair and inaccurate assertions of the Enquirer. On the Web The complete text of the Enquirer's investigation into Chiquita Brands International Inc. can be accessed at the Enquirer's Web site: enquirer.com - chiquita (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; European official calls for Chiquita probe Publication: Cincinnati Enquirer Date: May 5, 1998 By: CAMERON McWHIRTER and MIKE GALLAGHER --------------------------------------------------------------------- A member of the European Parliament on Monday called on a European Union commission to look into Enquirer reports that Chiquita Brands International Inc. is involved in a wide range of questionable business practices in Latin America. The EU's Commission on Agriculture is the 15-nation European Union's lead agency in dealing with the banana industry. On Sunday, the Enquirer published an 18-page section detailing the overseas operations of Cincinnati-based Chiquita. Those operations include secret control of supposedly independent banana companies, a bribery scandal in Colombia and the buying of political influence with campaign contributions. "It just makes me very angry," said Glenys Kinnock, member of the European Parliament for Wales. "We've just been to the commission now and met with the director general about this. They are very keen to see these stories. They are not very happy with Chiquita." Mrs. Kinnock has been a longstanding opponent of Chiquita's efforts to roll back EU banana protections. Those protections, in place since 1993, favored small banana growers from former European colonies in Africa and the Caribbean. But those protections have hindered sales for Chiquita, the largest banana provider to Europe. Mrs. Kinnock made her remarks on the opening day of the International Banana Conference, a gathering of banana producers, environmentalists, governments and union groups concerned about problems in the industry. The three-day gathering in Brussels, capital of the EU, has drawn more than 300 delegates from 44 counties to discuss issues from pesticide use, to market protections, to corporate codes of conduct. Delegates also include scientists, major banana distributors, industry consultants and a representative of a chemical company. Most of the world's major banana companies have sent representatives, including Dole, Del Monte and the Irish banana company Fyffes. Chiquita sent no delegate, though a public relations firm that has represented the company in Europe has sent an observer. Government representatives are here from the United Kingdom and several other members of the European Union and Costa Rica. The U.S. trade representative's office was invited to send a delegate, but as of Monday, no U.S. representative had registered. Ralph Ives, deputy assistant U.S. trade representative and point man on banana issues for the Clinton administration, did not return calls Monday seeking comment on the United States' absence from the conference. Mrs. Kinnock told the Enquirer she wants the European Union Parliament's legal services division to investigate the newspaper's findings. The issues are of interest here because the U.S. trade representative's office, in support of Chiquita, has led efforts to overturn the EU banana restrictions. Among the Enquirer findings: Chiquita acquired land in Latin American countries for expanded banana production - even though those nations' laws prohibit and - or limit Chiquita from directly buying property. Employees of Chiquita and a subsidiary were involved in a bribery scheme in Colombia that has come to the attention of the U.S. Securities and Exchange Commission. Chiquita Chairman and Chief Executive Officer Carl H. Lindner Jr., his family and associates made legal, but controversial contributions to political figures at a time the company desperately sought U.S. backing in the trade dispute over the EU banana restrictions. European and Caribbean critics of President Clinton's support for Chiquita's position have pointed to large campaign donations that Mr. Lindner has made to the president and the Democratic Party. The United States, working closely with Chiquita, has carried the case to the World Trade Organization (WTO), an international body set up to mediate trade disputes. The WTO has ruled that the EU protections run counter to the principles of global free trade, and must be altered. The EU Council, a body of ministers that serves as the organization's executive branch, is expected to submit an alternative plan to the WTO in June. In addition to Mrs. Kinnock, Philip Lowe, the EU's director general for development, said he also was looking into the newspaper's findings. Claire Godfrey, policy adviser of Oxfam International, a British charity organization concerned with hunger in the developing nations of the world, has long been a supporter of the EU protections and said the information published in the Enquirer puts the U.S. trade office on shaky ground" in the EU trade dispute. "If the U.S. or the Latin Americans want to take the case back to the WTO in June, I think their credibility is going to be weakened," she said. Ron Oswald, secretary general of the Geneva-based International Union of Food and Agricultural Workers, which represents more than 3.6 million dues-paying members worldwide, said the findings provide