This article was last modified on June 1, 2008.


Chiquita and Terrorism

Chiquita is known worldwide as a leading producer of bananas. But now, they are also known to some as a company that is willing to fund terrorism, murder, drug trafficking and kidnapping in South America in exchange for business security. What is the story behind Chiquita’s payments? While no doubt illegal, were the payments a necessary evil? And just who are these terrorists anyway?

Paying Terrorists?

High ranking corporate officers at Chiquita began paying protection money to the United Self-Defense Forces of Colombia, the AUC, in 1997. According to court documents, between 1997 and 2004, the company paid approximately $1.7 million, in exchange for employee protection in Colombia’s volatile banana harvesting zone. What the protection was from is unclear. From the AUC? From other terrorist groups?

Similar payments, though the amounts remain unclear, were also made to the Revolutionary Armed Forces of Colombia, or FARC, as well as the National Liberation Army, or ELN. Seemingly, funds were given to the three groups so that they wouldn’t attack the Chiquita employees. Why a third-party security force to defend against all three was not hired remains unclear. As of March 2007, all three of these groups are on the U.S. State Department’s list of Foreign Terrorist Organizations. Worth noting, however, is that the AUC was not a recognized terrorist organization at the time payments began.

Evidently, in the beginning only the officials in Colombia were aware of the payoffs. But word would eventually work its way up the chain as the payments continued. Millions cannot go unaccounted for. “No later than in or about September 2000, defendant Chiquita’s senior executives knew that the corporation was paying AUC and that the AUC was a violent paramilitary organization,” prosecutors alleged March 14, 2007 in a court filing. [Apuzzo, March 15]

The payments continued until June 2004, at which time Chiquita sold its Colombian banana operations. [Apuzzo, March 15]

AUC Declared a Terrorist Organization

The AUC was declared a terrorist organization on September 10, 2001 by the United States Department of State. Chiquita, being based in America, had to cut off payments to AUC or be charged with aiding terrorism. The fact that the World Trade Center attacks occurred the next day are completely a coincidence.

But payments did not stop, because when the choice had to be made the company officials felt the safety of the employees ranked much higher than the rule of law in moral principles. Assuming the threat was real, I agree with this assessment, although finding alternative security might have been the best option.

The company’s outside counsel advised in February 2003, “Bottom line: CANNOT MAKE THE PAYMENT.” This, too, was ignored. In April 2003, company officials and lawyers approached the Justice Department and told prosecutors they had been making the payments. The Justice Department advised them to stop making the payments, but as we saw this did not happen. [Apuzzo, March 15]

Who are These Groups?

In many cases, I remain skeptical of what constitutes “terrorism” or a “terrorist group”. When it comes to Colombia, however, there is little dispute about the violence and disruptive nature of these organizations. (Traditionally, the United States would divide “terrorists” and “freedom fighters” into two categories depending on their support of United States causes. In my view, the objective of terrorism does not make it any less terrifying and I will make no such distinctions between US-friendly and non-friendly groups.)

The threat of terrorism in Colombia is widespread and well-known. Journalist Matt Apuzzo sums it up as follows: “Leftist rebels and far-right paramilitaries have fought viciously over Colombia’s banana-growing region, though the victims are most often noncombatants. Most companies in the area have extensive security operations to protect employees.” [Apuzzo, March 15]

