On March 19, 2007, Chiquita Brands International Inc., a multinational corporation headquartered in Cincinnati, pled guilty to one count of engaging in transactions with a specially designated global terrorist. Pursuant to the terms of a plea agreement, the company has agreed to pay a $25 million criminal fine.
The U.S. Government’s investigation of Chiquita arose after the company made a voluntary self-disclosure to the Government in 2003 that it had been making payments to a Columbian group known as the AUC, or Autodefensas Unidas de Columbia (United Self-Defense Forces of Columbia). The payments began in 1997 after a meeting between the then-leader of the AUC and a senior executive of Chiquita’s Colombian subsidiary Banadex, during which the AUC leader made threats of physical harm to Banadex employees and property if payments were not made. The payments, which Chiquita made and recorded in its corporate books as “security payments” or payments for “security services,” spanned six years, from 1997 to early 2004, and totaled $1.7 million.
On September 10, 2001, the U.S. Government designated the AUC as a Foreign Terrorist Organization (FTO), thus making it a crime to finance the organization. Even after this, Chiquita kept paying the AUC. In February 2003, when a Chiquita employee informed a senior Chiquita officer that the AUC had been designated as an FTO, Chiquita sought advice from outside legal counsel. Counsel advised Chiquita in no uncertain terms that it should stop the payments, and suggested that the company pull out of Columbia altogether. After receiving this advice, a senior company officer and member of the Board of Directors reported to the full Board that Chiquita was making payments to an FTO. One Board member objected to the payments and recommended that Chiquita leave Columbia. The Board did not follow the recommendation, but did disclose the history of payments to the Department of Justice in April 2003. DOJ officials told the company that they viewed the payments as a technical violation of the law.
Even after its disclosure to the DOJ, Chiquita continued to make payments to the AUC until early 2004. In June 2004, Chiquita sold its Banadex subsidiary to a Columbian buyer. As part of the plea agreement that Chiquita entered on March 19, it agreed to cooperate with the Government’s ongoing investigation, to implement and maintain an effective compliance and ethics program, and to five years’ probation, in addition to the $25 million fine.
In a statement issued by Chiquita’s CEO Fernando Aguirre regarding the company’s agreement with the DOJ, Aguirre explained why Chiquita had made the payments: “The payments made by the company were always motivated by our good faith concern for the safety of our employees. Nevertheless, we recognized--and acted upon--our legal obligation to inform the DOJ of this admittedly difficult situation.”
One of the prosecuting attorneys, Assistant Attorney General Kenneth L. Wainstein of the National Security Division, announced: “Thanks to Chiquita’s cooperation and this prosecution, [funding for the AUC] is now dry and corporations are on notice that they cannot make protection payments to terrorists.”