insight into how some global companies operate in the 1990s. "The concept of trying to create virtual companies, that control only marketing and strategy, and therefore can wash their hands of all responsibility of what happens on the ground, is becoming quite common," he said. "The structure of ownership is obviously extreme in the Chiquita case." He said his union takes the position that companies should not be able to hide ownership at the expense of employees in the developing world. "I think that as soon as a company makes money out of an arrangement, I don't care how complex or clever the ownership structure they set up, they have a social responsibility." Chiquita criticizes use of tapes The following statement was issued Monday by Chiquita Brands International: Yesterday, Chiquita denied the highly inaccurate account in the May 3 Cincinnati Enquirer regarding the Company's business practices. In so doing, the Enquirer virtually ignored Chiquita's record of providing among the most competitive wages and benefits of any major employer in Latin America, of being a major engine of progress, building roads, schools and hospitals and, and of being singled out for praise by independent environmental groups for its progressive policies. The Enquirer based its article on selective, out of context voice mail messages that were stolen from private voice mail boxes of Chiquita employees. Steven G. Warshaw, Chiquita's President and Chief Operating Officer, said: 'We at Chiquita are shocked by the Enquirer's admission that it obtained more than 2,000 messages containing confidential, privileged and proprietary information that was stolen from the private voice mail boxes of Chiquita employees. This behavior raises serious moral and legal questions. We doubt that any citizen of Cincinnati is comfortable with a newspaper thinking it appropriate to obtain stolen private voice mail messages, much less selectively and inaccurately publishing them. Newspapers are supposed to guard against Big Brother, not be Big Brother.' Enquirer responds In response, Enquirer President and Publisher Harry M. Whipple issued the following: As explained in Sunday's package of stories, The Enquirer's investigation into Chiquita's business practices was supported by multiple sources inside and outside the company, and by extensive documentation. The documentation includes the executives' own words contained in copies of taped voice-mail messages. Copies of these tapes were provided to Enquirer reporters by a high-ranking Chiquita executive, who was one of several with authority over the company's voice-mail system. These voice-mail messages were essentially internal memoranda. The source, who requested confidentiality for fear of retribution, also provided the same tapes to the Securities and Exchange Commission, which has launched its own investigation. The Enquirer stands by its stories. We are proud of them. (Copyright 1998) --------------------------------------------------------------------- Pilarczyk defends accepting donation; Detroit bishop calls such Lindner gifts 'blood money' Publication: Cincinnati Enquirer Date: May 5, 1998 By: MIKE GALLAGHER and CAMERON McWHIRTER --------------------------------------------------------------------- Cincinnati Archbishop Daniel Pilarczyk on Monday defended his acceptance of a $1.5 million donation from Carl H. Lindner Jr. and his family after a prominent Catholic bishop characterized it as "blood money." Archbishop Pilarczyk said through a spokesman that he thought it was all right to accept the Lindner money despite a call by Detroit Auxiliary Bishop Thomas Gumbleton for Catholic institutions to refuse such donations because Mr. Lindner is chairman and chief executive officer of Chiquita Brands International. Bishop Gumbleton said Chiquita earns its money "off the backs of the poor peasants of Central America" where bananas are produced. Bishop Gumbleton is a member of the U.S. Catholic Conference's Social Justice Committee. His statement was in response to revelations in Sunday's Enquirer about Chiquita's Latin American business practices. Those findings included aerial spraying of pesticides while workers were still in the fields; brute force used on peasants by guards on banana plantations; and failure to adhere to established health and safety standards for workers. "The Archdiocese of Cincinnati was aware last fall that concerns of social justice were being raised in conjunction with the operations of Chiquita Brands International," Archbishop Pilarczyk said in a statement issued through spokesman Dan Andriacco. "Those concerns were considered by the archbishop before he decided to accept the gift of $1.5 million from members of the Carl and Edith Lindner family, which controls Chiquita. On the basis of the information available, there seemed no reason to refuse the gift. "The money from the Lindner family is being used to fund computer technology and equipment for seven inner-city Catholic schools serving 1,327 children, 75 percent of whom are black; 70 percent of whom are non-Catholic and 64 percent of whom have family incomes below the poverty level." The archbishop declined to speak directly with the Enquirer for this story. When asked whether the archbishop had any additional concerns about Chiquita based on the