- Edgardo Zepeda, president of the Honduran banana workers union
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)
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