Banana Pudding

The NYT has a funny article out about the involvement of bigtime Republican lawyer Roderick Hills in directing Chiquita to continue bribing a Colombian right wing militia even after the State Department listed the organization as a terrorist organization. I say funny, most of all, because Neil Lewis bills the competing narratives surrounding Hills’ actions as a "Rashomon-like set of narratives," but Lewis really provides only one of those narratives–Hills’. Because, you know, Rashoman would definitely have been the same movie if Kurosawa had only provided one viewpoint.

The other reason it’s interesting is because it suggests Michael Chertoff may have advocated Chiquita to break the law so Chiquita could provide intelligence on the terrorist organization they were bribing–which looks more like a Chertoff-sponsored suggestion of a way to evade the law on funding terrorists.

So here’s the side of the story Lewis doesn’t provide. The proffer on Chiquita’s action offers the following picture. At the beginning of 2003, Chiquita’s outside counsel told Chiquita–in no uncertain language–to stop paying bribes to the terrorists:

Must stop payments.


You voluntarily put yourself in this position. Duress defense can wear out through repetition. [Business] decision to stay in harm’s way. Chiquita should leave Columbia.

Pretty clear, right? On April 3, 2003, after Chiquita’s law firm had been warning the company to stop bribing terrorists for at least two months, Hills and a Chiquita executive told the board that Chiquita was making payments to a designated terrorist group. Even though one board member favored withdrawing from Colombia, the board instead decided to disclose to DOJ they had been paying terrorists.

At about the same time, Chiquita’s outside lawyers recorded a conversation with Hills, in which said outside lawyer interpreted, "[Hills’] opinion is just let them sue us, come after us."

And then, on April 24, Hills, that Chiquita executive, and the outside lawyers met with DOJ. They,

stated that defendant CHIQUITA had been making payments to the AUC for years, and represented that the payments had been made under threat of violence. Department of Justice officials told [Hills] and [the Chiquita executive] that defendant CHIQUITA’S payments to the AUC were illegal and could not continue. Department of Justice officials acknowledged that the issue of continued payments was complicated.

  1. nellieh says:

    I’m waiting for the Administration to add Chiquita to their public service announcements with marijuana that buying Columbian aids the terrorists. Not that buying Saudi Oil does.

  2. pol says:

    ’m kind of hoping they charge Hills if only because that’s the most likely way that we’re going to get Chertoff’s narrative of the events.

    No they won’t. Chertoff won’t be able to remember.

  3. albert fall says:

    Timing on all this is interesting (at least to me as a corporate and securities lawyer):

    Early 2003 notice from outside attorneys is shortly after Sarbanes-Oxley was enacted and the SEC was adopting rules on attorney conduct as required by SOX. SOX and those rules require attorneys to take matters of illegal conduct to the board if the executive officers do not respond to the attorney’s advice that there is a problem.

    If Chiquita went to the US government and got a go-ahead to pay off rebels while they unwound their Colombian operations–which a one-year time period sounds like–it begs the questions that Marcy raises: Are some terrorists less terrible than others?

    If Exxon paid off Al Qaeda in Iraq to leave its workers alone, would Chertof green-light that as well?

  4. Mary says:

    Great post.

    So, how is it that the Chiquita board are not unlawful combatants? The MCA contemplates a much much lesser threshold of active support for the label to apply. And really, if Chertoff gave them the go ahead . . .

    Isn’t Padilla’s cell empty at the SO. Carolina brig?

  5. JGabriel says:

    Where’s Jodi?

    This must me an interesting dilemma. Jodi can’t come out against the terrarists without also coming out against the wingers.

  6. Anonymous says:

    Jeebus – The Padilla jury has a verdict already! Hooey; that is a lot quicker than I would have thought.

  7. radiofreewill says:

    This reminds me of the story of how the Bushmen of South Africa, a nomadic tribe, find water in the arid deserts.

    What the Bushmen know is that Baboons are never far away from a water source. However, the Baboons are socialized to keep the location of their water supply a secret from outsiders – taking indirect routes, frequently stopping to see if they are being watched, etc.