Enquirer's report, Mr. Andriacco responded: "Sure it raises concerns. There were many, many allegations raised by the Enquirer and denied by Carl Lindner, and we are not in a position to choose between the two." (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Scrutiny of Chiquita widens Publication: Cincinnati Enquirer Date: May 6, 1998 By: CAMERON McWHIRTER and MIKE GALLAGHER --------------------------------------------------------------------- The president of the union representing banana workers in Honduras said Tuesday his union will investigate Enquirer findings that Chiquita Brands International Inc. set up secretly controlled companies in Honduras to undermine union membership and pay lower wages. In separate actions, representatives of Costa Rica and France said their governments have begun looking into findings contained in an Enquirer report that was published Sunday. Additionally, the director of a coordinating group for all of Central America's banana unions said he was calling on the Honduran government to investigate Chiquita's secret business practices "that have now been exposed by The Cincinnati Enquirer." The new calls for investigations of Chiquita echo that of European Parliament member Glenys Kinnock. Mrs. Kinnock, a member of the European Parliament from Wales, on Monday called on the European Union commission to investigate Chiquita. On Sunday, the Enquirer published an 18-page section detailing questionable business practices of Cincinnati-based Chiquita. Those included secret control of supposedly independent banana companies, the cover-up of a bribe in Colombia and the buying of political influence with campaign contributions. Chiquita has challenged the Enquirer findings, saying the reports were based on "selective editing" and were "inaccurate and misleading." The government and union officials made their statements while attending the International Banana Conference, a gathering of banana producers, environmentalists, governments and union groups concerned about problems in the industry. The three-day gathering in Brussels, capital of the EU, has drawn more than 300 delegates from 44 countries to discuss issues from pesticide use, to market protections, to corporate codes of conduct. Chiquita and the U.S. trade representative's office have not attended the conference despite being invited. Ralph Ives, deputy assistant U.S. trade representative and the administration's point man on banana policy, said he was not attending because of a scheduling conflict. "There will be a major reaction to this," said Juan Funes Estrada, 40, president of Sindicato de Trabajadores de la Tela Railroad Company (SITRATERCO), the union representing Chiquita workers in Honduras. The Tela Railroad Co. is Chiquita's main subsidiary in Honduras, though the company is incorporated in Delaware. The union is the largest in Honduras and one of the largest in Central America, with 5,600 members. "We have always suspected that the company wasn't being fair with us, but now we have the confirmation," Mr. Funes said, speaking through a translator. He was referring to Chiquita documents and quotes from Chiquita officials in internal voice-mail messages that were provided to the Enquirer by a confidential source. German Edgardo Zepeda, director of Coordinadora de Sindicatos Bananeros de Honduras (COSIBAH), a coordinating group for all of Central America's banana unions, said that the Honduran government will have to take some kind of action on the Enquirer findings. He said his organization will demand investigations by the Honduran government. "The government is bound to react," he said through a translator. "It has to clarify these issues to get to the bottom of this." Meanwhile, a Costa Rican delegate here said his government is going to review the Enquirer findings as well. Carlos Rojas, a member of the Costa Rican delegation and a former minister of agriculture, said he did not want to comment yet on the Enquirer stories until the review is concluded. Jean Louis Bonicel, who heads the agricultural department for the French government's Ministry of Overseas Territories, said his office had also begun a review of the findings. The French government has long opposed U.S. efforts on behalf of Chiquita to overturn European trade protections. These protections benefit small banana growers in Africa and the Caribbean, but hurt Chiquita, which is Europe's largest importer. Chiquita officials did not respond to Enquirer requests for comment Tuesday. According to the Enquirer report, Chiquita set up structures to avoid the restrictions of Honduran land ownership and national security laws as well as to limit or eliminate unions on its plantations. This system included trusts being set up in the Channel Islands and Liechtenstein, two well-known European tax and trust havens, and in Honduras with the involvement of large Honduran banks. Another form of control was the formation of farm companies involving five trusted Honduran citizens with ties to Chiquita subsidiaries. These Honduran citizens were made shareholders of the farm companies. But once those companies were established and shares issued, the shares were signed in blank and then given to Chiquita. Chiquita has used similar legal structures in other Latin American countries, including Colombia