Case Document 12 Filed 03 19 07 Page 1 of 17 trim v 1 ant td gn IN THE UNITE-B STATES DISTRICT COURT RAW MAYER FOR THE DISTRICT OF COLUMBIA 13 5 833m UNITED STATES or AMERICA CRIMENAL NOCHIQUITA BRANDS INTERNATIONAL INC 7% 6e Defendant 4 54252 9 07 FACTUAL Had this case gone to trial the government would have proven beyond a reasonabie doubt that Defendant Chignita Brands International Inc 1 Defendant CHIQUITA BRANDS INTERNATIONAL INC was a multinational corporation tneorporated in New Jersey and headquartered in Cincinnati Ohio Defendant CHEQUITA engaged in the business of producing marketing and distributing bananas and other fresh produce Defendant CHIQUITA was one of the largest banana producers in the world and a major supgolier of bananas throughout Europe and North America including Within the District of Columbia Defendant CHIQUITA reported over $2 6 billion in revenue for calendar year 2003 fibefendant CHIQUITA had operations throughout the world including in the Republic of Colombia 2 - 3 1 Bananos de Exportacion SA also known as and referred to hereinafter as Banadex was defendant Whollyeowned Colombian subsidiary Banadex produced bananas in the Uraba and SantaMartaregions of Colombia - By 2003 Banad x was defendant most pro table banana-producing operation In June 2004 defendant CHIQSITA Sold Banadex Case Document 12 Filed 03 19 07 Page The United Self Defense Forces of Colombia an English translation of the Spanish name of the group Autoctefensas Unidas de Coiombia commonly known as and referred to hereinafter as the was a violent right wing organization in the Republic of Colombia The AUC was formed in or about April 997 to organize looselyeaf liated illegai paramilitary groups that had emerged in Colombia to retaiiate against left wing guerillas ghting the Colombian government The activities varied from assassinating suspected gueriila Supporterslto engaging guerrilla combat units The AUC aiso engaged in other illegal activities including the kidnapping and murder of civilians 4 Pursuant to Titie 8 United States Code Section 1189 the Secretary of State of the United States had the authority to designate a foreign organization as a Foreign Terrorist Organization it the organization engaged in terrorist activity threatening the national security of the United States i 5 The Seeretary of State oftheUnited States designated the AUC as an PTO initialiy on September 10 2001 and again on September 10 2003 As a result of the FTC designation since September 10 2001 it has been a crime for any United States person among other things knowingly to provide material support and tesources including currency and monetary instruments to the AUC i 6 The International Emergency Economic i owers Act 50 3 8 0 NOE et saga conferred upon the President of the United States the authority to deai with threats to the national Security foreign poiicy and economy ofthe United States On September 23 2001 pursuant to this authority President George W Bush issued Executive Order 13224 This Eitecutive Order Case Document 12 Filed 03 19 07 Page 3 of 17 - prohibited among other things any United States person from engaging in transactions with any foreign organization or individual determined by the Secretary of State of the United States in consultation with the Secretary of the Treasury of the United States and the Attorney General ofthe United States to have committee or posed a signi cant risk of committing acts of terrorism- that threaten the security of United States nationals orthe national security foreign policy or economy of the United States referred to hereinafter as a Specially Designatetl Global Terrorist or This orchibition included the making of any contribution of funds to or for the bene t of an SDGT without having rst obtained a license or other authorization from the United States government - 7 The Secretary of the Treasury premolgated the Global Terrorism Sanctions Regulations 31 CPR 594 201 arisen implementing the sanctions imposed byEicecutiye Order 1 3224 The United States Department of the Treasury 5 Of ce ofForeign-Assets Control located in the District of Columbia was the entity empowered to authorize transactions with an SDGT Such authorization if granted would have been in the form of a license 8 Pursuant to Order 13224 the Secretary of State ofthe United States in Consultation with the Secretary ofthe Treasury ofthe United States and the Attorney General of the United States designated the a Specially Designated Global Terrorist on October 31 2001 As a result of the