In May 2004, Cincinnati-based Chiquita Brands announced that it had voluntarily told the U.S. Justice Department about payments that its Colombian subsidiary, Banadex, had made to unspecified Colombian terrorist groups.
At the time, the story made few headlines beyond wire-service reports and a piece in the Cincinnati Enquirer. It was soon all but forgotten. It looked like Chiquita had performed a masterful bit of â€œscandal management,â€ the branch of public relations that contends, â€œThe cover-up is always worse than the crime, so get it all out as soon as possible.â€
Yet since the announcement late last week that Chiquita and the Justice Department had agreed on a $25 million fine in exchange for a guilty plea, the Chiquita story has only drawn more attention and debate in both the United States and Colombia. Why is this?
1. The details. Unlike Chiquita’s 2004 unilateral announcement, the plea agreement discusses at length what the U.S. company – the successor to the notorious United Fruit Company – is guilty of doing. The indictment – available thanks to a good analysis on Slate – explains:
Defendant CHIQUITA began paying the AUC in UrabÃ¡ [northwestern Colombia, near Panama] following a meeting in or about 1997 between the then-leader of the AUC, Carlos CastaÃ±o, and Banadex’s then-General Manager. At the meeting CastaÃ±o informed the General Manager that the AUC was about to drive the FARC out of UrabÃ¡. CastaÃ±o also instructed the General Manager that defendant CHIQUITA’S subsidiary had to make payments to an intermediary known as a â€œconvivir.â€ CastaÃ±o sent an unspoken but clear message that failure to make the payments could 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 illegal activities.
It turns out that Chiquita made over 100 payments to the AUC, totaling about $1.7 million over nearly seven years.
2. The Colombian government’s unexpectedly strong reaction. Though Chiquita has portrayed its payments as extorted â€œprotection money,â€ both President Ãlvaro Uribe and Attorney-General Mario IguarÃ¡n have called for eight accused Chiquita executives’ extradition to face trial in Colombia.
Uribe may be seeking to distract attention from an ongoing scandal that has consumed several of his supporters in the government and Congress, all of them accused of helping paramilitary groups. With his extradition demand, Uribe sends a message that the list of paramilitaries’ backers in fact goes beyond his support base on Colombia’s right wing.
The call for Chiquita executives’ extradition also taps into a commonly felt frustration among Colombians. Many see their government handing over Colombian citizens to face long jail sentences in the United States, but believe that U.S. citizens accused of trafficking drugs or supporting armed groups in Colombia – including rogue U.S. military personnel who have dealt in drugs or weapons – get slaps on the wrist, such as fines or a few months in prison.
Either way, if the Colombian government wishes to begin punishing foreign executives whose corporations have paid â€œprotection moneyâ€ to illegal armed groups, it is within its rights to do so – but it may find itself extraditing a lot of people. Such payments are widely believed to have been commonplace for decades. Candidates for extradition run from the German construction company Mannesmann – whose payoffs to the ELN when building the CaÃ±o LimÃ³n-CoveÃ±as oil pipeline practically underwrote the guerrilla group’s revival from near defeat in the 1980s – to various oil, coal and beverage companies accused of paying paramilitaries to kill union organizers.
3. The convivir connection. It is not good news for President Uribe that, according to the indictment, Carlos CastaÃ±o ordered Chiquita to funnel its money through a convivir security cooperative. The convivir were a bizarre mid-90s experiment in which the Colombian government encouraged the formation of legal citizen militias to assist the security forces. Predictably, many of the convivir ended up committing abuses and linking with – or evolving into – paramilitary groups. They were abolished in 1998.
One of the most ardent promoters of the convivir model was Ãlvaro Uribe, who encouraged their formation during his period as governor of Antioquia department (January 1995-December 1997). The UrabÃ¡ region, where Chiquita was operating, includes part of Antioquia; the convivir to which Carlos CastaÃ±o instructed Chiquita to send payments (the â€œPapagayo Associationâ€) was in fact founded during Uribe’s term as governor.
So much for â€œscandal management.â€ The Chiquita story is likely to be with us for some time – especially if Attorney-General Mario IguarÃ¡n makes good on his pledge to keep pursuing â€œpara-businesses.â€