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Skeletons in the Corporate Closet: Chiquita and Dole


Top banana companies stand accused of hiring murderous terrorist groups.

Chiquita (CQB), the well-known food company best known for its bananas, has had its own share of a few bruises over the past couple decades.

Earlier this year, a federal judge denied the company's motion to dismiss a damage suit that was filed by five widows who claim that Chiquita is at least in part responsible for their husbands' murders at the hands of Colombian rebels.

In the early 1990s the five men, all missionaries, were abducted from their homes in Pucuro, Panama, across the border from Colombia, by the Armed Revolutionary Forces of Colombia, commonly known as FARC.

In 2007 it was confirmed that three of the men, who had been taken captive in 1993, had been killed in 1996. The two other men, who were abducted in 1994, died in a firefight between FARC and the Colombian government in 1995.

It wasn't until March 2007 that the women knew of Chiquita's involvement. It was then, through a US Justice Department investigation, that the company pleaded guilty to violating US antiterrorism laws by paying $1.7 million from 1997 to 2004 to the United Self-Defense Forces (AUC), the right-wing paramilitary group that had forced FARC out of the region.

Through court proceedings it became known that Chiquita made more than 100 payments to the AUC. Chiquita also acknowledged that it had been making monthly payments to FARC from 1989 to at least 1997 -- the period of time that included the five missionaries' abductions and murders.

Both FARC and AUC are considered terrorists by Colombia and the United States.

Ed Loyd, a spokesman for Chiquita, told the New York Times that the company did in fact make payments to FARC during the 1990s, but they were intended to ensure the safety of Chiquita employees working on banana plantations near the Panamanian border, a former stronghold of the leftist guerrillas.

He has also cited a 1995 incident in which 25 people aboard a bus transporting Chiquita employees were killed in an attack. He added that more than 50 employees were killed in Colombia in the 1990s.

Loyd did not return repeated requests for comment from Minyanville.

Dole (DOLE), which joins Chiquita as a top banana importer, is facing a similar suit. Almost a year ago 73 heirs of individuals who were murdered by the AUC filed a legal complaint against the company.

Dole immediately issued a press release saying the claims were "bogus" and "baseless."

Conrad & Scherer, the Florida-based law firm representing the plaintiffs in both the Dole and Chiquita cases, filed an amended complaint in the Dole case on April 9.

Although the 1990s may have been the most tumultuous decade for Chiquita's relations in Colombia, the brand's stock was flying.

Today the company is expecting poor first-quarter results, as banana volume in Europe has dropped 11% and prices there fell 13%.

However, CEO Fernando Aguirre said in a statement that he expects the pricing of bananas to strengthen throughout the year.

According to a Thomson Financial survey, analysts expect per-share earnings of $0.59 on revenue of $870 million in the first quarter.

While trying to look forward, the past has yet to catch up with Chiquita for good. A new complaint representing 242 Colombians seeking more than $1 billion in damages was just filed on April 14 and the company is still awaiting an order on the long-pending dismissal motion.

In his ruling to allow the suit to proceed through the judicial system, US District Judge Kenneth A. Marra wrote that the families of the victims "allege that Chiquita, knowing that FARC was a terrorist organization, intentionally agreed to provide money, weapons and services to it as part of a common scheme to subvert local trade unions, protect Chiquita's farms and shipments, harm Chiquita's competitors, [and] strengthen FARC's military capabilities, and that [the families] were injured by overt acts done in furtherance of the common scheme."

Loyd, the Chiquita spokesman, adamantly disagrees.

"It makes no sense to make Chiquita or Chiquita employees liable for the horrible crimes that those groups committed," he said, according to CNN.

Terry Collingsworth, an attorney at Conrad & Scherer, told Minyanville that the judge's ruling could come "any time now."
No positions in stocks mentioned.
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