The FCPA Files: Chiquita Brands International (2001)

The Urabá region of Colombia is a nearly impenetrable thicket of jungle and rainforest. It constitutes part of the Darian Gap, the only break in the Pan-American Highway and a treacherous passage for north-bound migrants. Remote and politically volatile, the region has served as a haven for left-wing guerrillas and right-wing paramilitaries alike.

It also includes vast stretches of fertile soil, perfect for growing the domestically important crop of bananas, initially exploited at scale in the “banana boom” of the 1960s. Leading that development was the United Fruit Company, later renamed Chiquita Brands International. The company already had a notorious history in Colombia, having been at the center of 1928’s strike-breaking “Banana Massacre” fictionally immortalized in Gabriel García Márquez’s masterpiece One Hundred Years of Solitude.

Traffic to and from the region takes one of two routes: either along the road to Medellin built in the 1960s or through the port of Turbo on the West Atlantic’s Gulf of Urabá. Throughout the 1990s the port was largely controlled by Chiquita’s subsidiary Banadex, which used it to export bananas and import fertilizers, fungicides, and other supplies. In 1993, the Colombian government granted Banadex a license to use its loading facility as a special customs zone in which goods could be held while awaiting import clearance. It was in connection with the renewal of this license in 1995 that Banadex found itself making a $30,000 bribe, for which Chiquita ended up paying a $100,000 civil penalty in a 2001 SEC enforcement action.

The bribe was the least of Chiquita’s concerns in Urabá. Since the late 1980s, the company had been making payments to FARC (“Fuerzas Armadas Revolucionarias de Colombia”) and other guerrilla groups, whether in exchange for security services or in response to simple extortion. In the mid-1990s, its political alignment flipped and it began contributing to the right-wing militias, operating in the guise of “Conviver” mutual defense leagues under a program endorsed by the state’s governor Álvaro Uribe Velez, who would later become Colombia’s president. The company’s support allegedly included facilitating the smuggling of thousands of AK-47s for the paramilitaries in late 2001. In 2007, Chiquita pleaded guilty in a U.S. court to transacting with a designated terrorist organization and penalized $25 million, and was held civilly liable to victims of the paramilitary groups in 2024 to the tune of another $38.3 million.

BriberyMatters

This post is part of "The FCPA Files" series, examining key enforcement cases under the Foreign Corrupt Practices Act and the lessons they offer for modern compliance.