  • United Self-Defense Forces of Colombia, the AUC (Autodefensas Unidas de Colombia). Apuzzo says, “The AUC has been responsible for some of the worst massacres in Colombia’s civil conflict and for a sizable percentage of the country’s cocaine exports.” [Apuzzo, March 15] (see Note 1) The AUC was formed in 1997 as a consolidated group of paramilitaries to provide counterinsurgency forces, since the government has failed to do so. They could, perhaps, be seen as a similar force as Hezbollah is for Lebanon. The intentions are seemingly good-natured, but the methods are criminal. AUC claims 20,000 members.
  • Revolutionary Armed Forces of Colombia, or FARC. This group was formed in 1964 as the military wing of the Colombian Communist Party, and still has strongly Marxist ideological positions despite a split from the party upon joining the drug trade in the 1980s. FARC, the world’s oldest rebel organization, operates primarily in the mountains, and boasts 18,000 members — many of which are children. FARC regularly relies on kidnappings to reach its goals and demands.
  • National Liberation Army, or ELN. The ELN, like FARC was formed in 1964 and is considered Marxist, though they have adopted more of a “liberation theology”. They are also much smaller than FARC, with only 5000 members. Also like FARC, they seem to prefer kidnappings when not directly attacking the infrastructure of Colombia. FARC and ELN have joined forces when the need arises, but are two distinct groups (for reasons more historical and ideological than we need to explore here).

Payments After September 2001

As noted, the payments continued after AUC was declared a terrorist organization. From 2001 to 2004, when Chiquita made $825,000 in illegal payments, the Colombian banana operation earned $49.4 million and was the company’s most profitable unit. So, not only were the employees being protected, but in the process an incredible profit was being reached.

But the American government sees another side of the story. “Funding a terrorist organization can never be treated as a cost of doing business,” U.S. Attorney Jeffrey Taylor said. Which raises a valid point: although employee lives were saved, thousands or millions of dollars can buy a large supply of guns or ammunition. Were more people killed than saved in the process?

In fact, it has come out that in December 2001 Banadex (Chiquita’s Combian subsidiary) was more directly involved in the terror trade than simply funding. Journalist Javier Baena says that “a Banadex ship was used to unload 3,000 rifles and thousands of rounds of ammunition” for the AUC. [Baena March 20] Journalist Gary Marx says, “a ship carrying 3,400 AK-47 assault rifles and 4 million rounds of ammunition unloaded at a dock in northern Colombia managed by Banadex.” [Marx March 22] (There seems to be some dispute on the actual amount of rifles and ammunition, and whether the boat or docks — or both — were owned by Banadex, but the general facts seem to be agreed upon.) Colombian prosecutor Mario Iguaran said the arms were used by the paramilitaries to push leftist rebels out of the zone in northern Colombia where Chiquita had its banana plantations. [Baena March 20]

After these allegations came to light in March 2007, Chiquita issued a statement saying that the incident in question was “fully investigated by the Colombian government, as well as international authorities, including the Organization of American States. None of the investigations found any wrongdoing by the company or any of its employees. A Banadex employee was held for a short time. However, after a thorough investigation by the Office of the Attorney General of Colombia, he was released and completely exonerated. The Colombian government did indict four Colombian customs officers as a result of its investigation. In addition, soon after learning of the incident, Chiquita and Banadex voluntarily decided to stop accepting cargo from third-party ships at this facility. No legal authority ordered or suggested this change. From that point until Banadex was sold, the company accepted import cargo only from ships owned or operated by Chiquita.” [Mitchell, March 23] The Colombian authorities obviously disagree with this version of events, and we may see the resolution down the line.

The payments did not end because of any perceived moral imperative. They ended because Chiquita was no longer in Colombia. Chiquita sold Banadex in June 2004 for around $43.5 million. [Apuzzo, March 19] One has to assume that if the plant was still Chiquita-owned, payments would still be sent out. As for the new owners, one can only speculate on how they do business.

Fined by the Government

On March 14, 2007, Chiquita Brands was fined $25 million as part of a settlement with the United States Justice Department for having ties to the Colombian paramilitary groups described above. Is the fine not enough or too much (or just right)? One could argue that this covers the bulk of the profits made during their period of operating illegally, and is thus fair. Others might say that merely covers restitution and does not actually constitute a “fine” or punishment. Personally, I think if the funding can be tied directly to any terrorist plots, this fine is not nearly high enough. If a wrongful death lawsuit can reach millions of dollars, shouldn’t funding a group that actively kills many innocents be seen as far worse?

Fernando Aguirre, Chiquita’s chairman and chief executive officer, released a statement on March 14. Aguirre asserted that “[t]he payments made by the company were always motivated by our good faith concern for the safety of our employees.” Cynics will question this motivation.

