Magazine article Security Management

No More Corporate Cash for Militias: U.S. Companies Must Be Cautious in Dealing with Foreign Militia Groups as the Government Cracks Down on Payment Schemes

Magazine article Security Management

No More Corporate Cash for Militias: U.S. Companies Must Be Cautious in Dealing with Foreign Militia Groups as the Government Cracks Down on Payment Schemes

Article excerpt

WHEN WE THINK OF the war on terror, we think of American business as an ally of the U.S. government, but when it comes to doing business in a conflict zone like Colombia or Nigeria, some companies have straddled the line--paying off or otherwise supporting outlaw groups that have been listed as terrorist organizations. The government is now aggressively going after businesses that have engaged in these practices.

Take the case of Cincinnati-based Chiquita Brands International. Chiquita admitted that for more than six years starting in 1997, it handed over $1.7 million in cash and checks to local commanders of the right wing United Self Defense Forces of Colombia (AUC). The AUC, disbanded in 2006, imposed a reign of terror and operated a thinly disguised protection racket in northern Colombia. In June, Chiquita Brands International agreed to pay a $25 million fine to the U.S. Justice Department after pleading guilty to "engaging in transactions with a specially designated global terrorist." Chiquita also agreed to cooperate in an ongoing investigation.

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Court documents state that even before that Chiquita paid undisclosed amounts of money to two left wing guerrilla groups starting in 1989 until the AUC drove them out of the region in 1997. A company official told Security Management that the company was not solely motivated by profit; executives reasoned that by pulling out, Chiquita might weaken the regional economy, worsen the plight of local people, and destabilize Colombia, an ally of the United States. But to continue operating in the region, it had to pay off AUC warlords.

The money kept flowing even after the U. S. government declared the AUC a terrorist organization in 2001. In 2003, Chiquita executives sought U.S. government guidance on the matter. But even after government officials and the company's own outside legal counsel told it to stop, Chiquita kept up its payments.

Then in January 2004, Fernando Aguirre joined Chiquita as CEO and immediately ordered the payments to stop. In June of that year, he sold Chiquita's Colombian subsidiary to local investors, though the company still imports Colombian bananas. Because Chiquita cooperated with government investigators, the government dropped criminal charges against ten senior executives implicated in the affair. They include Chiquita's former CEO, its former general counsel, and a former board member.

The law is fairly unambiguous when it comes to these types of payments, says Jay Robert Brown, a Denver University corporate governance expert. "There is some wiggle room for companies when they are defending their employees. But [Chiquita] was doing this for a long time, paying off these violent groups," he notes.

Chiquita is far from alone. A growing number of cases being brought against major U.S. corporations by the government and advocacy groups highlights how common the practice has been, particularly in regions where fighting has engulfed the operations of U.S. and European multinationals.

As these cases go forward, prosecutors and plaintiffs are having more success in American courts than before. This is forcing companies to rethink the way they handle security in far-flung trouble spots.

Some companies have been accused of going beyond simply paying bribes or protection money. In August, a U.S. District Court judge found evidence that Chevron Nigeria Limited (CNL) personnel "were directly involved in the attacks" against villagers in the country's volatile, oil-rich Niger Delta region a decade ago. The judge rejected Chevron's claims for dismissal and allowed the case to go forward. …

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