Chiquita Papers : Uncertainty Fueled Staff Concerns about
Payments to Guerrillas and Paramilitaries


Colombia Payments a “Leap of
Faith”


“We are funding their
activities, or we are protecting ourselves. It’s questionable.”


CFO asks: “How can I audit that?
I cannot ask them to sign a receipt.”


Posted
May 2, 2017


National
Security Archive Briefing Book No. 589


Edited
by Michael Evans


For
further information, contact: mevans@email.gwu.edu
Twitter: @colombiadocs


Washington, D.C., May 2, 2017 – Chiquita’s
Colombia-based staff questioned the company’s payments to illegal armed groups,
and asked whether Chiquita had gone beyond extortion and was directly funding
the activities of leftist guerrillas and right-wing paramilitary groups, even
while top company executives
became “comfortable” with the
idea.


This is the second in a series of stories jointly
published by the National Security Archive and VerdadAbierta.com documenting
how the world’s most famous banana company financed terrorist groups in
Colombia.


The New Chiquita Papers are the result of a seven-year legal battle waged by the
National Security Archive against the U.S. Securities and Exchange Commission,
and later Chiquita itself, for access to tens of thousands of records produced
by the company during an investigation of illicit payments made in Colombia.


The Archive has used these records to identify individual Chiquita
executives
who approved and oversaw years of payments to groups responsible
for countless human rights violations in Colombia, but whose roles in the
affair have been unknown or unclear until now.


In this installment, we examine the roles of financial officers,
security staff and hired intermediaries on the ground in Colombia who managed
an unorthodox payments process one official described as a “leap of faith.”


The following article was also published today in Spanish at VerdadAbierta.com.


* * *


Payments to Armed Groups
Generated Internal Conflicts at Chiquita Brands


The banana company invented an accounting system to hide payments
to guerrilla groups in Colombia that they admitted were “impossible to audit.”
Even while senior Chiquita officials became “comfortable” with the way the
payments were made, officials based in Colombia had their reservations.


By Tatiana Navarrete and Juan Diego Restrepo E.

Edited by
Michael Evans – This is the second in a series of articles published jointly by
the National Security Archive and VerdadAbierta.com


“[These]
were payments that, you know, are questionable, payments to the guerrillas that
at the end are payments that, you know, are questionable,” said Jorge Forton,
chief financial officer for Banadex, Chiquita’s wholly-owned subsidiary in
Colombia, in his April 27, 1999 statement to the U.S. Securities and Exchange
Commission (SEC). “We are funding their activities, or we are protecting
ourselves. It’s questionable.”[1]


The
deposition of this Peruvian accountant, who worked for Chiquita from 1990-1998,
turns out to be key evidence on a little-known chapter in the history of
Colombia’s banana-growing zone: payments made by the multinational fruit
company to anti-government guerrilla groups like the Revolutionary Armed Forces
of Colombia (FARC), the National Liberation Army (ELN), and the Popular
Liberation Army (EPL), and the funding of political organizations like the
Current for Socialist Renovation (CRS), Hope, Peace and Liberty, and the
Popular Commands.


Forton
began in 1990 at Chiquita headquarters in Cincinnati, Ohio, looking for
opportunities to expand the company’s worldwide operations. In the middle of
1994, he was sent to Colombia to assess how the local economy was affecting the
prices of banana production. Over the next few months, Forton returned to the
country several times and proposed alternatives for reorganizing Colombian
operations. At the end of the year, Forton accepted a new position as chief
financial officer for Banadex in Medellín.


Since
his arrival in Colombia in early 1995, the accountant knew that Chiquita made
“sensitive payments” to illegal armed groups to ensure, as he was told, that
its workers were not killed or kidnapped and that its plantations were not
burned to the ground. “My role was to see how we could standardize and have a
good control of those payments,” he said to the SEC.


At
that time, there were two Chiquita offices in Colombia: Banadex, in Medellín,
and Samarex, in Santa Marta; each with independent accounting systems and
separate sets of books to record payments not only to guerrillas but to the
Colombian Armed Forces, which also benefitted from the company’s secret
security fund. Forton’s job was to unify the accounts so Cincinnati could
better track the payments. The company asked him to prepare a report on all the
“sensitive payments” realized since 1992, something that, according to Forton,
was almost impossible given the “poor accounting records” that had existed up
to that point.


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/1.jpg


SEC Testimony of Jorge Forton, April 27, 1999, pp. 45-46.


So
Forton implemented a new procedure to better account for the payments. He
introduced two basic rules: there would be no more cash payments, and none
would be authorized without an invoice.


Forton
said he was “not comfortable” with the guerilla payments: “How do I feel those
payments are really going to those groups? I mean, how can I audit that? I
cannot ask them to sign a receipt.”


The
fact that Colombian guerrilla groups could not be counted on to provide
receipts elevated the role of the Security Department and the intermediaries
they relied on as go-betweens with the insurgent factions, military units, and
paramilitary groups at the receiving end of those payments. These are the names
and signatures that appear on the forms used to request payments to the various
armed groups.


The
fewer people who knew about the “sensitive payments,” the better, so the
payments only needed the authorization of the general manager, Charles Keiser,
and the signature of Forton. Keiser was followed as general manager by Álvaro
Acevedo, who later oversaw several years of payments to the paramilitary United
Self-defense Forces of Colombia (AUC) and today works for a fruit producer in
Ecuador. VerdadAbierta.com tried to contact Acevedo, but did not receive a
response.


Forton
instituted the “1016” form to register all of the payments and to camouflage
them among the fruit multinational many other expenses. To do so, he created
two new accounts: “Logistics,” for payments to government agencies; and
“Operations” for payments to guerrilla groups.


