159. Briefing Memorandum From the Assistant Secretary of State for Inter-American Affairs (Rogers) to Secretary of State Kissinger 1

Honduras: United Brands

You should be aware that the SEC has discovered that Eli Black of United Brands (formerly United Fruit) promised a $2.5 million bribe to the President of Honduras for his settlement of the company’s tax problem and an extension of its concession—this, just before Eli Black jumped out of the window. $1.25 million has been paid to a Swiss account. The SEC is insisting on disclosure in the company’s forthcoming financial statement.

We are organizing ourselves for the crunch, when and if this becomes public.

Carl Maw is advised, but otherwise the information is closely held—so far.

Attachment

Paper Prepared by the Assistant Secretary of State for Inter-American Affairs (Rogers)2

Undated.

UNITED BRANDS PAYMENT TO HONDURAN OFFICIALS

The 1974 payment of a $1,250,000 bribe by United Brands to officials of the Government of Honduras (probably the Chief of State) in connection with a tax dispute broke this afternoon.

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The SEC uncovered the payment in the course of its review of the company’s operations following the suicide of its Chief Executive Officer, Eli Black, in January. The company pleaded with the SEC to allow it to keep the matter confidential. However, the Wall Street Journal got wind of the story and is preparing to publish it today (Wednesday). Upon learning that the Wall Street Journal has the story, United Brands has decided to put the facts out in a press release Tuesday—and the SEC will accordingly suspend trading in the stock today.

This will probably destroy the Chief of State of Honduras, and trigger a strong reaction against United Brands in Honduras and in other countries where it operates. And the revelations will hardly help the general image of American multinational corporations abroad.

United Brands asked us to intercede with the SEC to keep the information confidential. We refused. United Brands also asked us to approach the GOH. We refused this too.

—United Brands is a U.S. company growing bananas in Honduras and other Latin countries.

—Its President, Eli Black, bribed the President of Honduras to settle a tax dispute a year ago, before he, Black, jumped out of the window.

—The story is in the Wall Street Journal. The SEC will suspend trading in the stock, and the President of the country will probably have to resign.

—The Department just learned of the bribe. It refused to help cover it up.

  1. Summary: Rogers informed Kissinger that United Brands had paid a $1.25 million bribe to the Honduran Chief of State, noting that this revelation would likely bring down the Honduran Government and damage the image of U.S. corporations overseas.

    Source: National Archives, RG 59, Central Foreign Policy File, P760175–0717. Confidential; Eyes Only. Drafted by Rogers on March 28. In telegram 1204 from Tegucigalpa, April 1, Ambassador Sánchez stated the repercussions of the bribery revelations were “likely to be serious and damaging to company, GOH and USG.” (Ford Library, National Security Adviser, Presidential Country Files for Latin America, Honduras—State Department Telegrams, To Secstate—Nodis) In telegram 1584 from Tegucigalpa, April 22, the Embassy reported on the Honduran military leadership’s removal of López as Chief of State; he was succeeded by Col. Juan Alberto Melgar. (National Archives, RG 59, Central Foreign Policy File, D750140–0912)

  2. Source: Ibid., P760175–0718. Confidential; Nodis. Drafted by Rogers.