Fruit Giant Chiquita Brands Guilty of Paying Terrorists

Chiquita Brands International Inc., a multinational supplier of fruit and vegetables, pleaded guilty in the U.S. District Court for the District of Columbia to one count of engaging in transactions with a designated global terrorist, according to the U.S. Justice Department.

Chiquita pleaded guilty pursuant to a written plea agreement. Under theterms of the plea agreement, Chiquita's sentence will include a $25 million criminal fine, the requirement to implement and maintain an effective compliance and ethics program, and five years' probation.

Chiquita also has agreed to cooperate in an ongoing investigation. Sentencing will occur on June 1.

The plea agreement arises from payments that Chiquita had made for years to the violent, right-wing terrorist organization United Self-Defense Forces of Colombia -- an English translation of the Spanish name of the group, "Autodefensas Unidas de Colombia" (commonly known as the "AUC"). The AUC had been designated by the U.S. government as a Foreign Terrorist Organization ("FTO") on Sept. 10, 2001, and as a Specially-Designated Global Terrorist ("SDGT") on Oct. 31, 2001. These designations made it a federal crime for Chiquita, as a U.S. corporation, to provide money to the AUC. In April 2003, Chiquita made a voluntary self- disclosure to the government of its payments to the AUC, giving rise to this investigation.

"Like any criminal enterprise, a terrorist organization needs a funding stream to support its operations. For several years, the AUC terrorist group found one in the payments they demanded from Chiquita Brands International. Thanks to Chiquita's cooperation and this prosecution, that funding stream is now dry and corporations are on notice that they cannot make protection payments to terrorists," says Assistant Attorney General Kenneth Wainstein.

"Funding a terrorist organization can never be treated as a cost of doing business," says U.S. Attorney Jeffrey Taylor. "American businesses musttake note that payments to terrorists are of a whole different category. They are crimes. But like adjustments that American businesses made to the passage of the Foreign Corrupt Practices Act decades ago, American businesses, as good corporate citizens, will find ways to conform their conduct to the requirements of the law and still remain competitive."

Following the company's disclosure, the investigation leading to this prosecution developed evidence that for over six years -- from sometime in 1997 through Feb. 4, 2004 -- Chiquita paid money to the AUC in two regions of the Republic of Colombia where Chiquita had banana-producing operations: Uraba and Santa Marta. Chiquita made these payments through its wholly owned Colombian subsidiary known as "Banadex." By 2003, Banadex was Chiquita's most profitable operation. Chiquita, through Banadex, paid the AUC nearly every month. In total, Chiquita made over 100 payments to the AUC amounting to over $1.7 million.

For several years Chiquita paid the AUC by check through various intermediaries. Chiquita recorded these payments in its corporate books and records as "security payments" or payments for "security" or "security services." Chiquita never received any actual security services in exchange for the payments.

Beginning in June 2002, Chiquita began paying the AUC in Santa Marta directly and in cash according to new procedures established by senior executives of Chiquita. The newly-implemented procedures concealed the factthat Chiquita was making direct cash payments to the AUC.

The U.S. government designated the AUC as an FTO on Sept. 10, 2001, and that designation was well-publicized in the American public media. TheAUC's designation was even more widely reported in the public media in Colombia, where Chiquita had its substantial banana-producing operations. Chiquita also had specific information about the AUC's designation as an FTO through an Internet-based, password-protected subscription service that Chiquita paid money to receive. Nevertheless, from Sept. 10, 2001 through Feb. 4, 2004, Chiquita made 50 payments to the AUC totaling more than $825,000.

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