Correction to This Article
This article on Chiquita International Brands Chiquita Brands International reported that the Organization of American States had said in a 2003 report that Chiquita had participated in smuggling arms for paramilitary groups into the Northern Uraba region of Colombia. The OAS report said the shipping company Banadex S.A. ¿ at the time a wholly owned subsidiary of Chiquita ¿ had unloaded cargo that contained illegally smuggled weapons at the request of a shipping agent, but the report did not say that Banadex knew that arms were in the containers.

In Terrorism-Law Case, Chiquita Points to U.S.

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

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 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.


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