By Cliff Peale
The Cincinnati Enquirer
Chiquita Brands International Inc. said Monday the Justice Department is investigating payments the company made to Colombian terrorist groups in response to threats against its workers.
Cincinnati-based Chiquita, the world's largest banana company, said it voluntarily informed the Justice Department in April 2003 that it made the payments over an undisclosed period of time.
Chiquita said the Justice Department was contacted after the company discovered the groups were listed on the State Department's Foreign Terrorist Organizations list. The list names 37 organizations, including al-Qaida as well as three groups in Colombia.
A Justice Department spokesman declined Monday to comment on the investigation. U.S. law makes it a crime to knowingly provide resources to terrorist organizations.
Chiquita would not say when the payments started or stopped, to whom they were made or how much was paid. But in its disclosure Monday, the company said the government's initial investigation has expanded to include "the role and conduct of the company and some of its officers."
The company also said the federal probe will not stop negotiations to sell its Colombian operations.
Chief executive officer Fernando Aguirre, who joined Chiquita in January, emphasized the company took the terrorist threats seriously.
"The company's sole reason for submitting to these payment demands has been to protect its employees from the risks to their safety if the payments were not made," he said.
Aguirre said the investigation is confined to the company's Colombia operations. "This issue only involves our Colombian subsidiary," said Aguirre. A company spokesman said Aguirre was informed of the probe before he left Procter & Gamble Co. to take the reins at Chiquita.
Aguirre spoke with Chiquita investors after the company released its quarterly earnings report on Monday. The disclosure of the federal probe was made in the earnings statement, which was released after the close of the stock market.
Chiquita's Colombian subsidiary, called Banadex, includes about 4,400 employees and contributes about 9 percent of Chiquita's total banana volume. Chiquita produces about 130 million boxes of bananas a year, mostly from plantations in Central and South America.
The company is negotiating to sell the unit to a Colombian fresh-fruit distributor called Banacol and is closing in on a deal, Aguirre said.
"We are taking this situation very seriously but believe it's manageable," Aguirre said of the investigation.
Chiquita has had other troubles in Colombia in recent years. In October 2001, the company was fined $100,000 by the U.S. Securities and Exchange Commission for violating the record-keeping provisions of the Foreign Corrupt Practices Act, which prohibits bribing of foreign-government officials.
Rival insurgent groups, some involved in drug trafficking, have been fighting the Colombian government for decades. Three rebel groups in Colombia are listed on the State Department's Internet site as foreign terrorist organizations:
The National Liberation Army.
The Revolutionary Armed Forces of Colombia, known as FARC.
The United Self-Defense Forces/Group of Colombia, known as AUC.
Chiquita's operations in northern Colombia are in a region in which AUC is known to be active, according to reports by Reuters.
In 2000, FARC announced a "peace tax" requiring payments from individuals and companies with net worth of more than $1 million, Bloomberg Business News reported Monday.
Chiquita revealed the investigation while reporting its first-quarter earnings.
The company said it earned $19.9 million, or 46 cents per share, compared to earnings of $24.9 million, or 62 cents per share, during the same period a year ago.
Sales increased by two-thirds to $793.2 million. Most of that increase came from the acquisition of European produce distributor Atlanta AG. Excluding Atlanta, sales increased 8 percent.
Chiquita also said:
It would invest $10 million to $15 million in new fresh-fruit innovation programs.
While Chiquita lost $3 million on its new fresh-cut fruit venture, early results from distribution in the U.S. Midwest are favorable. The company even plans to roll out new television commercials for the line soon.
Chiquita shares closed Monday at $17.10, down 21 cents. In after-hours trading, the stock fell an additional 91 cents to $16.19.
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