The U.S. Securities and Exchange Commission’s investigation of Eli M. Black’s suicide led to the discovery of a system of corporate bribes and the downfall of Oswaldo López Arellano, the president of Honduras.
On February 3, 1975, Eli M. Black, former rabbi and the chief executive officer of United Brands Company, began his day in a seemingly routine manner. He packed his briefcase, received the morning papers, and left his Park Avenue apartment in New York City to meet his driver, James Thomas, for his usual ride to work. Upon arriving at his office, Black locked the doors to the reception area and to his own office, both from the inside. He then used the briefcase, filled with heavy books rather than the usual working papers, to break the window of his forty-fourth-floor office in New York’s Pan Am building. He cleared away some shards of glass from the broken window, tossed the briefcase through the window, and watched it fall to the street. Moments later, at 8
Suicide[01540]
Eli M. Black.
In the meantime, Black’s driver parked the car and returned to Black’s office, finding the doors locked. Black did not answer his phone, so Thomas broke into the office. He immediately went to the broken window and looked down upon the body of his employer, whom he identified for the police. Black was only fifty-three years old, apparently happily married with two grown children. He left no suicide note. His family had not noticed anything unusual in his behavior the day before his death. Early responses to his death suggested that the stress of working in the corporate world led to his suicide.
United Brands, however, had been low on cash and was under pressure to sell one of its enterprises to increase liquidity. Black had successfully negotiated the sale of Foster Grant to a West German chemical company, a sale announced the day after his dramatic plunge. In 1968, Black had bought a significant number of shares of the
United Fruit had a long protectionist history of meddling in the politics of the sovereign nations of Central America in particular. In 1911, United Fruit sponsored an invasion of Honduras, whose government had blocked the company’s development efforts. The most egregious political act of the company was its support for the Central Intelligence
In 1973, seven Latin American nations created the Union of Banana Exporting Countries and demanded a tax of one U.S. dollar on every box of bananas. Though the tax plan was not implemented, in part because Ecuador declined to enact the tax, Honduras did enact a tax of fifty cents per box in 1974. The money from the banana tax was intended to support economic development in Honduras and more agrarian reform, but the new fees would have cost United Brands millions of dollars. In 1974, Hurricane Fifi destroyed 70 percent of United Brands’s Honduran banana crop.
Black’s suicide triggered an investigation of his company by the U.S. Securities and Exchange Commission (SEC). Such an inquiry was standard practice in the case of an unusual death. The SEC uncovered evidence of a $2.5 million dollar bribe of Honduran president Oswaldo López Arellano to lower the per-box tax. The president reduced the tax to twenty-five cents with future incremental increases. (Of the bribe money, $1.25 million had been paid to a Swiss bank account prior to Black’s suicide and the remaining $1.25 was never paid.)
The SEC charged United Brands with concealing the $2.5 million dollar bribe as well as paying over $750,000 to Italian officials beginning in 1970 to prevent restrictions on imports of bananas to Italy. United Brands initially denied the existence of a bribe, then admitted it but asked the SEC to keep the bribes secret to avoid harm to stockholders and the company. The company law firm even requested intervention by the U.S. State Department, arguing that the investigation would harm the relationship between United Brands and Honduras. The State Department declined and the investigation went forward. In Honduras, the United Brands branch office announced that it had no knowledge of the bribe. A special commission of the government of Honduras prohibited middle- and high-ranking officials from leaving the country during the investigation.
President López Arellano was removed from office on April 22, 1975, by military coup. Abraham Bennaton Ramos, his minister of economy, was charged with negotiating, and perhaps receiving, the bribe and was likewise removed from office. A number of United Brands stockholders sued the company in an attempt to force reimbursement of the money lost in the bribes. Public trading of United Brands stock was suspended.
Black’s suicide signaled the end of an era of corporate influence that had begun during the late nineteenth century with the happy marriage of Minor C. Keith
To protect its assets and forward company interests, United Brands financed the invasion of Honduras, assisted with the Bay of Pigs invasion, supported the overthrow of Árbenz Guzmán of Guatemala, provided favorable media coverage for Honduras in its war with
Although no one from United Brands was incarcerated as a result of the SEC investigations, the company’s stock value plummeted along with its reputation. In its earlier history, United Brands could count members of the State Department as friends and supporters. In 1975,
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Chapman, Peter. Bananas: How the United Fruit Company Shaped the World. Edinburgh, Scotland: Canongate, 2007. Originally published as Jungle Capitalists, this work begins with Black’s suicide then investigates the power plays and deceits of a company that affected policy and politics in several countries. Argues that United Fruit’s (Brand’s) actions contributed to the rise of the powerful and the downfall of governments. -
Cole, Robert J. “More Stockholders Suing United Brands on Bribery.” The New York Times, April 12, 1975. Newspaper report on the continuing financial problems of United Brands that was published shortly after Black’s suicide. -
Kilborn, Peter T. “Suicide of Big Executive: Stress of Corporate Life.” The New York Times, February 14, 1975. An analysis of Black’s suicide that seeks to answer the question of why business professionals would take their own lives. Argues that career stress is the trigger. -
McCann, Thomas. On the Inside: A Story of Intrigue and Adventure on Wall Street, in Washington, and in the Jungles of Central America. Rev. ed. Boston: Quilan Press, 1987. Part memoir of the author’s years in public relations, part history of United Fruit/Brands, and part travelogue. -
Soluri, John. Banana Cultures: Agriculture, Consumption, and Environmental Change in Honduras and the United States. Austin: University of Texas Press, 2005. History of the banana industry and its effects on local, national, and international politics. Includes discussion of the Black and the Bananagate scandal.
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