He also added for the investors that, “[u]nder the terms of the agreement, the company will pay a fine of $25 million, payable in five annual installments. As previously disclosed, the company recorded a reserve in 2006 for the full amount of the fine in anticipation of reaching an agreement. The company does not anticipate that the fine will impact its ability to operate its business.” This could be taken as a sign that the fine was really no inconvenience or punishment at all.

On March 19, 2007, Chiquita Brands admitted in federal court that the company paid Colombian terrorists to protect its most profitable banana-growing operation. The company pleaded guilty to one count of doing business with a terrorist organization. In exchange, the company will pay the $25 million fine and court documents will not reveal the identities of the several senior executives who approved the illegal protection payments. Allegedly the documents name ten executives, but they will only disclose that none of them are at the very top of the chain (for example, CEO Fernando Aguirre and Senior Vice President James Thompson). Also, they will not disclose if the people listed are still employed by Chiquita or not (though one may assume that they are if the identities are being kept hushed).

What Next for Chiquita in America?

The company is set to be sentenced June 1. By law, it faces up to nearly $100 million in fines if Judge Lambreth does not accept the $25 million deal with prosecutors. [Apuzzo, March 19] Personally, I do not expect the deal to be declined.

While obviously there will be no future payments, what will this do for business in general in terrorist-controlled regions? Does this send the message that America will go soft on crime and terrorism in exchange for business (what else is new)? Can any company get away with hiding behind the guise of “protection” in the name of profits? I do not expect this to be the last we hear of illegal payments.

The Colombian Angle

The American trial may have just been the beginning. Soon afterwards, with the facts and people responsible more out in the open, Colombia is trying to get their hands on the people responsible (since going after the American funders is easier than tracking down the terrorists directly).

“They should be judged in Colombia, not only for the extortion payments, but also for the transport and safekeeping of 3,000 rifles,” Colombian chief federal prosecutor Mario Iguaran told RCN radio. [Baena March 20] Iguaran sent a letter to the U.S. Justice Department on March 20 seeking the names of the Chiquita officials responsible and more details on the scheme. [Marx March 22]

Iguaran is far more suspicious of Chiquita than American authorities were. “The relationship was not one of the extortionist and the extorted but a criminal relationship,” Iguaran stated in an interview. “It’s a much bigger, more macabre plan,” he added. “Who wouldn’t know what an illegal armed group like the AUC does … by exterminating and annihilating its enemies,” Iguaran said. “When you pay a group like this you are conscious of what they are doing.”

Colombia has an extradition treaty with the United States, so criminal proceedings may be the future (though America does have a history of stonewalling — American soldiers caught drug trafficking in the past have not been tried in Colombian courts).

The Subsequent Civil Suits

Not surprisingly, a civil suit was filed anonymously on June 7, 2007 against Chiquita Brands International by the families of 144 victims of paramilitary groups that had been paid by Chiquita. The lawsuit, filed in Washington federal court, alleged the company “knowingly engaged in an ongoing campaign of terror.” The ten unnamed Chiquita executives made themselves liable “by providing financial support, arms and other substantial assistance.”

Chiquita spokesman Mike Mitchell quickly dismissed the lawsuit, claiming there was no merit. “We categorically deny the allegations and reiterate that Chiquita and its employees were victims,” Mitchell said. “The actions taken by the company at all times were motivated to protect the lives of employees and their families.”

In September, Chiquita agreed to pay the $25 million fine to resolve an inquiry by the US Justice Department, a settlement that Judge Royce Lamberth authorized. Colombian Interior Minister Carlos Holguin said the Justice Department agreement should not grant Chiquita immunity from further payments.

Another lawsuit was filed in Manhattan federal court, New York on November 14, 2007. The civil lawsuit seeks a total of $7.86 billion on behalf of 393 victims and their relatives, for the same reasons as stated in the Washington suit. The lawsuit seeks $10 million in punitive and $10 million in compensatory damages for each of the victims. Lawyers said the amount was based on a 2004 arrangement wherein Libya accepted its alleged role and paid up to $10 million to each of the families of the 270 passengers killed in the December 21, 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland (although speculation remains on the actual culprit of this crime).

