Ethics and stakeholder management in organizational contexts

Ethics and Stakeholder Management

Chiquita is a leading brand in the international market, but their existence has not been without turmoil. The latest is the one caused by their confession to having financed terrorist organizations in Columbia in exchange for protection on the plant's farms. The United States Court fined the company for $25 million, but they still face criminal charges in Columbia, where the families of terrorism victims sued them for having supported illegal operations and having been conspirators to acts of terrorism and the deaths of many innocents. "This is a landmark case, maybe the biggest terrorism case in history. In terms of casualties, it's the size of three World Trade Center attacks" (Al Jazeera, 2007). This paper focuses on presenting the details of the ethical dilemma surrounding the payments to terrorist organizations in Columbia.

Relevant Facts

The ethical dilemma is in its essence based on different interpretation of the same situation. To ensure an objective look at the case however, one has to consider the hard facts underlying it. In this line of thoughts then, it is a fact that historically, Chiquita had encountered legal and moral challenges. It is also a fact that the company changed its direction and supported social responsibility initiatives and the economic growth of the region in which it operated, through the creation of jobs and the increase in the population's living standards. Another fact is given by the politically unstable scene in Columbia, in which compromises had to be made in order to ensure safe business operations. Also, it is a fact that two attacks had occurred and tens of Chiquita employees were killed. The final facts are that the Chiquita managers did offer payments to the terrorist organizations in Columbia, but they also willingly confessed their blame in front of the United States authorities and assumed the consequences of their actions.

3. Root Problem

Chiquita is today facing the repercussions of its actions. The generator of all problems was their acceptance of paying down several terrorist organizations. The payments occurred throughout a period of seven years (from 1997 up to 2004) and totaled an estimated $1.7 million. A primary recipient of the Chiquita Funds was the United Self-Defense Forces of Columbia, which received funding from 2001 up until 2004 (Carroll and Buchholtz, 2008). However the dilemma is far more complex, the root cause of the situation in which Chiquita is today is given by their acceptance of financing the terrorist organization in their destination country.

4. Problem Components

As stated in the previous section, the problem is far more complex than revealed by the simple statement of the root cause. A primary component is given by the past negative reputation of Chiquita, which still casts the shadow of doubt upon the organization. Another component is given by their decision to operate in a region which possessed several comparative advantages, such as rich natural resources and a cost-effective labor force. The third component is the downside of the region - lack of properly implemented legislation and safety measures. As a result then, terrorist organizations 'made the law' and forced business entities to operate by their rules. The direct effect of all these forces was the acceptance from the part of Chiquita to make payments to the terrorist organizations and ensure the safety of its employees.

The first set of problem components are directly linked to the national context in Columbia and the actions and reactions of the company operating in the region. The second set of problem components belong to the international context and is based on the United States' decision to punish all institutions subsidizing terrorist organizations. When they became informed of this decision, the officials at Chiquita came clean to the U.S. authorities. They signed a plea bargain with the District Attorney's office, according to which Chiquita would pay a fine of $25 million (Carroll and Buchholtz, 2008).

5. Generating Alternatives

The company was faced with the need to make a decision at four crucial points in time. The first time alternatives were generated was when the organization decided upon the future operations. The first alternative would have been not to expand the company, but maintain it at its respective levels. The second alternative was to expand the operations within the United States and the third alternative would have been that of expanding the operations in other global regions.

The second problem which required the need to generate alternatives occurred with the opening of the plant in Columbia. At this time, becoming informed of the political instability in the region and the demands of the terrorist organizations, the company management could have chosen to pay the money requested by the paramilitary organizations, or not pay this money.

The third moment for generating alternatives occurred with the enforcement of the U.S. legislation which punished all economic agents that funded terrorist organizations. At this stage, the Chiquita officials could have chosen to come clean to the U.S. authorities on their actions, or keep them secret. Finally, the fourth time which generated the need for alternatives was the moment when the company's management was once again forced to decide on the organizational future - should they remain in Columbia or should they exit this region?

6. Evaluation of Alternatives

Just the generation of the alternatives, their analysis is required at the four distinctive points in time. When first deciding the future of the company, the alternative of keeping the respective levels would have fostered no opportunities for growth and development. If the company decided to expand their business within the United States, the costs of such an endeavor would have been significantly higher relative to an expansion to a foreign region, richer in resources and more cost-effective.

The first alternative when faced with the political instability and the demands of the paramilitary organizations in Columbia would have implied that the company financially supported the illegal operations of groups such as the AUC (Spanish acronym of the United Self-Defense Forces of Columbia) and become the moral author of violent acts. On the other hand, the second alternative would have implied that the organization takes the risks of having their employees killed.

When informed of the new American legislation, the Chiquita managers could have chosen to not declare their funding operations to the Columbian terrorist organizations. This would have probably resulted in the continuance of the current operations, without the knowing of the U.S. officials. It could have also further deepened the problem and created more matters of concern if (and when) at a given time in the future, the U.S. authorities were to become aware of the Chiquita funding. The second alternative, coming clean and accepting the consequences, would have implied financial and moral capital loses.

Finally, once the dice had been rolled, the institution could have continued to operate in Columbia in order to avoid further financial loses, or could have exited the region in order to become detached from the situation created and try to salvage its reputation.

7. Chosen Alternative

At the first point in time, the managerial team at Chiquita decided to expand their business into a foreign region that would offer richer resources and a more cost-effective approach. Then, once in Columbia, they decided to give into the pressures of the AUC and other similar organizations and offer them financial resources in exchange for protection. Third, with the implementation of the new American legislation, the company decided to come clean and confess their operations, with the risks of facing loses. Finally, the managers at Chiquita decided to close down their plant in Columbia, even when this implied additional loses.

8. Implementation Plan

The series of decisions presented in the previous section led to the occurrence of today's situation, where the company has to pay a $25 million fine and rebuild its reputation. The most adequate course of action in achieving this desiderate is based on the following steps: