April 27, 2009 8:39 PM

Report Reveals Why Lawyers OK'd Chiquita Payments to Colombian Terrorists

Posted by Brian Baxter

A new 269-page report by an independent special litigation committee reveals why Chiquita Brands International paid extortions to Colombian terrorists for 15 years, reports the Cincinnati Business Courier.

Cincinnati-based Chiquita, one of the world's top banana producers, admitted in March 2007 that it had paid millions to several Colombian terrorist groups in order to protect its workers and business interests in the South American country.

Chiquita subsequently paid $25 million to settle a Justice Department investigation into the payments, making the company the first in the U.S. to be convicted of financial dealings with designated terrorist organizations.

Former Covington & Burling partner and current U.S. Attorney General Eric Holder, Jr., was tapped by Chiquita to handle the Justice Department inquiry. The ensuing legal proceedings raised questions about the legal advice Chiquita had received about the payments from its outside counsel at Kirkland & Ellis and touched off a turf war between Main Justice's criminal division and the U.S. attorney's office for the District of Columbia over how the investigation should proceed. (Corporate Counsel's Sue Reisinger wrote an excellent feature story on Chiquita's legal predicament in November 2007.)

Since settling the criminal case, Chiquita has sought to clear itself of civil liability in consolidated litigation before U.S. district court judge Kenneth Marra in West Palm Beach, Fla.

According to the Courier, a special litigation committee report was filed along with a motion to dismiss the shareholder litigation, a fairly common occurrence. The massive report delves into how the $10,000 payments that Chiquita doled out in the eighties soon multiplied into multimillion-dollar payments to right-wing paramilitaries and left-wing guerrillas a little more than a decade later. (The report also states that Chiquita chose to settle the Justice Department case rather than face as much as $180 million in potential litigation costs.)

Fried, Frank, Harris, Shriver & Jacobson partners David Hennes, Michael Bromwich, and William McGuinness are serving as counsel to Chiquita's special litigation committee along with Joseph DeMaria of Miami's Tew Cardenas. (Former Chiquita executives can still be prosecuted under the company's plea agreement; former general counsel Robert Olson, who hasn't been charged but left Chiquita in 2006, is being represented by Arnold & Porter's Robert Litt.)

The Courier reports that despite the special litigation committee's conclusions, plaintiffs attorneys aren't backing down.

"I'm not aware of a case where an American company has laid out in such detail [these] kinds of things," said Steven Steingard of Philadelphia plaintiffs firm Kohn Swift & Graf, which represents the widows of five American missionaries kidnapped and murdered by Colombian guerrillas in the early nineties. "It's a remarkable listing of . . . the conduct that went on for years and years that nobody knew about."

Chiquita sold its Colombian banana operations for nearly $40 million in June 2004.

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