“It was about acquiring every aspect of banana distribution and sale through a reign of terror,” plaintiffs’ lawyer Jonathan Reiter told reporters, as reported by Reuters the same day. The plaintiffs are seeking compensation for Chiquita “supporting terrorism, war crimes, wrongful death and torture.” Reiter said the suit was justified because none of the money from the March 2007 criminal case would reach victims.

Spokesman Michael Mitchell again had a similar defense, saying the lawsuit “grossly mischaracterized the payments made by Chiquita in Colombia… The company was forced to make such payments to both left- and right-wing organizations to protect the lives of our employees at a time when kidnappings and murders were frequent.”

Yet another lawsuit was filed in U.S. District Court for the Southern District of Florida in Miami on March 11, 2008. This suit alleges that the FARC abducted five missionaries and killed them in the 1990s after their Florida-based New Tribes Mission group failed to pay a ransom sought by the rebels. The five slain Americans were Mark Rich, David Mankins, Richard Lee Teneoff, Stephen Welsh and Timothy Van Dyke. [Brown 2008]

The lawsuit seeks unspecified damages on behalf of the victims’ families and alleges that Chiquita’s payments to the FARC were a contributing factor in the killings because they helped finance the group’s operations at the time they occurred. According to court papers, Chiquita “knew or consciously avoided knowing that the FARC was a terrorist organization and that it kidnapped, killed and terrorized thousands of people in Colombia … Defendant aided and abetted the murder of Plaintiffs’ relatives by providing material support to FARC in the form of large sums of money and weapons.” [Brown 2008]

I am unclear as to how the lawsuits will play out. To what degree can we find the funders responsible for the actions of those who were funded? Unlike hiring a hitman, where the expected outcome is death, can we hold a company responsible for deaths funded with their money when the alleged intent was security?

Notes

1. Journalist and former State Department employee William Blum claims that the groups in Colombia are not directly involved in drug trade, but rather get funding by protecting those who are in the drug trade. The distinction seems trivial, but we must consider the overall picture of Colombia. The official Colombian military has been connected to the drug trade, and the president was a known friend of drug kingpin Pablo Escobar. In short, drug connections in Colombia aren’t a rare occurrence, but more often simply a way of life.

Sources

Apuzzo, Matt. “Chiquita to Pay $25M Fine in Terror Case,” ABC News. http://abcnews.go.com/Politics/wireStory?id=2952161&page=1 March 15, 2007

Apuzzo, Matt. “Chiquita Pleads Guilty in Terror Probe,” ABC News. http://abcnews.go.com/Business/wireStory?id=2962867 March 19, 2007

Baena, Javier. “Colombia Seeks 8 in Chiquita Payments,” HeraldSun.Com. http://www.heraldsun.com/nationworld/14-830808.cfm March 20, 2007

Brown, Tom. “Chiquita sued over killings of U.S. missionaries” (Reuters), March 12, 2008. viewed http://www.reuters.com/article/topNews/idUSN1224676120080313?feedType=RSS&feedName=topNews&pageNumber=1&virtualBrandChannel=0 on March 13

“Chiquita Named in Colombian Murder Suit” (Associated Press), Washington Post. June 7, 2007.

Kearney, Christine. “Chiquita sued in NY over killings in Colombia” (Reuters) November 14, 2007. http://www.reuters.com/article/americasCrisis/idUSN14211578

Marx, Gary. “Colombian official seeks U.S. papers on Chiquita,” Chicago Tribune. March 22, 2007.

Mitchell, Michael R. “Claims of Chiquita involvement in arms shipments inaccurate,” FreshPlaza.Com http://www.freshplaza.com/2007/0323/1-2_us_inaccuracies.htm March 23, 2007

“US banana firm must pay $25m fine”, BBC News. September 17, 2007.

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