This is a tale of a banana republic and banana Republicans. It is also a tale stranger than fiction. It should also be a cautionary tale for House Democrats cheering so-called Free Trade Agreements (FTAs) that Bush desperately wants throughout South America and Asia.
In the late 1990s, Chiquita Brands International was struggling with the profitability of its banana farming operations in Columbia. Starting in 1997, they started to pay a paramilitary organization known as "Autodefensas Unidas de Colombia" (AUC) for "protection." Presto. By 2004, the Banadex subsidiary of Chiquita, was suddenly the most profitable unit of the company. Then Justice Department spoiled the party, charged the company with a host of crimes, and Chiquita was fined $25 million as part of a plea deal. Even USA Today reported this much of the story. However, there is more here than meets the eye.
First, Chiquita has been paying for protection for a long time. Prior to 1997, they paid anti-government guerilla organizations like the FARC and ELN for protection. When the banana growing region came under control of the AUC, then Chiquita signed up and their profits soared despite having to shell out $1.7 million for "security."
The real trouble for Chiquita came in 2001. On September 10, 2001, the AUC was designated a terrorist organization by the State Department. The company continued to pay the AUC and got busted by the Ashcroft-led Justice Department. The unsavory details are contained in the USA Today story, which is remarkably detailed for the paper.
More than 4,000 people were killed in the Uraba banana-growing region during the period when Chiquita admits to paying the AUC.
"Chiquita's money helped buy weapons and ammunition used to kill innocent victims of terrorism. Simply put, defendant Chiquita funded terrorism," the Justice Department said last month in court filings.
In this brutal, shadowy war, which drew only episodic attention outside Colombia, the interests of the paramilitaries and big business overlapped, according to labor leaders and critics of the Colombian government. The AUC and similar groups regarded all union organizers not as worker representatives seeking better pay and working conditions but as guerilla allies in a left-wing campaign to topple the government. To the private armies of a fractured society, they were legitimate (if unarmed) targets in the ongoing conflict. And businesses wanted compliant, low-cost labor.
I was pleasantly surprised that the paper noted the confluence of interest between the paramilitaries and the multinational corporations. Business wanted cheap labor and the paramilitaries murdered union organizers and their family members. A marriage made in hell.
The problem with the article is it would seem like the Justice Department was on top of things and enforcing international laws. There seems to be a little more to the story. With the Bushies, there is always a back story.
I discovered a much more detailed analysis of the Chiquita story in Portfolio magazine. Since Columbia is another of the countries that the Bushies want to sign a FTA with, similar to the Peru FTA, I strongly encourage everyone to read the 7-page article in Portfolio penned by Kevin Gray.
Now, for the back story. The Justice Department did not catch Chiquita paying the Columbian equivalent of Blackwater. Lawyers for the company discovered that the AUC was on the terrorist watch list and contacted the DoJ for advice and consent in early 2003. Company executives were concerned they might be in deep guano if they got caught. So, company officials wanted to confess their sins, hoping for a slap on the wrist.
Over the next few days, according to the federal complaint and lawyers on both sides, Olson and Roderick Hills argued internally that Chiquita was in an impossible bind: If it stopped paying off the A.U.C., its workers and facilities would be in jeopardy. Would Chiquita be off the hook because some of the payments had been made through a convivir, or security firm? Urgenson’s legal compass did not move. Notes from his discussions, laid out in a February 26, 2003, memo read like one side of a moot court debate: “Bottom Line: CANNOT MAKE THE PAYMENT.” Followed by “Advised NOT TO MAKE ALTERNATIVE PAYMENT through CONVIVIR.” Also added is a line of basic legal logic: “General Rule: Cannot do indirectly what you cannot do directly.”
On April 3, Hills and Olson finally told the full Chiquita board about the company’s payments in Colombia. The board recommended that the two executives go to the Justice Department and confess the wrongdoing, in the hopes that self-disclosure would earn the company leniency. They had good reason to expect such an outcome: In the past, firms that self-reported wrongdoing were often granted deferred prosecution, meaning they’d face no penalties as long as the activity ceased immediately.
Here is where the story gets really interesting.