SDGT designation since October 31 2001 it has-been a crime for any United States person among other things willfully to engage in transactions with the AUC Without having rst obtained a license or other authorization from OFAC Relevant Persons 9 Individual A was a-l tighrranking Of cer of defendant CHIQUITA Case 1 07-cr-00o55-RCL Document 12 Filed 03 19 07 sage 4 of 17 10 Individual was a member of the Board of Directors of defendant CHIQUITA Board Individnai was a high-ranking of cer of defendant 12 Individual was a high ranking of cer of defendaot CHIQUITA 13 Individual a was a high-ranking of cer ofdefendant CHIQUITA 14 Individual was a high ranking officer of Banadex 15 7 Individual was an employee of Banade'x 16 Individual was an employee of defendant CHIQUITA 17 Individual i was an employee of defendant CHIQUITA 18 Individuai was a high ranking of cer of defendant CHIQUITA Defendant Chimita s Payments to the AUC 19 For over six years from in or about 1997 through on or about February 4 2004 defendant CHIQUITA through Banadex paid money to the AUC in the two regions of Colombia where it had bananaprdducing operations 'Uraba and Santa Marta Defendant paid the AUC directly or indirectly nearly eVery month From in or about 1 997 through on or about February 4 2004 defendant CHIQUITA made over 100payments to the AUC totaling over $1 7 million - 20 Defendant had previously paid money to other terrorist organizations operating in Colombia namely to the following violent left-Wing terrorist organizations Revolutionary Armed Forces of Colombia wan English translation of the Spanish name of the group Fnerzas Annadas Revoluoionarias de Colombia commonly known as and referred to hereinafter as the and the National LiberationArrny an English translation ofthe Spanish name of Case Decument 12 Filed 03 19 07 Page 5 of 17 the group Ejercito as Liberacion Nacional Commoniy'hnown as and referred to hereinafter as the Defendant CHIQUITA made these earlier payments from in or about 989 through in or about 1997 when the FARC and the ELN controlied areas where defendant CHIQUITA had its banana-producing operations The PARC and the ELN were designated as FTOS in October 19 97 21 Defendant CHIQUITA began paying the AUC in Uraba following a meeting in or about 1997 between the thenmieader of the AUC Carlos Casta o and Banadex s then-General Manager At the meeting Castat io informed the General Manager that the AUC was about to drive the FARC out ofUrab a Castai io also instructed the General Manager-that defendant subsidiary had to make payments to an intermediary known as a convivir Castaiio sent an unapoken but clear message that failure to make the payments coald result in physical harm to Banadex personnel and property Convivirs were private security companies licensed by the Colombian government to assist the local police and military in providing security The AUC however used certain convivirs as fronts to collect money from businesses for use to support its activities 22 Defendant CHIQUITNS payments to the AUC were reviewed and approved by senior executives of the corporation to include high ranlcing of cers directors and empioyees No later than in or about September 2000 defendant senior executives knew that the corporation was paying the AUC and that the AUC was a violent paramilitary organizationled by Carios Casta o Ari attorney for defendant CHIQUITA conducted an internaiinvesti gati on into the payments and provided individual with a memorandum that investigation The results of that internal investigation were discussed at a meeting of the then-Audit Cornrnittee of the theanoard of Directors in defendant CHI Cincinnati headquarters in or about september -5- Case Document 12 Filed 03 19 07 Page 6 of 17 2000 Individual C among Others attended this meeting 23 or several years defendant CHIQUITA paid the AUC by check through various - convivirs in both theUra-ba and Santa Marta regions of Colombia The checks Were nearly always made out to the convivirs and were drawn from the Colombian banii accounts of defendant subsidiary No convivir ever provided defendant CHIQUITA or Banadex with any actual security services or actual security equipment in exchange for the payments for example security guards security guard dogs security patrols security alarms security fencing or security training Defendant CHIQUITA recorded these payments in its corporate books and records as security payments or payments for security or security services 24 In or about April 2002 defendant CHIQUITA seated a new