Chiquita Brands announced last week an agreement with the US Department of Justice regarding “protection payments” made in Columbia by a former subsidiary:
In 2003, Chiquita voluntarily disclosed to the Department of Justice that its former banana-producing subsidiary had been forced to make payments to right- and left-wing paramilitary groups in Colombia to protect the lives of its employees. The company made this disclosure shortly after senior management became aware that these groups had been designated as foreign terrorist organizations under a U.S. statute that makes it a crime to make payments to such organizations. Since voluntarily disclosing this information, Chiquita has continued to cooperate with the DOJ’s investigation.
The DOJ’s press release is here, and reads a bit like a Tom Clancy novel. The bottome line for Chiquita, according to the DOJ:
Chiquita pleaded guilty pursuant to a written plea agreement. Under the terms 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 this ongoing investigation. Sentencing will occur on June 1, 2007.
While the DOJ has admitted that this matter is “complicated” that apparently did not prevent the prosecution. You get the sense that the full story has not emerged; Chiquita maintains that it was motivated to ensure the safety of its employees. The DOJ’s press release repeatedly mentions that Chiquita had advice of counsel that these payments were illegal under American law.