and Guatemala. One company involved in these schemes was Compania Bananera Limitada S.A., (COBALISA) which is based in La Lima, Honduras, headquarters of Chiquita's Honduran banana operations. "The truth is, we didn't know about COBALISA," said Mr. Funes, who also lives in La Lima. "We knew it existed as a company, but (COBALISA officials) kept it very secret and said they were independent and said they had nothing to do with Chiquita." Mr. Funes said he thinks Tela may have violated its contract with the union. "I plan to discuss this with my board as soon as I get back (to Honduras)," he said. Mr. Funes said SITRATERCO could take several actions, including calling for national strikes, lawsuits or public campaigns with the help of other unions around the world. He said the union, if it determines the Enquirer findings are true, will lodge a complaint with the United Nations and the International Labor Organization (ILO), a world body dealing with employees' rights. He also said the issues will be raised at the union's contract negotiations with Tela, set for August. Mr. Funes said Tela had launched a program several years ago with the slogan that translates from Spanish, "Together is Better," a plan that is supposed to promote company - union cooperation. These latest findings, he said, make it clear Tela and Chiquita are not interested in doing anything "together with the union." "We don't trust them at all," he said. (Copyright 1998) --------------------------------------------------------------------- Chiquita secrets revealed; Colombia to investigate bribe scheme Publication: Cincinnati Enquirer Date: May 8, 1998 By: MIKE GALLAGHER and CAMERON McWHIRTER --------------------------------------------------------------------- The Colombian government has launched an investigation into reports that employees of Chiquita Brands International Inc. and its Colombian subsidiary were involved in the bribery of customs agents to obtain storage space at a government-owned compound. Officials at the Colombian Embassy in Washington, D.C., also confirmed they will ask U.S. Securities & Exchange Commission (SEC) investigators to provide copies of tape-recorded voice-mail messages of employees of Chiquita and its Colombian subsidiary detailing the bribe scheme and efforts to cover it up. The tapes were provided to the Enquirer and to the SEC by a high- level Chiquita source with authority over the company's voice-mail system. Chiquita President and Chief Operating Officer Steven G. Warshaw disputed this week that anyone had such authority. Those tapes, if released by the SEC to Colombian investigators, will be used in the Colombian government's own bribery probe, according to Alfonso Lievano, commercial adviser of the Foreign Trade Ministry's Colombian Government Trade Bureau in Washington. The SEC has begun a formal investigation of Chiquita and its subsidiaries on a wide range of topics, including the Colombian bribery scheme and hidden control of supposedly independent companies in Latin America, according to company and SEC sources. SEC investigators served multiple subpoenas on Chiquita in April seeking documents, voice-mail messages, reports, memos, etc., in connection with its probe of the Cincinnati-based banana giant, according to SEC sources. The information also was confirmed in voice-mail messages of Robert Olson, Chiquita's general counsel, and other company officials. The Enquirer also has been provided voice-mail messages linking one of Chiquita's lawyers - Manuel Rodriguez - to an effort to cover up the bribe scheme to prevent Colombian and U.S. officials from connecting the banana company to the illegal act. "Yes, we are investigating all this and it is a very serious matter," said Mr. Lievano. "It is also a most delicate matter but one that must be looked into. We will be asking the SEC for those records (voice-mail tapes)." Also confirming the Colombian probe was Fidel Cano, the Colombian Embassy's press attache. "My government will want answers to what is going on in this matter with Chiquita. This will all be looked into." The Colombian authorities said they learned of the alleged bribe scheme after the Enquirer published an 18-page special section Sunday describing the findings of a yearlong investigation into questionable business practices by Chiquita. The bribery incident involved paying customs agents in Turbo, Colombia, to help Chiquita's Colombian subsidiary Banadex obtain use of a large government storage facility. The Enquirer detailed the bribery scheme in its Sunday report. The voice-mail tapes and high-level Chiquita sources described how, after learning of the scheme, company officials took action to hide it. The tapes reveal that two company executives have been forced to resign: Douglas Walker, vice president for operations, and Reinaldo Escobar, a lawyer for Chiquita's Banadex subsidiary. Jorge Forton, a Banadex executive in Medellin, Colombia, also is being forced to resign, but company officials, including Mr. Warshaw, allowed him to stay on temporarily while he sought other employment in the United States, according to the tapes. High-level Chiquita sources, and the voice-mail messages, show Mr. Escobar and Mr. Walker were given generous severance packages and signed confidentiality agreements preventing them