CORPORATE CRIME REPORTER
Discloses Illegal Payments, Then Continues Making Them – and Justice Decides
Not to Charge Execs
21 Corporate Crime Reporter 36, September 16, 2007
For six years, Chiquita International illegally paid protection money to a right wing terror group in Columbia.
The company’s outside lawyer found out about it and disclosed the illegal payments to the Justice Department – hoping for leniency.
The outside lawyer told the company’s highest executives to stop the payments.
But after repeatedly giving these warnings, and after the self-disclosure to the government, the company continued making the payments.
And yet, no individual executives will be charged.
The company itself will plead guilty at a sentencing hearing on September 17 in Washington, D.C.
The plea agreement calls for Chiquita to pay a $25 million fine and be sentenced to five years probation.
The Justice Department decided last week that corporate criminal liability was enough.
“The United States gave serious consideration to bringing additional charges in this matter,” the Justice Department said in its sentencing memo. “In the exercise of its prosecutorial discretion, the United States has decided not to do so.”
Off the hook – Roderick Hills the former head Chiquita’s audit committee.
Off the hook – Chiquita’s former general counsel Robert Olson.
Off the hook – Chiquita’s former CEO Cyrus Freidheim.
Chiquita’s outside law firm, Kirkland & Ellis, warned repeatedly – and to no avail – that Chiquita should stop its payments to the right wing terror group.
Here are some of the examples of the Kirkland & Ellis warnings:
“Must stop payments.” (notes - 2.21.2003)
“Bottom Line – Cannot Make the Payment.” (Memo 2.26.2003)
“General rule – you cannot do indirectly what you cannot do directly.” (Memo 2.26.2003)
And so on.
And yet, the payments continued.
Even after the company reported the payments to the Justice Departments, the payments continued.
The Justice Department was not happy with this.
voluntary disclosure merits comment,” wrote Assistant U.S. Attorney Jonathan
Malis. “As a matter of good policy and common sense, the Department of
Justice encourages self-reporting. The company deserves and has received some
credit for having done so in this case. It is important to point out, however,
that defendant Chiquita has also admitted as part of its guilty plea, that it
continued to engage in the same criminal conduct after its voluntary disclosure.
Self-reporting does not automatically protect a company from prosecution, any
more than a confession would protect an individual from prosecution. The decision
whether to prosecute a voluntary disclosure case depends on a myriad of factors,
including the nature and scope of the criminal conduct that has been disclosed.
Moreover a voluntary disclosure certainly does not authorize the continuation
of the underlying criminal conduct.”
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