Board of Directors and I Audit Committee following defendant emergence from bankruptcy - i 25 Beginningin or about June 2002 defendant CEHQUITA began paying the AUC in the Santa Marta region of Colombiadirectly and in cash according to new procedures established by senior executives-of defendant CHIQUITA In or about-March 2002 Individual and others established new procedures regarding defendant direct cash payments to the AUC AcCording to these new prOCedures A Individual received a check-that was made orit to him personally and drawn from one of the Colombian bank accounts of defendant subsidiary Individual then endorsed the check Either Individual or individual cashed the check and Individual hand- delivered the cash directly to AUC- personnel in Santa Marta B Banadex treated these direct cash payments to the AUC as payments to Individaai F recorded the Withholding of the corresponding Colombian tax iiability reported tiie payments to Case Document 12 Filed 03 19 07 Page of 17 individual as such a commie tax antherities and paid Individual F s corresponding Colombian I I tax liability This treatment of the payments made it appear that Individual was being paid more moaey and thus increased the rislt that individual would be a target for kidnapping or other physical harm if this became known I I C Individual aleo maintained a private ledger of the payments which did not re ect the ultimate and intended recipient of the payments The private ledger only re ectedthe transfer of funds from Individual to Individuai and not the direct cash eayrnents to the AUG 26 On or about April 23 2000 at a meeting of the Audit Committee of the Board of Directors in defendant Cincinnati headquarters Individual described the erecedures referenced in Paragraph 25 Individual A individual 13 and Individual E among others attended this meeting f Designation of the AUC as a Foreign Terrorist Organization 27 The United States government designated the AUC as an PTO onSeptember 10 2001 and that designation was well-publicized in the American public media The designation was rst reported in the national-press- for example in the Wail Street 1 oumal and the New York Times on September 11 2001 It Was later reported in the local press in Cincinnati where defendant headquarters were iocated for example in the Cincinnati Post on October 6 2001 and in the Cincinnati Enqnirer on October 17 2001 The designation was eVen more widely reported in the public media in Colombia where defendant CHIQUITA had its substantiai banana-producing Operations - 28 - Defendant CHIQUITA hadinfoimation about the designation as an FTC speci cally and global security threats generaliy through an Intemet based password-protected -7- Case Document 12 Filed_03 19 O7 PageSof 17 subscription'service that defendant paid money to receive On or about September 30 2002 Individual H from a computer Within defendant Cincinnati headquarters accessed this'serviee s Colombia 7 Update pagef which contained the following reporting on the AUC terrorist designation International condemnation human rights abuses cuiIn1nated in 2001 with the US State Department 5 decision to include the paramilitaries 111 its annual list offereign terrorist organizations This designation permits the US authorities to implement a range of measures against the AUC including denying AUC members US entry visas freezing AUC bank accounts in the and barring US companies from contact with the personnel accused of AUC connections - Defendant Chiquita Continued to Pay the AUC after the AUC wasDesignated as an FTC 29 Front on or about September 10 2001 through on or about February 4 2304 defendant made 50 payments to the AUC totaling over $825 000 Defendant never applied for nor obtained any license from the Department of the Treasury s Of ce of Foreign Assets Control with reapect to any of its payments to the AUG 30 011 or about September 12 2001 Individual paid the AUC in robe and Santa Marta by check in an amount equivalent to $31 847 31 On a about November 14 - 2001 Individual 1 and Individual paid the AUC in Uraba and Santa Marta by check in an amount equivalent to $56 292 32 On or about December 12 2001 Individual F- and Individual paid the AUC in With respect to all statements in this actual Proffer relating to payments by check the fon or about dates refer to the dates on which such cheeks cleared the bank jnot the dates on which the checks were issued'or delivered Case Document 12 Filed 03 19 070 Page 9 of 17 Ura'aa and Santa Marta by check in an amount equivalent to $26 