from discussing any company business, including the Colombian incident. Mr. Forton also signed a confidentiality agreement, the tapes show. After leaving Chiquita, Mr. Walker was hired by Corporex Cos. Inc. in Northern Kentucky. As part of Mr. Escobar's severance package, he has been hired as an outside lawyer in Colombia for Chiquita, company records revealed. One high-level Chiquita executive provided the Enquirer with the voice-mail messages to back up his information. Citing fear of losing his job and company retaliation, the executive requested confidentiality. Mr. Walker, in a Nov. 17, 1997, voice-mail message to Mr. Olson, confirmed the bribery issue as the reason he was leaving the company. In his message, Mr. Walker said a friend had told him that he heard "Jorge Forton and myself had been fired for bribing a Colombian official for a warehouse facility in Turbo. So he has it pretty close to accurate if not completely accurate." Mr. Escobar, in a Dec. 13, 1997, voice-mail message to Mr. Rodriguez, said Colombian custom agents were paid so Banadex could use the government compound for storage, thus saving the company more than $1 million in private storage costs at the Colombian port. Discussing how payment was made to Colombian customs agents to secure the storage area, Mr. Escobar said: "What happened, remember, Manuel, was that the company, for security reasons, delivered what had to be delivered to the customs agents, who gave it to a third party and this party to its final destination, which means a lot of time without being traced." Mr. Walker, Mr. Escobar and Mr. Forton declined repeated Enquirer requests for comment. Mr. Cano, the Colombian Embassy press attache, said the Colombian government "does not lease or rent space" at its custom facilities - including Turbo - to private companies such as Chiquita. "That is strictly for use by our government." Mr. Rodriguez, in an Oct. 16, 1997, voice-mail message to John Ordman, Chiquita's senior vice president of finance, described what sparked the company officials' decision to offer the three men incentives to resign in lieu of being fired. Mr. Rodriguez's message was in Spanish and was translated for the Enquirer. "Hey, John Ordman, there was an article in El Tiempo newspaper (in Colombia) where it was reported that ten custom officials were arrested for alleged corruption and paybacks," Mr. Rodriguez said. "It is important that you know this because apparently there has been several others, 30-60 custom people were arrested and are being investigated and will obviously make statements against other officers and it is going to come to light regarding all types of corruption." Mr. Rodriguez then discussed why it would be a good idea to allow Mr. Escobar to resign and give him a Chiquita consulting contract instead of fining or firing him for his involvement in the Colombian incident. "We have to give him that consulting contract for many reasons, but the other additional point is that if Reinaldo questions this action, we would have to prove (his) termination to the (Colombian) authorities, which means that we have to reveal the fact that the payment was made and try to justify the firing. "This has legal repercussions, but in addition, it has greater political repercussions," he said. "Particularly . . . given that (Colombian President Ernesto) Samper wants to make an example against the multinationals, and what a better time than to declare war on Chiquita over this point. This would have international repercussions . . . Therefore, it is a very delicate issue. "Let me tell you that the same situation can be made in relation to Walker and Forton. If they decide to fight this (forced resignation) I don't see that we have any other option. Up to a certain point we're risking that possibility." Chiquita lawyer David Hills, in a Dec. 10, 1997, voice-mail message to Mr. Olson and Mr. Warshaw, also advised against firing Mr. Escobar, because the only way to legally do that would alert Colombian authorities to the fact the bribery occurred. Additionally, he added, notifying Colombian authorities would publicly tie Chiquita to the bribe. Mr. Hills' message, in part, said, "We can only fire him (Escobar) with cause because of his involvement in the Colombian problem if we file a criminal charge against him with Colombian authorities. Clearly we would not want to do that because we would be implicating ourselves. So, basically, the only thing we can ask Reinaldo to do is basically have a, we're basically asking him to resign, which doesn't put us in the best legal position." Chiquita, in a written response through its lawyers to the Enquirer, declined to discuss the Colombian incident, the resignations of the employees or whether the company violated any U.S. laws. The company response did say, "Chiquita's 'Code of Conduct for Associates' requires employees to comply at all times with the laws that affect the company's business." Corrupt activities committed by U.S. companies abroad may fall under the U.S. Foreign Corrupt Practices Act (FCPA). The act, passed in 1977, followed a series of international scandals in which American companies operating overseas were caught bribing foreign officials, paying kickbacks for contracts and committing other acts that would be illegal in the United