Chiquita admits payments to terror groups

By Seattle Times news services

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The admission by a U.S. company that its Colombian subsidiary paid protection money to "terrorists" confirmed what has long been an open secret in Colombia: Businesses are sometimes forced to pay off illegal armed groups.

Extortion is a huge problem for businesses in Colombia, which is struggling with a 40-year guerrilla war. But Cincinnati-based Chiquita set a precedent Monday by saying it had voluntarily revealed to U.S. authorities that its banana-exporting Colombian subsidiary paid off groups the U.S. government calls "terrorist."

Chiquita said it had not realized the payments were illegal in the United States when it made them. Chiquita said it sought Justice Department guidance when it became aware the groups had been designated as foreign terrorist organizations under a U.S. statute that makes it a crime to support such an organization.

The subsidiary, called Banadex, made the payments under pressure to ensure the safety of employees, said Chiquita, which did not reveal the amount or recipient.

Chiquita's stock fell nearly 5 percent to close at $16.25 on the New York Stock Exchange. Chiquita also announced its first-quarter earnings fell by 20 percent to $20 million despite a 68 percent sales increase to $793 million.

Banadex has about 4,400 employees and contributes about 9 percent of Chiquita's banana supply.

Chiquita, which emerged from bankruptcy in 2002, said in January that it was in talks to sell the Colombian operations as part of an effort to cut costs and develop higher-profit products. The business is mainly on the Caribbean coast, where there is rebel activity.

The company operates in areas where there is a heavy presence of the United Self-Defense Forces of Colombia, a far-right paramilitary army known by the Spanish initials AUC, which has been blamed for thousands of killings over the years and is classified as a "terrorist" organization by the United States.

The Revolutionary Armed Forces of Colombia (FARC), the largest rebel group, in 2000 announced a "peace tax" requiring payments from individuals and companies with a net worth of more than $1 million.

The United States also has identified FARC and the smaller insurgent National Liberation Army as foreign terrorist groups.

Compiled from The Associated Press, Reuters and Bloomberg News reports

Copyright © 2004 The Seattle Times Company

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