[Dialogue] In Terrorism-Law Case, Chiquita Points to US

[Harry Wainwright]

Published on Thursday, August 2, 2007 by the Washington Post
<http://www.washingtonpost.com/wp-dyn/content/article/2007/08/01/AR200708010
2601.html?hpid=topnews>  

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

by Carol D. Leonnig

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.
<http://www.commondreams.org/archive/wp-content/photos/0802_02.jpg> 

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 overnight.

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 administration.

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.

C 2007 The Washington Post Company

Article printed from www.CommonDreams.org 

URL to article: http://www.commondreams.org/archive/2007/08/02/2936/

 

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