Banana Republic

BY SALLY GALLAGHER

Last March, the Chiquita corporation – best known for their trade in bananas – was forced to fork out a 25 million dollar fine for making illegal payments to right-wing paramilitaries in Colombia. Not that surprising a development from the type of company that created the term “banana republic” with policies that force governments in developing countries to act as their puppets.
A Chiquita board member disclosed the payments to a top official at the United States Justice Department, and even when the payment contravened US legislation, the company was never advised by US authorities to put an end to their relationship with the right-wing groups. This merely confirmed the widely held view that for the US administration economic interests will win every time.
On 24 April 2003 Roderick M. Hills, a board member of Chiquita International Brands, met Michael Chertoff, a former law firm colleague then working for the Justice Department, to claim that his company was making business in a manner that was breaking the country’s anti-terrorism laws.
Chertoff was told that Chiquita was paying “protection money” to right-wing paramilitary group AUC in Colombia. The AUC was at the time listed by the US Government as a terrorist organisation.
Hill knew that any such payments were illegal, but insisted he wanted Chertoff’s advice because the US Corporation would have to pull out of the country if it could not continue to pay to secure its banana plantations.
Chertoff confirmed that the payments were illegal, but also allegedly recommended waiting for more feedback before stopping them. Chertoff at the time was US Assistant Attorney General. Today, he is Secretary of Homeland Security.
Three sources confirmed that Chertoff promised to get back to the company after checking with national security advisers and the State Department about larger ramifications for US interests if the corporation pulled out of Colombia overnight. However, to this day, Chertoff has not come back to the company. Neither has Larry D. Thompson, the Deputy Attorney General, who was contacted by the company after Chertoff left his job to become a federal judge in June 2003. Allegedly Chiquita kept funding right-wing dead-squads in Colombia for another year.

Criminal probe
Now that these payments are the matter of a criminal probe, the company has already pleaded guilty to making $1.7 million in payments to the United Self-Defense Forces of Colombia (AUC), and it agreed to pay a $25 million fine. But at the end of July lawyers for the former Chiquita executives sent letters to the Justice Department, asserting that their clients did not intentionally break the law but believed they were waiting for an answer from the highest levels of the Bush administration.
Chiquita International’s lawyer in this case, Eric H. Holder Jr, said he is concerned that company leaders who chose the difficult path of disclosing the corporation’s illegal activity to prosecutors are now facing the possibility of prosecution.
“If what you want to encourage is voluntary self-disclosure, what message does this send to other companies?” asked Holder, who was deputy attorney general in the Clinton administration.
“Here’s a company that voluntarily self-discloses in a national security context, where the company gets treated pretty harshly, [and] then on top of that, you go after individuals who made a really painful decision.”
Chertoff, through spokesman Russ Knocke, refused to discuss the case.
“I’m declining all comment, because there is an investigation ongoing,” Knocke said.
Justice Department spokesperson Dean Boyd also declined to comment on the details, citing the pending criminal probe. But he stressed that any company has a responsibility to comply with the law.
But legal sources on both sides say there was a genuine debate within the Justice Department about the seriousness of the crime of paying AUC. For some high-level administration officials, Chiquita’s payments were not aiding an obvious terrorism threat such as al-Qaeda; instead, the cash was going to a violent South American group helping a major US company maintain a ‘stabilising’ presence in Colombia.

United Fruit
The prosecution first centred solely on Cincinnati-based Chiquita, the world’s largest banana producer and one of its largest food-distribution companies. It has operations in 70 countries and 25,000 employees, and has been in Colombia for more than a century, dating to the days when the company was called United Fruit.
Historically, the United Fruit Company was responsible for sponsoring corrupt governments in Latin America and, most notoriously, for causing a coup in Guatemala in the 1950s to stop the redistribution of the company’s idle land among small farmers.
Starting in 1997, according to court filings, Chiquita’s subsidiary in Colombia, Banadex, began making cash payments to AUC. The payments were suggested by AUC leader Carlos Castano, who said he planned to drive the left-wing Revolutionary Armed Forces of Colombia (FARC) guerrillas – a group also on the US terrorist list – out of the northwest region of Uraba.
In September 2000, Chiquita executives learned about the payments in an internal audit but allowed them to continue, according to a prosecution filing not disputed by the company.
In the plea agreement, Chiquita officials said they knew that AUC was blamed for numerous killings and kidnappings in the region, but that they had no alternative to keep their workers alive and to secure their operations at a time when FARC guerrillas were blowing up railroads used by US companies and kidnapping foreigners for ransom.
On 10 September, 2001 the State Department declared AUC an international terrorist group, making it illegal for any US company to deal with the organisation. Prosecutors say senior company executives were aware of the designation in 2002, and internal Chiquita records state that the company’s outside legal counsel warned them in February 2003 that they “must stop payments”.
“Bottom line: CANNOT MAKE THE PAYMENT,” the Kirkland & Ellis law firm advised Chiquita, according to court records and sources.
On 3 April, 2003, Chiquita’s board decided to disclose the payments to Justice. Around that time, Chiquita counsel Olson told others that he and Hills thought the company had a strong defense and should let the Justice Department “sue us, come after us” if it disagreed, according to court records and sources.