    No problem for the Bushmen! They wander until they see Baboons, then pick a shady spot and start smoking and joking. After a bit, one of the Bushmen will ’cup’ a six-inch piece of wood and walk by himself, whistling and oblivious, towards a tall, hard as a rock, pock-marked termite mound and stand next to it.

    The curiosity of it all drives the Baboons crazy. Then the Bushman makes a big show of slipping his hand into one of the holes in the mound – once his hand is inside the hole, he turns the stick sideways to ’lock it in.’ Then he dusts off his hands and walks back to his grinning tribe-mates.

    The Baboons go wild and pick a member to go check out the mound. To a cacophony of his cheering buddies, the selected Baboon runs over to the mound, plunges his hand in the hole, grabs the stick and tries to pull it out.

    At this point, the Bushmen have put the finishing touches on a net. As the Baboon frantically pulls and pulls on the stick, the Bushmen mosey over to the distressed Baboon – who can’t let go of the stick – and easily net him. Then they drag him back to the shade and feed him salt for a day.

    The next day, the Bushmen get up and let the Baboon loose. There’s no pretence at hiding anything now – the Baboon runs like hell for the water with the Bushmen laughing right behind him.

    I say this because Chiquita are like the Baboons, hoarding their profits but always wanting more, the stick is illegality, and the Bushmen are Law Enforcement. With the Law in plain sight, they still can’t let go of trying to make money illegally.

  8. Flora Legium says:

    That’s a marvelous fable, radiofreewill. I wish we could assume that the Law had as much interest in exposing this kind of crime as the Bushmen do in finding water. But I appreciate the tale nonetheless.

  9. Anonymous says:

    Guilty on all counts. Aren’t you proud of your country today? Jose Padilla is a complete scumbag and likely deserves to be in prison, but because of his gang activities, not this. This is a pathetic and disturbing result.

  10. Neil says:

    Where’s Jodi? This must me an interesting dilemma. Jodi can’t come out against the terrarists without also coming out against the wingers.
    Posted by: JGabriel | August 16, 2007 at 12:27

    Too funny.

  11. Anonymous says:

    albert fall

    That is interesting timing–hadn’t thought of that, thanks. The Colombian group in question was named a terrorist organization on 9/10/01 (yeah, honest). And Hills joined the board in 2002.

    The proffer doesn’t say when Hills learned it was a terrorist organization, but the company started acting on it in February 2003.

    Also, what does this mean?

    Defendant CHIQUITA never applied for nor obtained any license from the Department of the Treasury’s Office of Foreign Assets Control with respect to any of its payments to the AUC.

    Their later payments sure seem to have been laundered through a fake security company. Were they also supposed to reveal these payments independent of the terrorist designation?

  12. albert fall says:

    If the Company was making illegal payments, SOX was aimed at cracking down on it.

    I am not familiar with the Office of Foreign Assets Control or the specific law that makes paying terrorists illegal (although it makes sense such a law would exist).

    SOX passed in June 2002, with the SEC required to do a lot of accompanying rulemaking in 90-180 days thereafter. One element (and the reference to the specific statements of the law firm was what triggered the association) was SOX section 307.

    Quoting the SEC, quoting SOX 307:

    Section 307 of the Sarbanes-Oxley Act of 2002 (the â€Actâ€) (15 U.S.C. 7201 et seq.) mandates that the Commission:

    â€shall issue rules, in the public interest and for the protection of investors, setting forth minimum standards of professional conduct for attorneys appearing and practicing before the Commission in any way in the representation of issuers, including a rule –

    â€(1) requiring an attorney to report evidence of a material violation of securities law or breach of fiduciary duty or similar violation by the company or any agent thereof, to the chief legal counsel or the chief executive officer of the company (or the equivalent thereof); and

    â€(2) if the counsel or officer does not appropriately respond to the evidence (adopting, as necessary, appropriate remedial measures or sanctions with respect to the violation), requiring the attorney to report the evidence to the audit committee of the board of directors of the issuer or to another committee of the board of directors comprised solely of directors not employed directly or indirectly by the issuer, or to the board of directors.â€

    The SEC proposed an attorney conduct rule by November 2002 (, and adopted a version of it withing the 180-day time limit.

    In context, it looks like SOX got the banana folks–or at least their attorneys, and thereby management–to be more careful about illegal payments to terrorists.