States. The act prohibits U.S. companies or their employees from offering a bribe to influence a foreign government official's acts or decisions. The act also requires that U.S. companies maintain accurate records of their foreign operations. The SEC and the U.S. Justice Department have responsibility for investigating reports of FCPA violations. (Copyright 1998) --------------------------------------------------------------------- Chiquita SECRETS Revealed; Stockholders sue Chiquita over reports; Three separate lawsuits charge mismanagement Publication: Cincinnati Enquirer Date: May 9, 1998 By: MIKE GALLAGHER and CAMERON MCWHIRTER --------------------------------------------------------------------- Three stockholders of Chiquita Brands International Inc. have filed separate lawsuits against the company and its board of directors, saying they violated their duties by engaging in illegal acts, gross mismanagement and abuse of corporate control. Shareholder Helen Bondy filed her lawsuit Thursday, while Hal Bloomberg and Anne Shapiro filed theirs Friday. No addresses were provided in the court papers for the three stockholders. Ms. Shapiro's lawyer said she lived in Putnam County, N.Y. None could be reached for comment. Wording of the lawsuits, filed in Hamilton County Court of Common Pleas, was virtually identical. Named as defendants were Chiquita and all seven members of the board: Carl H. Lindner Jr., chairman and chief executive officer; Keith E. Lindner, vice chairman; Fred J. Runk, director; Jean Head Sisco, director; William W. Verity, director; Oliver W. Waddell, director, and Steven G. Warshaw, director, president and chief operating officer. The three lawsuits recount questionable business practices revealed in an 18-page section in Sunday's Cincinnati Enquirer. They allege that the board of directors violated its "fiduciary responsibilities" to protect the company, its assets, reputation, and its shareholders' investments. They claim that Chiquita and its directors were involved in, permitted, or should have been aware that company employees engaged in activities such as: The bribing of Colombian government officials to obtain access to a state-owned warehouse facility in violation of the U.S. Foreign Corrupt Practices Act. Routinely conducting aerial spraying of hazardous and toxic pesticides on its banana crops while unprotected workers were in the fields. Endangering the lives and health of employees by the misuse of pesticides and the emission of toxic fumes from a Costa Rican factory run by a Chiquita subsidiary. Maintaining a system to routinely rotate workers from one subsidiary to another to deprive them of benefits and prevent them from organizing in unions. Circumventing existing labor agreements by closing farms and employing foreign military forces to raze long-standing villages over the protest of local residents and international human rights organizations. Assisting companies with which it does business to avoid tax obligations. Creating an international trust structure to circumvent foreign nations' land-ownership and national security laws. "No reasonable individual could have believed that the company was justified in failing to monitor and impose adequate mechanisms and safeguards and to investigate and correct the misleading, deceptive and illegal practices," Ms. Bondy's lawsuit stated. The lawsuits, called derivative complaints, state that Chiquita directors, by failing to halt illegal and improper actions by company employees, left shareholders vulnerable to extensive financial losses through potential lawsuits and state and federal investigations. The lawsuits also cite the possibility that an ongoing U.S. Securities and Exchange Commission investigation into Chiquita's business practices could lead to substantial fines, court-ordered sanctions and criminal prosecution. Any or all of those things would harm and diminish the shareholders' investments, the suits state. "The company has engaged in illegal activities, its corporate assets have been wasted, the value of its common stock has been adversely affected, the company has been and will continue to be subjected to litigation as a result of the wrongful conduct alleged, and the company has lost credibility, its reputation has been damaged, and its ability to be competitive has been seriously undermined," Ms. Shapiro's lawsuit alleges. Chiquita officials did not respond Friday to Enquirer questions about the lawsuits. The lawsuits were filed on behalf of the shareholders by Richard S. Wayne and William K. Flynn of the Cincinnati law firm Strauss & Troy. Each shareholder also has retained New York lawyers. Efforts to reach Mr. Wayne and Mr. Flynn were unsuccessful. Stanley M. Grossman, the New York lawyer representing Ms. Shapiro, told the Enquirer Friday that the "extensive and well-documented" newspaper articles, along with additional information obtained by the attorneys, prompted the quick legal action. "It sounds like a very serious situation at Chiquita and there is just no reason to wait when this information is currently available," Mr. Grossman said. "Hopefully, these lawsuits will prompt some corrective action by the (Chiquita) board." Mr. Grossman said "it is still being decided" whether Ms. Shapiro will attend Chiquita's annual stockholders' meeting in