Thursday, September 13, 2007

Chiquita Directors Dodge an Indictment

What looked like a potentially unprecedented prosecution of corporate directors for not stopping the company's illegal overseas payments after it disclosed the conduct to the Department of Justice ended with a decision not to pursue charges against any individuals.  Chiquita Brands International, Inc. had been paying a Columbian paramilitary group protection money for a number of years to ensure the smooth operation of its subsidiary in the country, even after the delcaration that the organization was a global terrorist.  After Chiquita reported the payments -- and its improper accounting for them under the FCPA -- to the Department of Justice, there was concern on the board that it could not simply stop paying the money without risking the safety of its employees, so for nearly a year it continued the transfers.  While the company was allowed to plead guilty to one count of engaging in transactions with a specially-desiganted global terrorist, the district court refused to sentence Chiquita until the Department of Justice decided whether it would charge any of the directors who allowed the payments to continue after the initial disclosure.  While there was "serious consideration" given to filing charges, according to the government's sentencing memorandum (available below), "In the exercise of its prosecutorial discretion, the United States has decided not to do so."  The government and Chiquita agreed to a $25 million fine and five years probation for the violation, and no individuals will be charged in the case.  Sentencing is scheduled for September 17. (ph)

Download us_v_chiquita_brands_government_sentencing_memorandum_sept_11_2007.pdf

http://lawprofessors.typepad.com/whitecollarcrime_blog/2007/09/chiquita-direct.html

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