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WASHINGTON -- Fruit company Chiquita Brands International Inc. said Wednesday that it would pay a $25 million fine to settle a long-running Justice Department investigation into whether it knowingly paid "protection" money to terrorist organizations in Colombia to allow it to grow bananas there.
In a filing with the Securities and Exchange Commission, the Cincinnati-based conglomerate also said it would cooperate with the government "in any continuing investigation into the matter."
The agreement to cooperate is significant, one senior Justice Department official said, because investigators continue to focus on whether several current or former high-ranking company officials knowingly engaged in a scheme to pay at least $1.7 million to two paramilitary groups so the groups would not target Chiquita facilities in volatile parts of Colombia or kidnap or attack its employees. Both groups are on the State Department's list of terrorist organizations.
According to that Justice Department official and other authorities, the Chiquita investigation is the most prominent probe in which a U.S. corporation is believed to have provided financial assistance to a foreign terrorist organization in the post-Sept. 11 environment. President Bush repeatedly has said that any financier of terrorism should be prosecuted as severely as any terrorist operative.
"Obviously it's a sensitive case, an important case," said a second Justice Department official. Both men spoke on the condition of anonymity, saying they were not authorized to discuss the investigation.
Earlier Wednesday, federal prosecutors filed a single criminal "information" against Chiquita as a corporation, charging it with "Engaging in Transactions with a Specifically-Designated Global Terrorist."
Unlike a federal grand jury indictment, an information is traditionally worked out through discussions between prosecutors and defense lawyers, followed by a guilty plea to the charges. A hearing has been set for Monday before U.S. District Judge Royce C. Lamberth in Washington.
Chiquita's chairman and chief executive officer, Fernando Aguirre, described the plea agreement as "a reasoned solution to the dilemma the company faced several years ago."
Aguirre said in a statement that the "protection payments" were made by the company's Colombian banana-producing subsidiary, which it sold in 2004. The subsidiary had been forced to make the payments to right- and left-wing paramilitary groups in Colombia to protect the lives of its employees, he said.
"The payments made by the company were always motivated by our good-faith concern for the safety of our employees," Aguirre said.
With annual revenues of about $4.5 billion, Chiquita said the fine would not affect its global operations. It is a leading international marketer and distributor of fruits and salads, and it is one of the world's top sellers of bananas.
Chiquita has had a history of controversial dealings in South America that date to when its precursor, the United Fruit Co., was alleged to have worked with the CIA to overthrow an anti-capitalist government in Guatemala in 1954 so it could continue growing bananas there.
In 1975, a U.S. investigation revealed that the company had bribed the president of Honduras in a scandal that came to be known as Bananagate. And in 1998, the Cincinnati Enquirer published an 18-page section on Chiquita that alleged a host of questionable business practices and improprieties, including bribing foreign officials. Chiquita portrayed the articles as unfair and inaccurate and forced the Enquirer to run a retraction and pay a large settlement, but critics of the company have alleged that it never denied many of the allegations and that at least some of them were true.
In the 18-page criminal filing submitted Wednesday, prosecutors said Chiquita officials came to them in 2003 seeking advice on what to do about the payments. But they said that at least several high-ranking company officials knowingly engaged in the scheme long after their own lawyers told them it was illegal, and that they should stop.
Initially, prosecutors said Chiquita paid the Revolutionary Armed Forces of Colombia, a left-wing group known by its Spanish-language acronym FARC. But after the right-wing United Self-Defense Forces of Colombia, known as the AUC, took control of parts of Colombia where Chiquita had massive banana-growing farms, the company began paying that group, according to the court filing.
In court documents, prosecutors said Chiquita began making payments to the AUC in 1997 and continued until at least 2004, long after the United States had designated the group a terrorist organization. Under various U.S. laws, it is illegal for anyone -- an individual or a corporation -- to do business with any designated terrorist entity.
Chiquita paid an undisclosed amount of money to the FARC in the 1990s, prosecutors said. Then, in 1997, Chiquita began paying the AUC after a meeting between the general manager of its subsidiary and the AUC's leader, Carlos Castano.
The payments, usually disguised through a series of financial tricks, "were reviewed and approved by senior executives of the corporation, to include high-ranking officers, directors and employees," the court filing said.
Soon, according to the court papers, Chiquita was paying the AUC monthly with cash and, sometimes, checks.
By September 2000, senior executives at Chiquita knew that the corporation was paying the AUC and that it was a violent paramilitary organization, prosecutors said. In April 2002, according to the court filing, the company seated a new board of directors after coming out of bankruptcy and began paying the AUC "according to new procedures established by senior executives."
In early 2003, outside counsel hired by Chiquita was demanding that the company sever its financial relationship with the AUC. "Must stop payments," said one Feb. 21, 2003, communication contained in the court filing.
The payments continued, however, and they were soon reported to the full board of directors, which agreed to disclose the payments to the Justice Department. In late April 2003, Chiquita officials met with Justice lawyers, who said the payments were illegal and could not continue.
Within two weeks, though, Chiquita officials gave instructions to "continue making payments," the criminal filing said.
Justice Department officials said that because of such brazen acts, they initially considered filing the more serious charge of providing "material support" to a terrorist organization but ultimately decided against it, in part because Chiquita did report the payments to federal authorities after it became aware of them.
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