Chiquita to plead guilty to ties with terrorists

Federal authorities say the banana producer made transactions with terrorist organizations.

WASHINGTON (CNN) -- Chiquita Brands International entered a plea agreement with federal authorities on charges that it engaged in transactions with a terrorist organization.

The company agreed to pay a $25 million fine regarding the investigation of protection payments made by the company's former banana-producing subsidiary in Colombia.

Federal authorities charged banana giant Chiquita with ties to terrorist organizations.

Shares of Chiquita (up $0.25 to $12.75, Charts) fell nearly 1 percent in after-hours trading on the New York Stock Exchange Wednesday.

The announcement came moments after U.S. Attorney for the District of Columbia Jeffrey Taylor accused the Cincinnati-based banana producer with paying - through its Colombia subsidiary Banadex - a right-wing paramilitary group in Urabá and Santa Marta, two areas of Colombia where Chiquita grew bananas.

"From in or about 1997 though on or about Feb. 4, 2004, defendant Chiquita made over 100 payments to the AUC [United Self-Defense Forces of Colombia] totaling over $1.7 million," the 17-page information said.

It said Chiquita had also paid money to two left-wing organizations from about 1989 until about 1997, when those groups controlled areas where the company grew bananas. It identified the groups as the FARC (Revolutionary Armed Forces of Colombia) and the ELN (National Liberation Army).

The company recently pushed back its annual report to amend an agreement with lenders after taking a charge related the federal investigation.

Under the terms of the agreement, the company will pay the fine in five annual installments. The agreement is subject to approval and acceptance by the United States District Court for the District of Columbia.

Chiquita did not file its annual report by March 1 as required and now expects to file it on March 16. It is seeking approval of an amendment with lenders under a June 28 credit agreement, it said.

In a Feb. 22 filing, Chiquita said it had voluntarily disclosed that its Colombian banana-producing subsidiary, which it sold in June 2004, had made payments to certain groups there that were designated as "foreign terrorist organizations" under U.S. law.

Following the disclosure, the Justice Department initiated a criminal investigation to examine the role and conduct of the company and some of its officers in the matter, the company said in that filing.

Terrorist payments

The company began making the payments after a general manager for Banadex met with the then leader of the AUC, Carlos Castaño, the information said.

Castaño told the company's general manager that the AUC was preparing to drive FARC from Urabá and asked for payments to be made to the AUC through private security companies, the information added.

"Castaño sent an unspoken but clear message that failure to make the payments could result in physical harm to Banadex personnel and property," it said. Senior company executives knew about the payoffs to AUC, the information said.

Though the checks were written to security companies, the companies provided no actual services.

In 2002, after the U.S. government designated the AUC a terrorist organization, Chiquita began paying the AUC in cash, turning over more than $1 million and continuing to pay even after outside counsel told the company that the payments were illegal and should stop immediately, the information said.

In a written statement, Chiquita Brands International's CEO Fernando Aguirre said the information is part of a plea agreement, "which we view as a reasoned solution to the dilemma the company faced several years ago."

He said Chiquita voluntarily disclosed the payments to the Justice Department in 2003, saying they were made "to protect the lives of its employees."

He added, "The company made this disclosure shortly after senior management became aware that these groups had been designated as foreign terrorist organizations under a U.S. statute that makes it a crime to make payments to such organizations. Since voluntarily disclosing this information, Chiquita has continued to cooperate with the DOJ's investigation."

--CNN's Katy Byron and Reuters contributed to this report

Chiquita cleans up its act

Kraft stirs up new strategies  Top of page