Cincinnati on Wednesday. Arthur N. Abbey, the New York attorney representing Ms. Bondy, and Marian P. Rosner, the New York attorney for Mr. Bloomberg, could not be reached for comment. (Copyright 1998) --------------------------------------------------------------------- Environmental group loosens pesticide standards; Chiquita SECRETS Revealed Publication: Cincinnati Enquirer Date: May 13, 1998 By: CAMERON McWHIRTER and MIKE GALLAGHER --------------------------------------------------------------------- The environmental partner of Chiquita Brands International Inc. issued pesticide standards Tuesday that loosen restrictions to conform to Chiquita's existing pesticide practices. In a two-page statement issued in response to questions by the Enquirer, the New York-based Rainforest Alliance stated that its rules prohibit banana plantations from using pesticides that are banned by the U.S. Environmental Protection Agency (EPA) or the European Union. These rules are less re- strictive than previously pub- +1l lished alliance standards. The statement comes a week after the Enquirer published a special section May 3 on Chiquita's business practices. The newspaper reported that Chiquita subsidiary farms used several pesticides in violation of stated alliance policy. In documents provided earlier to the Enquirer, the alliance stated in its "General Production Standards" for its Better Banana program that certified farms can "only use products that are registered for use in the United States, Canada and Europe." To be banned by the EPA or the European Union means a chemical cannot be used anywhere in the world on produce shipped to the United States or Europe, a restriction that must be adhered to by food importers according to U.S. and European law. But the alliance's previously issued "General Production Standards" held producers to a higher standard. If a chemical is not registered for use in the United States, it cannot be used on farms in the United States but may be used on produce being shipped from overseas. The list of banned chemicals is far shorter than the list of chemicals not registered by the EPA or authorized by the European Union. The Enquirer reported May 3 that several pesticides on Chiquita's own list of approved chemicals were not registered for use in the United States, Canada or one or more nations of the European Union, in contradiction to stated Rainforest Alliance policy. Those pesticides included bitertanol, sold as Baycor, a pesticide that Chiquita and its subsidiaries use in aerial spraying. Both the company that manufactures the product as well as the EPA stated that bitertanol is not, and never has been, registered for use in the United States on bananas or any other crop. Under the standards released Tuesday, pesticides used by Chiquita subsidiaries that were in violation of the previous rules are now permitted. Since 1993, the Rainforest Alliance and Chiquita have worked on the ECO-O.K. - Better Banana program, an environmental certification designed to assure protection for workers and the environment on Costa Rican farms of Chiquita's subsidiaries, Compania Bananera Atlantica Ltda. (COBAL) and the Chiriqui Land Co. The program, originally called "ECO-O.K." but later changed to "Better Banana," has since expanded to Chiquita subsidiary farms in Panama and Colombia. Of 81 Latin American farms involved in the program, 74 are Chiquita subsidiaries. The farms pay for the alliance's certification process. Eric Holst, New York coordinator of the alliance's Better Banana program, would not commment on the statement issued Tuesday, except to say that it had been approved by Chiquita. Joseph Hagin, Chiquita's vice president for corporate affairs, did not return calls Tuesday. The alliance statement made no reference to an Enquirer finding that Chiquita also conducts aerial spraying of banana farms while the workers are in the fields - another violation of the alliance's environmental policy. In a story published May 3, the Enquirer reported that workers are exposed to pesticides through aerial spraying on Chiquita subsidiary farms in Costa Rica - and all these farms are certified under the Better Banana program. The newspaper quoted workers on Chiquita subsidiary farms. For that story, Mr. Holst told the Enquirer, "We require that workers have protection from the application of chemicals. That clearly is a violation." The Enquirer also published statements from tape recordings made from internal Chiquita voice-mail messages in which company officials discussed that Chiquita subsidiaries are conducting aerial spraying while workers are in the fields. Those tapes were provided to the Enquirer by a high-level source in Chiquita's Cincinnati headquarters. In the United States, aerial spraying while workers are in the fields is banned by the EPA. EPA spokeswoman Denise Kearns said the EPA will, on rare occasions, allow an individual dressed in full safety gear to "flag" for a crop-dusting airplane, but all other workers are removed. Asked why the EPA had such regulations, Ms. Kearns said "because of the acute reactions to pesticide applications of this kind and also over time, you have all kinds of chronic effects that creep up for the workers, so we simply don't permit it," she said. (Copyright 