184:, followed by another $ 1.25 million the next year. The money was to be put in a Swiss bank account. The operation was managed via the Honduran Minister of the Economy, Abraham Bennaton Ramos. After the bribe the Honduran tax was reduced from fifty cents to twenty-five cents per box. This caused the UPEB cartel to collapse. This reduction saved United Brands Company about $ 7.5 million in tax payments. In addition it was discovered that United Brands Company had paid another $ 750,000 in bribes to an Italian official to prevent restrictions on United's banana exports to Italy, beginning in 1970. The SEC determined that none of the bribes could have been paid without the knowledge and approval of Black. While it was not illegal at the time for US companies to bribe officials, it was illegal for companies to hide such bribes from their stockholders.
46:. Its aim was to achieve better remuneration from the North American banana trade oligopoly, which consisted of three US companies. UPEB's proposal of an export tax was undermined by the U.S. oligopoly bribing Honduran and Italian officials. The UPEB cartel collapsed when bribes became public. What is referred to as the Bananagate scandal paved the way for the U.S. Congress to create the 1977
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On May 1, 1975, Costa Rica passed a law to raise the tax on banana exports from 25¢ to $ 1 per 40-pound box. The decree stated that 45¢ of each tax dollar would go to the government and the other 55¢ to subsidize independent banana growers. United Brands' local subsidiary, the Costa Rican Banana Co.,
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UPEB proposed an export tax of one dollar for every forty-pound box of bananas exported. The companies protested and threatened to withdraw their operations. There was also a glut on the world banana market and
Ecuador, the leading producer, refused to enact the tax. Former
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was the only major exporter of bananas to the United States which did not join. The market for banana exports to Europe at this time was quite separate, with mainly former
European French and British colonies in the Caribbean supplying European countries.
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United Brands
Company also admitted that it had tried to convince the SEC that the bribes should be kept secret, on the ground that disclosure would hurt the company and its stockholders. The company's Washington law firm,
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When the bribe was revealed, it provoked the overthrow of the military government in
Honduras and this in turn led to the nationalisation of United's railways along with a major divestiture of land by the companies.
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then filed a $ 3 million suit against the government in April 1975, stating that the export levy violated a government guarantee not to tax the company until its contract with the government expired in 1988.
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In 1974, Honduras passed a law to raise the tax on banana exports from 25¢ to 50¢ per 40-pound box. Honduras had supplied more than 22% of United Brands
Company exports in 1974.
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spent by North
Americans on bananas went to producing countries. At the time the banana trade was highly concentrated with only three US companies participating:
180:(SEC) investigated Black's suicide, it uncovered a scandal that was named "Bananagate". United Brands had paid a $ 1.25 million bribe to Honduran President
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Since its formation, the Union of Banana
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to intervene, arguing that news of the
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that if there were any more threats, the company would pull out of Costa Rica. Costa Rica dropped its demand to 25¢ a crate.
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or UPEB) was a cartel of
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137:'s property should be nationalized if the companies refused to pay the tax.
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Pauly, David; Rich Thomas (21 April 1975). "The Great Banana Bribe".
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Totally Bananas: The Funny Fruit in American History and Culture
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Graham, Robert (17 February 1990). "A modern banana republic".
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Cartel of Central and South American banana exporting countries
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study had concluded that no more than seventeen cents of each
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Inevitable Revolutions: The United States in Central America
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Women sorting bananas and cutting them from bunches.
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458:International trade organizations
355:Facts on File World News Digest
280:. University of Hawaii Press.
255:. W. W. Norton & Company.
141:threatened the new president,
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48:Foreign Corrupt Practices Act
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453:History of Central America
372:. Transaction Publishers.
416:. Duke University Press.
276:Boyce, James K. (1993).
247:Lafeber, Walter (1993).
326:. Xlibris Corporation.
322:Fox, Dennis N. (2002).
190:Covington & Burling
128:President of Costa Rica
182:Oswaldo López Arellano
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194:U.S. State Department
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108:United Brands Company
448:Tropical agriculture
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228:References
149:Bananagate
118:, and the
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64:Costa Rica
18:Bananagate
174:Manhattan
164:In 1975,
120:Del Monte
80:Nicaragua
72:Guatemala
58:In 1974,
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216:See also
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60:Colombia
68:Ecuador
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