644 33 On or about February 4 2002 Iadividual IF and Individual 3 paid the AUC in Uraba and Santa Marta by check in an amountequival nt to $30 079 - 34 On or about March 7 2002 individual F- and IndividualG paid the AUC in Uraba and San-ta Marta by check in aname'unt Equivalent to $25 977 35 Ortor about Marcia 31' 2002 Individual and Individuai HG paid the AUC in Santa Marta in cash in two equal payments in amounts eqai valent to $3 689each 36 0171 or about April 16 2002 Individuai and Individual paid the AUC in Uraba by check in an amount equivalent to $35 675 I 37 On or about May 15 2002 Individual paid the AUC in Uraba by check in an amount equivalent to $10 888 38 On or'aboat May 31 2002 Individual and Individual paid the AUC in Santa Marta in cash in two equal payments in amounts equivalent to $3 595 each 39 In or about June 2002 IndividuaE'F and Individaal began making direct cash payments to the AUC in the SantaMartaregion of Colombia according to the procedures referenced in Paragraph 25 40 On or about June 11 2002 Individual F-and individual paid the AUC in Santa Marta in cash in three payments-in amounts equivaieat to $45 764 $6 670 and 36 269 respectively 41 On or about Iune I4 2002 Individual and Individual paid the AUC in Uraba by check in an amount equivaient to $31 131 42 On or about July 2 2002 Individual and-Individual paid the AUC in Uraba by check in an amount equivalent to $11 585 Case Document 12 Filed 03 19 07 Page 10 of 17 43 On or about July 9 2002 individual aucl Individuai paid the AUC in Santa Marta in cash in an amount equivaient to $5 917 44 On or about August 6 2002 Individual and I dividual paici the AUC in Santa Marta in cash in an amount equivalent to $4 654 45 On or about Auguet 15 2002 Individual and Individual paid the AUC in Uraba by check in an amount equivalent to $27 841 46 On or about September 2 2002 Individual and Individual Gipaid the AUC in Sauta Marta in cash in an amount equivalent to $4 616 I 47 On or about October 7 2002 Individual and hidividual paid the AUC in Santa Marta in cash in an amount equivalent to $8 026 48 On or about October 15 2002 Individual and Individual paid the AUC in Uraba by check in an amount equivalent to $40 419 49 On or about Novembei 8 20 02 Individual and Individual paid the AUC in Santa Ma a in cashin an amouut equivalent to $6 164 I 50 On or about November 29 2002 Individual and Individual G-paid the AUC in Santa Marta in cash in an amount equivalent to $5 685 51 On or about December 9 20 02 Individual and individual paid the AUC in Urab by check in an amount equivalent to $47 424 52 On or about January 21 2003 Individual and IntiividualG paid the AUC in Santa Marta in cash in an amount equivalent to $7 954 53 On or about Ianuary 27 2003 Individual and Individual paid the AUC in Utaba by check in an amount equivalent to $22 336 -10- Case Document 12 Filed 03 19 07' Page 11 of 17 54 On or about February 1 i 2003 Individual and Individual paid the AUC inSanta Marta in dash in an amount equivaient to $7 291 Defendant Chiguita Continued To Pay the AUC Against the Advice of Outside Counsel 55 On or about February 20 2003 Individual i stated to hidividnai that individaaii had discovered that the AUC had been deSignated by the United States government as a Foreign Terrorist Organization Shortly thereafter Individual 3 and Individuali spoke with attorneys in the Disttict of Columbia of ce of a national an rm outside counsel about defendant ongoing payments to the AUG 56 Beginning on or about February 21 2003 outside counsel advised defendant through Individual and Individual 1 that the payments were illegal under United States law and that defendant CHIQUITA should imniediately stop paying the AUC directly or I indirectly Among other things outside counsel in words and in sobstance advised defendant CHIQUITA 0 Must stop payments notes dated February 2 1 2003 Bottom Line CANNOT MAKE THE Advised NOT TO MAKE ALTERNATIVE PAYMENT through General Ride Cannot do indirectly what you cannot do directly Concluded with CANNOT MAKE HE memo dated February 26 2003 40 You voluntarily put yourself in this position Duress defense can wear out through repetition Buz business decision to stay in harm s way Chiquita should leave Colombia notes dated March 10 2003 T he company should not continue to make the Santa Marta payments given the designation as a foreign terrorist memo dated March 11 2003 Case Document 12 Filed 03 19 07 Page 12 of 17 TJhe cempany should not make the payment memo dated March '27 2003- 57 On or about February 