[Marxism] Banana Republic

Louis Proyect lnp3 at panix.com
Thu Aug 2 09:54:33 MDT 2007

In Terrorism-Law Case, Chiquita Points to U.S.
Firm Says It Awaited Justice Dept. Advice

By Carol D. Leonnig
Washington Post Staff Writer
Thursday, August 2, 2007; A01

On April 24, 2003, a board member of Chiquita International Brands 
disclosed to a top official at the Justice Department that the king of 
the banana trade was evidently breaking the nation's anti-terrorism laws.

Roderick M. Hills, who had sought the meeting with former law firm 
colleague Michael Chertoff, explained that Chiquita was paying 
"protection money" to a Colombian paramilitary group on the U.S. 
government's list of terrorist organizations. Hills said he knew that 
such payments were illegal, according to sources and court records, but 
said that he needed Chertoff's advice.

Chiquita, Hills said, would have to pull out of the country if it could 
not continue to pay the violent right-wing group to secure its Colombian 
banana plantations. Chertoff, then assistant attorney general and now 
secretary of homeland security, affirmed that the payments were illegal 
but said to wait for more feedback, according to five sources familiar 
with the meeting.

Justice officials have acknowledged in court papers that an official at 
the meeting said they understood Chiquita's situation was "complicated," 
and three of the sources identified that official as Chertoff. They said 
he promised to get back to the company after conferring with national 
security advisers and the State Department about the larger 
ramifications for U.S. interests if the corporate giant pulled out 

Sources close to Chiquita say that Chertoff never did get back to the 
company or its lawyers. Neither did Larry D. Thompson, the deputy 
attorney general, whom Chiquita officials sought out after Chertoff left 
his job for a federal judgeship in June 2003. And Chiquita kept making 
payments for nearly another year.

What transpired at the Justice Department meeting is now a central issue 
in a criminal probe. According to these sources' account, the Bush 
administration was pulled in competing directions, perhaps because its 
desire to avoid undermining a newly elected, friendly Colombian 
government conflicted with its frequent public assertions that 
supporting a terrorist group anywhere constitutes a criminal offense and 
a foreign policy mistake.

Chiquita's executives left the meeting convinced that the government had 
not clearly demanded that the payments stop. Federal prosecutors, 
however, are now weighing whether to charge Hills; Robert Olson, who was 
then Chiquita's general counsel; former Chiquita CEO Cyrus Friedheim; 
and other former company officials for approving the illegal payments, 
according to records and sources close to the 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 last week, 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 

Federal prosecutors have said in court papers that Chertoff and his 
deputies at Justice made clear in the April 2003 meeting that Chiquita 
was violating the law and that "the payments . . . could not continue." 
Government sources say that lawyers at Justice headquarters and the U.S. 
attorney's office in Washington were incensed by what they considered 
the flagrant continuation of these payoffs, despite the warnings.

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, 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 spokesman 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.

"If the only way for a company to conduct business in a particular 
location is to do so illegally, then the company probably shouldn't be 
doing business there," Boyd said.

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 U.S. 
company maintain a stabilizing presence in Colombia.

The prosecution first centered 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.

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 U.S. terrorist list -- out of the northwest region of 
Uraba, according to the filings.

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 U.S. companies and 
kidnapping foreigners for ransom.

On Sept. 10, 2001, the State Department declared AUC an international 
terrorist group, making it illegal for a U.S. company to deal with the 
organization. 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 April 3, 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.

Then, on April 24, the company executives met with Justice officials, 
including Chertoff. They disclosed the payments and Justice officials 
said they were against the law. Hills said he agreed, but stressed that 
Chiquita would have to withdraw from the country if it did not pay AUC, 
and noted this could affect U.S. security interests in that region.

That's when, according to the five sources, Chertoff acknowledged that 
the matter was complicated, and said that he would get back to them 
after conferring with other administration officials.

A week later, Hills and Olson told the company board's audit committee 
that Justice had advised them that there would be "no liability for past 
conduct" and that there was no "conclusion on continuing the payments," 
according to a summary of the case filed by the prosecution. The company 
authorized new payments to AUC starting on May 5.

After Chiquita officials got no answer from Chertoff, they met with 
Thompson, who praised them for "doing the right thing" in disclosing the 
payments, and said he, too, would try to get back to them on how to 
proceed, defense sources said. Thompson, now general counsel for 
PepsiCo, did not respond yesterday to a request to comment.

Hills's lawyer, Reid H. Weingarten, said his client alerted the 
government to a problem, then waited as the government asked to see what 
the administration wanted to do. Hills resigned from the board in June.

"As soon as Rod Hills learned that there were payments to a terrorist 
organization, he brought the matter immediately to the attention of the 
Justice Department," Weingarten said. "He had a reasonable basis to 
believe that the Justice Department wanted to maintain the status quo 
while they sorted out the difficult issues."

Robert S. Litt, an attorney for Olson, declined to elaborate on the case 
but said: "Bob Olson acted properly in helping Chiquita deal with a very 
difficult situation, and I'm confident that the Department of Justice 
will agree."

The attorney general of Colombia, Mario Iguaran, and other Colombian 
officials have dismissed Chiquita's assertions that it was a victim of 
extortion and paid AUC to protect its workers. An Organization of 
American States report in 2003 said that Chiquita participated in 
smuggling thousands of arms for paramilitaries into the Northern Uraba 
region, using docks operated by the company to unload thousands of 
Central American assault rifles and ammunition.

Iguaran, whose office has been investigating Chiquita's operations, said 
the company knew AUC was using payoffs and arms to fund operations 
against peasants, union workers and rivals. At the time of the payments, 
AUC was growing into a powerful army and was expanding across much of 
Colombia and, according to the Colombian government, its soldiers killed 
thousands before it began demobilizing.

U.S. District Judge Royce C. Lamberth, who must decide whether to accept 
the Chiquita corporation's plea agreement, privately warned both sides 
last month that he wants to know more about the role played by Chiquita 
executives in approving the payments, according to sources familiar with 
his remarks, made in a closed meeting in his chambers.

Lamberth specifically said he wanted to know which company officials 
made the key decisions and whether they would face prosecution. A 
hearing on the plea agreement is scheduled for Monday.

Staff writer Spencer S. Hsu and correspondent Juan Forero contributed to 
this report.

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