Hills was considered a man of impeccable integrity, with vast legal knowledge and friends in high places. A former law-firm colleague, Michael Chertoff, was then head of the criminal division at the Justice Department. (He later became Secretary of Homeland Security.) Hills was convinced Chertoff would understand Chiquita’s plight. On April 24, Hills, Olson, and Urgenson met with Chertoff at Justice headquarters. What happened at that meeting is now the subject of an ongoing federal probe. Hills laid out the problem, saying he knew the A.U.C. payments were illegal but that stopping them could mean death and destruction. In effect, Hills seemed to want Chertoff to give Chiquita absolution.
According to a source familiar with the meeting, Chertoff told Hills that the payments were indeed illegal and could not continue but acknowledged that the issue of continued payments was “complicated.” Hills, the insider says, argued that if Chiquita stopped the payments, it would have to pull out of Colombia, possibly destabilizing the region and putting U.S. security interests at risk. Hills offered to take the issue to the National Security Council or other agencies—a typical course when a prosecution might jeopardize U.S. diplomatic interests. Chertoff said he would do that himself and that Chiquita should await his response. The company maintains that Chertoff never replied. (Chertoff declined to comment for this article.)
Clearly, the Justice Department did not "catch" Chiquita in the act of paying terrorists as the USA Today seems to imply. No, the wrongdoing was brought to their attention. In fact, it was brought to the attention of one Michael Chertoff, whom as fate would have it is now head of homeland defense. That Chertoff fellow never got back to the company about how to handle the situation, so Chiquita decided to continue the payments for another year before selling off the Banadex subsidiary in 2004. Selling off Banadex worked out really well for the company:
With federal prosecutors closing in, Chiquita came up with a solution to its problems in 2004. It sold its Colombian subsidiary, Banadex (which had been making the A.U.C. payments), to a local outfit called Banacol. But as part of the sale, Chiquita negotiated a contract to buy 11 million 40-pound boxes of bananas a year—the entirety of Chiquita’s former Colombian harvest—from Banacol for eight years. In other words, Chiquita has not given up a single banana from Colombia.
The supply of bananas was uninterupted and the company claimed a 9 million dollar loss in selling Banadex to Banacol:
By February 2004, Chiquita’s new C.E.O., Fernando Aguirre, had finally stopped the payments. A month later, Chiquita sold Banadex to a holding company called Invesmar for $51.5 million, taking what Chiquita estimates to be a $9 million loss.
When I wear my tinfoil hat, I wonder if Chiquita intended to guarantee the supply of bananas for 8 years until the legal storm blew over and it would be safe to re-aquire the holdings under a new, improved, squeaky clean subsidiary.
There is another strange piece to the puzzle. The Justice Department was pursuing charges against Chiquita in 2004 when Ashcroft was Attorney General. When he left in early 2005, the heat cooled considerably for another 3 years under Alberto "Fredo" Gonzales. Then, in April of 2007, with the Bushies juiced for FTAs in South America, including Columbia, the Justice Department finally filed charges against Chiquita.
This summer, congressional investigators asked the U.S. attorney general’s office to take a close look at the meeting between Chiquita executives and Michael Chertoff on April 24, 2003. Specifically, they want to know if Justice showed any favoritism toward the company. Why did it wait until four years after that meeting, they ask, to charge Chiquita with a crime?
Four years is a long time to ponder charges, even for an Attorney General with a memory disorder serious enough to warrant a clinical diagnosis of Alzheimer's disease.
Kevin Gray also does a very good job of outlining the benefits of the partnership between these multinational corporations like Chiquita and the right-wing paramilitary thugs:
As a corporation, though, Chiquita stood to benefit greatly from the lethal cleansing that Castaño delivered. At the time, the Marxist guerrillas routinely kidnapped U.S. executives, blew up railroads, and sabotaged oil pipelines. Chiquita says it became increasingly difficult to protect its workers and their families. Castaño’s death squads, however, were squarely pro-business. They were not just ridding Urabá of guerrillas; they were killing leftists and eradicating unions.
“The payments Chiquita made to the paramilitaries were part of a project that the A.U.C. called Operation Genesis,” says Gloria Cuartas, who was the mayor of Apartadó from 1995 until 1997, when Castaño threatened her life and drove her out of the area. “It called for the elimination of the left and of all social groups that were supposedly contributing to instability for investors and the multinationals.” Francisco Ramirez, a leading labor lawyer with the United Confederation of Workers, the largest labor union in Colombia, says that money from Chiquita and other companies “created these paramilitary groups and helped destroy the unions.”