27 2003 Individual and Individual paid the AUC in habit by check in an amount equivalent to $17 434 I 58 On or about March 27 2003 Individual and Individual paid the AUC in Urabd by check in an amount equivalent to$19 437 59 Grier about April 3 2003 Individual and Individual rst reported to the full Board of Directors of defendant CHIQUITA that defendant CHIQUITA was making payments to a designated Foreign Terrorist Organization A member of defendant Board of Directors objected to the payments and recommended that defendant CHIQUITA consider taking immediate corrective action to include Withdrawing from Colombia The Board agreed to disclose to the Department of Justice the fact that defendant CHIQUITA had been making payments to the AUG 60 On or before April 4 2003 according to outside counsel s notes concerning a conversation about defendant payments to the AUC Individuai said His and Individual B s opinion is just let them sue us come after us This is alSO individual A s opinion 6 1 On or about April 8 2003 Individual and Individual I met at defendant headquarters in Cincinnati with Individual F Individual G Individual H and Individual 1 According to the contemporaneous account of this meeting Individual and Individual instructed Individual and Individual to I ccntinue making payments to the AUG 62 On or abont April 24 2003 Individual and Individual C along with outside counsel met with of cialsiof the United States Department of Justice stated that defendant ICHIQUITA had been making payments to the AUC for years and represented that the payments Case'1207-cr-00055-RCL Document-12 Filed 03 19 07 Page 13 of 17 had been made under threat of Department of Justice of cials told Individual and Individual that defendant paments to the AUC were illegal and could not continue Department of Justice of cials acknowledged that the issue of continued payments was complicated 63 On or about April 30 2003 Individual and Individual told members ofthe Audit Committee of the Board of Directors and the outside auditoi's of defendant about the meeting with Department ofJustiee of cials on April 24 2003 individual and Individual said that the conclusion of the April 24th meeting was that there wouid be no liability for past conduct and that there had been conclusion on continuing the payments 64 On or about May 5 2003 according to the contemporaneous account of this conversation individual I instructed Individual and Individual to continue making payments tomeAUC 65 On or about May 12 2003 hidividual and individual paid the AUC in Santa Marta in cash in an amount equivalent to $6 105 66 On or about May 21 2003 Individual Fand individual paid the AUC in Uraba by --ehecl in an amount equivaieut to $47 235 I 67 On or about June 4 2003 lndividuai and Individual paid the AUC in Santa Marta in cash in an amount equivalent to $7 623 68 On or about June 6 2003 individual F and Individual paid the AUC in Santa Marta in cash in two payments in amounts equivalent to $6 229 and $5 764 respectively 6-9 011 or about July 14 2093 individuata and individual paid the AUC in Santa Marta in cash in an amount equivalent to 1 3 9 -13 Case Document 12 Filed 03 19 07 Page 14 of_ 17 70 On or about July 24 - 2003 Individual and Individual paid the AUC in Uraba by check in an amount equivalent to $35 136 71 011 or about August 8 2003 Individual and Individual paid the AUC in Santa Marta in cash in an amount equivaient to $5 822 I 0 7 2 On or about August 25 2003 Individual and Individual 3 paid the AUC in Uraba by check in an amount equivalent to $12 850 73- On or about September 1 2003 Individual and individual 3 paid the AUC in Santa Marta in cash in an amount equivalent to $6 963 I 74 On or about September 8 2003 outside counsel advised defendant CHIQUITA in writing through Individual and Individual I tha Department of Justice of cials have been unwilling to give assurances or guarantees of non-prosecution in fact of cials have repeatedly stated that they view the circumstances presented as a technical violation and cannot endorse current or future payments 75 On or about October 6 2003 Individual and Individual paid the AUC in Uraba by check in an amount equivalent to $18 249 76 On 0r about October 6 2003 Individual and Individual paid the AUC la Santa Malta in cash in an amount equivale t to $9 439 77 On or about Octoberld 2003 Individual 3 and Individual paid the AUC in Urab by cheek in an amount equivalent to $30 511 78 On or about November 5 2003 Individual and Individual paid the AUC Sarita Marta in cash in an