Reference no: EM131508289

Activity: Blood Bananas

Chiquita Brands was one of the largest produce growers and distributors in the world with multi-billion dollar sales. Its most profitable international subsidiary, Banadex, (which specialized in bananas) was located in Colombia, a country filled with violent turmoil. The United Self Defense Forces of Columbia (AUC) approached Banadex proposing to provide Banadex with "protection" services against potential threats to its workers and property. In reality, the AUC was a Colombian paramilitary organization that posed a violent threat to Banadex, and the proposal was nothing more than a form of extortion to "protect" Banadex workers and property from attack by the AUC.

Chiquita had to decide whether or not to accept the extortion and pay the AUC its demands for "protection." Three Banadex options are provided including paying the AUC's demands, refusing to pay the demands but maintaining operations, or exiting the country altogether.

Chiquita decided to pay the AUC for its security services. Over the next four years, Banadex paid the AUC over $800,000. While no apparent services were ever rendered, there were also no reports of Banadex employees being harmed. In 2001, however, the situation changed. On September 10, 2001, the U.S. State Department declared the AUC a Foreign Terrorist Organization (FTO) and on October 31, 2001 a Specially Designated Global Terrorist (SDGT). The designations were well-publicized in the American public media as well as in the public media in Colombia. These designations for the AUC meant that it was now illegal for any U.S. company to have business dealings with the AUC.

Chiquita Brands now had another decision to make: continue the payments in violation of U.S. law, or stop the payments and risk the safety of its employees. For the past four years, the arrangement had apparently been working well, and if the payments stopped, the risk of reprisal from the AUC was likely.

In addition, since the U.S. Government was unaware that Chiquita had paid the AUC more than $800,000 in the past four years, did the firm's management have an obligation to disclose the payments?

What should Chiquita do now?

Your paper should address the following issues. Your Activity responses should be both grammatically and mechanically correct and formatted in the same fashion as the Activity itself. If there is a Part A, your response should identify a Part A, etc. In addition, you must appropriately cite all resources used in your response and document them in a bibliography using APA style. (A minimum of 4 pgs. response is required.)

Part A: What are the primary issues that Banadex should consider in responding to the AUC? Include the following.

1. Ethical Dimensions

2. Employee Welfare Dimension 

3. Financial/Business Dimension 

4. Social Responsibility Dimension   

Part B: Considering all of these varying dimensions, how should Banadex respond to the AUC's proposal?

Part C: Would the amount that AUC is requiring of Banadex impact its decision?