Bear in mind that Chiquita put the 100 payments to the AUC on its books as payments to a security firm (a convivir). And that security arrangement worked out very well indeed. In fact, the AUC control over large segments of the Columbia countryside has resulted in a decline in union membership from 14% of the population to under 9% in less than 5 years. Brutality in the service of union-busting by paramilitary organizations is very effective.
In the past decade alone, the paramilitary group United Self-Defense Forces of Colombia, or A.U.C., has committed an estimated 62 massacres in the region of Urabá, killing 3,778 people and forcing 60,000 peasants off their land. It’s little wonder that no one wants to open his mouth.
Here is what one of the heroes of the Democratic Party (a Spinecrat), Rep. Lynn Woolsey, had to say about sordid business arrangements in Columbia.
PREPARED STATEMENT OF THE HONORABLE LYNN C. WOOLSEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIR, SUBCOMMITTEE ON WORK FORCE PROTECTIONS, COMMITTEE ON EDUCATION AND LABOR
This hearing today illustrates that—whether we sit on the Ed & Labor Committee or the Foreign Affairs Committee, or in my case on both—what goes on with workers in Colombia, especially those employed by U.S. companies, has a huge bearing on the decisions we make in Congress. After all, since 2000, the U.S. has provided over $5.5 billion in assistance to Colombia—more than any other country in South America—to curb drug trafficking and assist the government in eliminating the influence of the Country’s homegrown paramilitary and other terrorists groups. And we are currently re-negotiating a free trade agreement with Colombia. And it is essential that 5 basic labor rights, as outlined in the International Labor Organization Declaration, become part of that agreement. Against this backdrop is a four-decade long civil war in Colombia, involving leftwing guerillas, right-wing paramilitaries and the government. These groups are funded by drug trafficking and extortion. And trade unionists in Colombia have found themselves at the center of this battle. Due to past ties some union groups have had with left-wing guerillas, trade unionists have been targeted by the paramilitary groups, who have murdered them at an alarming rate. According to the State Department, more tham 4,000 union members have been killed in the last 20 years. Last year alone, Colombian labor groups report that over 70 unionists were killed. And those who are not killed are often threatened, attacked or kidnapped. Many of these crimes are never even investigated, and the vast majority have gone unsolved. One of the recent victims was Carmen Cecilia Santana Romana. She was a 28-year old mother of 3 and a national trade union official. Colombia is the most dangerous country in the world for trade unionists. Which is a shame; because before 1990, Colombia’s trade unions were among the strongest in Latin America. And while paramilitary groups have been supposedly ‘‘demobilized’’ under a peace agreement with the Colombian government in 2004, these groups are still in operation, committing horrendous acts of violence against the workers and citizens of Colombia. What is equally disturbing is that the influence of these groups reaches high into the Colombian government. And U.S. companies were also involved with these violent groups. Chiquita has admitted that it paid paramilitary groups and paid $1.7 million in protection money over a 7-year period. It paid a $25 million fine, which some say was too lenient given the seriousness of the company’s actions. Drummond has also admitting to paying paramilitary groups at its mining operation in Colombia. But it is beginning to appear that the involvement of Chiquita, Drummond and other companies might have gone much further. Today, we will explore the extent of their involvement with these groups, including whether they were complicit in the deaths of their own union employees. I think this is going to be a very tough hearing, and we will hear disturbing evidence of gross violations of human rights.
As noted by David Sirota in this excellent post, Bush is pushing for the passage of the Peru Free Trade Agreement, another poisonous trade agreement, with Spineless Hoyer salivating at the opportunity to give Bush everything he wants. While the Democrats have held the line on Columbia (so far), the rush to fast-track these FTAs should be stopped.
Laura Carlsen outlines two reasons why Bush is so desperate to promote FTAs:
The Bush administration wants to create more advantageous conditions for transnational corporations and remove remaining barriers to the flow of capital and crossborder production within the framework of NAFTA. It wants to secure access to natural resources...