How to Become a Top Banana

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Banana pricing wars also took a toll, but even more telling, the company ran up its long-term debt so that cash payments for interest charges spiraled from $52.6 million in 1990 to $164.3 million in 1993. Even if Chiquita sales had reached the level the WTO said they would have in the absence of European restrictive policies, the company still would have recorded losses or, at best, a marginal profit. As a Wall Street investment analyst who tracked the banana industry put it in 1992, "we have serious doubts about the abilities of management to deal with the company's problems."

Over the 15 years ending in 1998, with the Lindners in control, Chiquita tallied total sales of $45 billion but profits of only $44 million. That's the equivalent of a $10,000 investment that returns 65[cents] a year. Not surprisingly, the company's stock is now trading at less than $5 a share.

In an SEC filing last December, a minority shareholder of Chiquita's reported that the Lindners were pondering an auction to sell off Chiquita. All of which may explain the money trail the Linders left behind in Washington.

Throwing Money at the Problem
Lindner, a nonsmoking, nondrinking, nonswearing Baptist, has been a major supporter of the Republican Party, its candidates and causes. This may account for the less than enthusiastic response that Lindner received when he first took his banana case to the Clinton Administration early in 1993. In fact, at that time the U.S. Trade Representative's internal memos show that bananas were a low priority for the U.S. government. What's more, USTR and State Department officials had given--and would continue to give--repeated assurances to leaders of Caribbean governments that the U.S. supported European preferences for their bananas. And not without good reason. Everyone was fearful that islanders unable to grow and sell bananas would turn to a much bigger cash crop--drugs.

It was against this background that in June of that year, Keith Lindner, then president of Chiquita and one of Carl's three sons in the family businesses, wrote a "Dear Ambassador" letter to Mickey Kantor outlining concerns over Europe's import restrictions. There was little response.

That December, Carl Lindner contributed a quarter of a million dollars to the Democratic National Committee, establishing himself as a generous supporter of both political parties.

Through the early months of 1994, the Lindner lobbying juggernaut concentrated on building congressional support to pressure the Clinton Administration into action. From January to August, lawmakers of both parties bombarded Clinton and Kantor with letters demanding action.

Among the more strident and persistent correspondents were Bob Dole, who would eventually campaign for the presidency aboard Lindner's corporate jet, and John Glenn, who counted Lindner as a campaign contributor.

In January, Dole and Glenn, along with Senator Richard Lugar, wrote to the President calling for "sustained interventions" with European Union officials to make clear that export quotas and licensing "are not an acceptable solution." By August, Dole and Glenn demanded that Kantor initiate a so-called 301 investigation. The name comes from a section of the 1974 trade law that gives the USTR authority to investigate foreign trade practices and impose tariffs in retaliation.

On Sept. 13, Dole arranged a breakfast meeting with Kantor and Lindner. A day later, according to an internal USTR memo, Kantor and his staff had a follow-up meeting with Lindner and his colleagues to discuss "possible strategies" to overturn the European quotas.

Over the years, the USTR has averaged only about five 301 investigations annually. Even rarer are cases in which the USTR has recommended punitive tariffs on the imports of the offending nation. The Chiquita case was rarer still--an instance in which the complaining company was not even a U.S. exporter. Two USTR staff members acknowledged this in a memo to Kantor on Oct. 13, 1994, saying that "if initiated, this investigation would break new ground, as this would be the first time that USTR had ever used Section 301 in connection with a product not exported from the United States but from elsewhere." Nonetheless, the staff members said "we have been persuaded by Chiquita that the practices here do have a significant effect on U.S. commerce." Lawyers for other U.S. corporations disagreed strongly. Natalie Shields, tax and trade counsel for Black & Decker, later captured the logic of the USTR decision this way: "This would inflict substantial harm on one U.S. company in an effort to benefit other U.S. companies which export bananas from third countries."