amount equivalerit to $6 937 79 On or about Qecember 15 2003 Individual and IndividuaEG paid the AUC in Santa -14- case Document 12 Filed 03 19 07 Page 15 8117 1 Marta in cash in an amount ac-111111513111 to $6 337 30 i 1 Qnerabout Dege-mber 2 2003 Individual and Individual paid-the AUC 1n Uraba i 5 by check in an ameunt equivalent to $3 0 193 81 I on or about December 4 2003 Individual and Individual provided the Board of Directors additional details concerning defendant payments to the AUC that had not prev1ously been disclosed to the Board A member of defendant Board of Directors responded Io this additional inforrnation by stating reiteIate my strong opinion I stronger 110W 'Io sell our operations in Colembia 82 011 o-I'befor'e-Deceir'nber 2003 defendant CHIQUITA created and maintained - that did not identify the ultimate and intended recipient of the payments to the AUC in UIaba incalen dar year 2003 as follows Repertin gPeIiod - Descriptionofrelcinient Description ofnavrnent ISI 'Quarter 2003 I P apagayo Association Payment for security - - - a Convi'vir Convivi'rs service are licensed security providers 2 ndQuarter 2003 - apagayo Association Payment fer security a Convivir Convivirs 0 services are g0vernn1ent licensed 1 Seouri ty providers 3rd Quarter 2003 1 Papa gayo Association - Payment for security I - - a Co nvivir Convivirs services - are g0v-e1 n1nent licenSed Security providers 7 83 2 On or about December 16 _ 2003 Individual and Individual paid the AUC 1n Ur'aba by check 111 an amount equivalent to $24 584 i 84 On or about December 22 2003 Ind1v1diia1 7B sent an email t'o other Board members -15 case D'ocument'iz Filed 03 19 07 Page 15 of 17_ 7 nngoingpayn'ients to theAUC stating aniong other I things This is not-ra'managernent inventigation This is an audit-committee inVestigation It is an audit committee inventigation b eCaus e we appear to be committing a felony 85 On or about January 9 2004 Individual and Individual paid the'AUC in Santa Marta in cash in an meant equivalent to $10 63 0 86 On or about January 13 2004 Individua1 and hidiVidual paid the AUC in Uraba by checkin an amount equivalent to $27 958 - 87 _ of orj about February 4 2004 Individual Fand Individual paid the 'Urab'a 7 by check-in an arnount equivalent to $4 795 Defendant Cliicjnitak Profits from its Colombian BananaaProducing Operations 88' According to defendant recOrds from September 10 2001 through I I in or ab0ut January 2004 defendant CHIQUITA earned no more than $49 4 million in pro ts from its Go'lombian banana prodneing operations JEFFREY A TAYLOR United States Attorney for the District of Columbia 7 - D C Bar No 498610 By 7 - Wu M Maris Bar No 454548 Denis e Cheung D C Bar No 451714 Assistant United States Attorneys 1 202 305 9665 Jonathan M MaliS@usdoLgov _15_ - mud 74 77 4 7 7 7 Case Document 12 Filed 03 19 07 Page 17 of 17 A Stepheti Ponticiel lo PA Bar No 44119 Department of Justice Trial Attorney Counterterrorism Section Dated March 2007 Defendaat s Stipulation and Signature I am the Chairman of the Board of Directors President and Chief Executive Officer of Chiquita Brands Intemationai inc lam authorized by Chiquita Brands International the to act on its behalf in this matter On behalf of Chiquita Brands International 11 10 after consulting with its attomeys and pursuant to the plea agreement entered into this day with the United States I hereby stipulate that the above statement of facts is true and accurate lfurthet stipulate that had the matter proceeded to that the United States would have proved the same beyond a reasonable doubt Chiquita Brands International Inc 3 2 2039 Date By t W e I Chat the Board of Directors President and Chief Executive Of cer of Chiquita Brands International inc Attomey s Acknowledgment i am cottasel for Chiquita Brands international Inc I have carefully reviewed the above statement offsets with my client To my knowledge the decision to stipulate to these facts is an informed and voluntary one 3 N3wl 7 I m 5 Date - Eric H Ems-offs Ego 1 Counsel for Chiquita Brands In creations Inc -17- USA v CHIQUITA BRANDS INTERNATIONAL INC Docket No 1 07-cr-00055 D D C Mar 14 2007 Court Docket General Information Court United States District Court for the District of Columbia United States District Court for the District of Columbia Federal Nature of Suit Criminal Docket Number 1 07-cr-00055 Status Closed C 2017 The Bureau of National Affairs Inc All Rights Reserved Terms of Service PAGE 18                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu