Friday, August 3, 2007

The Cooperation Vise

The Wall Street Journal (here) and Washington Post (here) have interesting articles on possible criminal charges against board members of Chiquita Brands International for payments to a Columbian paramilitary group to protect the company's operations.  While Chiquita settled the case by pleading guilty and paying a $25 million fine, the investigation of individuals has moved forward because the payments continued after the company informed the government of them.  Chiquita apparently believed it could not simply cut off paying the paramilitary organization, which was designated a terrorist group on September 10, 2001, without endangering its workers.  While the government never said they could continue, it appears that federal prosecutors, including the then-head of the Criminal Division, Michael Chertoff, the current secretary of the Department of Homeland Security, did not tell Chiquita it had to stop.

As co-blogger Ellen Podgor points out in the WSJ story, "This case will make companies think twice about self-reporting."  At a minimum, the government's consideration of criminal charges against individual board members signals that when a company decides to cooperate it better be ready to stop all illegal activity it plans to disclose.  It may be that Chiquita did not have a Plan B in case the government did not authorize it to continue the payments because prosecutors clearly look askance at cooperation that does not include a cessation of the underlying activity.  The prosecution of Stolt-Nielsen is an example of a company accused of wrongdoing after agreeing to cooperate due to what prosecutors alleged is continued misconduct.  In addition to the decision to cooperate, the timing of the disclosure is an important issue if a company wants to show that it has made a clean break for prior illegal conduct. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/08/the-cooperation.html

FCPA, International, Investigations | Permalink

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