1998) --------------------------------------------------------------------- Chiquita backed at annual meeting; Banana giant defends practices, blasts Enquirer Publication: Cincinnati Enquirer Date: May 14, 1998 By: URSULA MILLER and MARK SKERTIC --------------------------------------------------------------------- More than 400 shareholders and employees turned Chiquita Brands International Inc.'s annual meeting Wednesday into a testimonial to the Lindner family and the Cincinnati-based banana company. The outpouring of support, which included a standing ovation for Chiquita Chairman and Chief Executive Officer Carl H. Lindner Jr., followed a May 3 investigation of the company by the Enquirer. That report revealed questionable overseas business practices including bribery, hidden control of farms, environmental problems and political influence. "We reject the outrageous allegations reported by the Enquirer," Chiquita President and Chief Operating Officer Steven G. Warshaw told shareholders and employees at the meeting at the Omni Netherland hotel downtown. "You cannot imagine the moral outrage of Chiquita associates in this room and around the world," he added. Enquirer Editor Lawrence K. Beaupre declined to comment on any specific criticism Wednesday, except to say: "The Enquirer's stories were highly detailed and fully documented." Mr. Warshaw wrapped up the regular business portion of the meeting in less than 15 minutes. He then took a few moments to say Chiquita expects improved profits in its core banana business this year. But the bulk of his remarks - 20 minutes of the 55-minute meeting - were spent denouncing the Enquirer's reporting as "tabloid journalism" and "atrocious misrepresentations." Though Mr. Warshaw adamantly defended Chiquita's business practices, he did say he "couldn't guarantee" the honesty of each of the company's "40,000 associates in 50 countries." He added that Chiquita disciplines employees who disobey company policies. Mr. Warshaw also attacked the newspaper for publishing the contents of internal Chiquita voice-mail messages. A high-level source within Chiquita provided the Enquirer with tape recordings of more than 2,000 voice-mail messages. Mr. Warshaw said the tapes were "stolen." The Enquirer has reported that its source also has turned copies of the tapes over to U.S. Securities and Exchange Commission (SEC) investigators. In April, the SEC launched an investigation into the company's business practices and issued multiple subpoenas for internal Chiquita records. Mr. Warshaw did not mention the SEC investigation during his speech. However, talking to reporters after the meeting, he said the company is cooperating with the investigation. At the conclusion of his remarks, Mr. Warshaw opened the floor to questions from shareholders. A half-dozen shareholders or friends of the company spoke. Only two asked questions. The others lambasted the Enquirer and praised Chiquita for its contribution to Cincinnati's economy and the Lindner family's charitable donations. Mr. Warshaw was the only company executive who discussed official business at the meeting. Mr. Lindner thanked the audience for the standing ovation. Keith Lindner, the elder Lindner's son and vice chairman of Chiquita, briefly offered his appreciation for the shareholders' support. Meanwhile, on the sidewalk outside the Omni, more than 30 protesters demonstrated against Chiquita. Several badgered Mr. Lindner as he pulled up to the hotel in his white Bentley. "Hey, Carl, stop killing the workers," one of the protesters gathered along Race Street shouted at the 79-year-old businessman. Mr. Lindner ignored the man and questions from local media as he walked into the hotel. The group was hoping to send a message to shareholders, said Scott Campbell, a North Avondale resident. "They call themselves good corporate citizens, and they've certainly done a lot for Cincinnati," he said. "But being a good corporate citizen involves more than that." A second group of protesters arrived while the meeting was in progress to demand the Enquirer take a hard look at its practices. Unlike the anti-Chiquita crowd, which was mostly dressed in jeans and carried homemade signs, those supporting the banana company came dressed in business suits or white shirts and dark slacks. The signs they carried had been printed by a computer and all carried the same message: "Enquirer ought to investigate their own unethical business and union practices." Among the findings of the Enquirer's May 3 report: Chiquita secretly controls dozens of supposedly independent banana companies through business structures designed to avoid restrictions on land ownership and security laws in Central American countries. Chiquita and its subsidiaries are engaged in pesticide use that threatens the health of workers and residents at the company's Central American banana plantations, despite an agreement with an environmental group to adhere safe practices. Authorities seized more than a ton of cocaine from seven Chiquita ships in 1997. The company was unaware and didn't approve of the cocaine shipments, but the problem was traced to lax security on its Colombian docks. Employees of Chiquita and a subsidiary were involved in a bribery scandal in Colombia. (Copyright 1998) ---------------------------------------------------------------------