This
rigorous accounting system coldly recorded the harsh reality of life in the
violently-contested region of Urabá during the 1990s. Forton was aware of the
impact that the payments had on public order and thought it indispensable to
know whether the money found its way to the intended recipients. At the very
least, the ultimate destination of the payments mattered more to Forton than to
his superiors in Cincinnati, who had not witnessed Colombia’s war in person.


In
a vivid account to the SEC, Forton said the surge in paramilitary groups (or
“anti-guerrilla groups,” as he called them)—who were also financed by the
company—had intensified conflict in the region. He recalled a day when some 20
bus riders were killed, and a subsequent call from company staff in Urabá
asking what to do. “I have a wife that carried the body of her husband into the
office to ask for money to bury him,” he remembered.


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/2.jpg


SEC Testimony of Jorge Forton, April 27, 1999, p. 57.


“There
were situations where, I mean, things that I hope not to live again. But after
being exposed to those horrible stories, I understood better if the money was
reaching the end or not,” he explained.


Forton
left Colombia in 1996 and was effectively fired from the company in 1998 for
his role in authorizing bribes to Colombian port authorities in Turbo,
Antioquia. Forton is now a high-ranking official at Dun & Bradstreet,
according to his LinkedIn account. VerdadAbierta.com did not receive a response
from a message sent to Forton through the social media network.


Where did the money actually go?


The
names of the individuals from the Security Department who handled the
“sensitive payments” to armed groups in Colombia during that time, Juan Manuel
Alvarado and John Stabler, are found in a draft Chiquita legal memorandum dated
January 5, 1994.


One
of the chief intermediaries used as a bridge between the company and the
insurgent groups was René Alejandro Osorio J., an attorney from Antioquia who
in 1992 signed a services contract with the Compañía Frutera de Sevilla,
another of Chiquita’s Colombian subsidiaries.


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/3.jpg


His
role as a “Security Consultant” for Chiquita is revealed in an earlier draft of
the same memo, dated January 4, 1994, which identifies Osorio as the company’s
“contact with the various guerrilla groups in both Divisions.” The professional
middleman was responsible for making “guerrilla extortion payments” for Chiquita.
In many internal company records, he is referred to by the initials “R.O.”


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/4.jpg


Another
document obtained by the National Security Archive is a copy of a contract
signed by Osorio indicating that he was paid five million Colombian Pesos
(about five thousand U.S. dollars) every three months. Osorio assumed all risks
involved with the assigned work, but Chiquita would provide legal assistance if
it ever became necessary. VerdadAbierta.com contacted him in Medellin, where he
apparently resides, to hear his version, but made clear that he “was not
going to refer to that subject”.


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/5.jpg


The
sort of informality that existed between Chiquita Brands and the intermediaries
made it even more difficult to determine if the money was actually reaching the
guerrillas and generated suspicions among some of the managers in Medellín.


Even
when the payments were made in cash, before the arrival of Forton as CFO, it
was never really known whether they arrived in their totality to the
guerrillas. John Ordman, based in Costa Rica, was a key link between Chiquita’s
Colombian operations and top executives at the company’s headquarters in
Cincinnati (as explained in the first
article in this series
). Ordman called these payments “a leap of
faith.”


“Now
does it get distributed to the people that it should be? Does it get
distributed – you know, there’s a commission for this guy [name redacted]. Does
he take half of it and put it in his pocket? How do you tell? There’s no way of
determining that.”


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/6.jpg


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/7.jpg


SEC Testimony of John Ordman, November 23, 1999, pp. 124-125.


In
spite of this, Ordman said he felt “comfortable that this was being handled in
a responsible way.” The view of Robert F. Kistinger, head of Chiquita’s Banana
Group, was much the same. He told the SEC he saw the guerrilla payments as an
“ongoing cost” of company operations, like the purchase of fertilizers or
agrichemicals.


Forton
told the SEC that he took the concerns about his inability to track the
payments to a top executive in Cincinnati, asking, “How can I audit this?” And
the response was: “If nobody is killed, it’s because the money is reaching the
end. That’s the only way to say that the money is there.”


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/8.jpg


SEC Testimony of Jorge Forton, April 27, 1999, p. 58.


The
person who provided that response may well have been Robert Kistinger, since
SEC investigators asked him about this same episode during his interview, but
denied ever having such a conversation with Forton.


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/9.jpg


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/10.jpg


SEC Testimony of Robert Kistinger, January 6, 2000, pp. 66-67.


Forton
was not the only person who worried that the money could not be tracked. His
replacement in Colombia, John Paul Olivo, who arrived in 1996, voiced similar
concerns in his SEC testimony. Olivo’s name has been known to Colombian
investigators since 2009 when the Attorney General opened an investigation
against him and two other officials, Charles Keiser and Dorn Wenninger, for conspiracy
to commit an aggravated felony—a process that has gone nowhere in eight years.


In
his December 1999 testimony to the SEC, Olivo said he did not feel comfortable
with the way the company made the payments, since it was impossible to know
whether Alvarado, Osorio and the others were actually delivering the money to
the armed groups. “The only person that requests funds and payments for
guerrillas is the head of security,” he said. “No one ever knows who – or
negotiates with this groups, except for himself. And that’s been my . . .
concern since day one.”


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/11.jpg


SEC Testimony of John Paul Olivo, December 15, 1999, p. 64.


More than extortion?


In
his declaration, Kistinger said the company made the payments because they were
being extorted and wanted to protect the lives of their workers amid constant
threats. For this reason, Chiquita also paid Colombian military and police
forces, above all when they needed special security services.


While
the internal discussions of Chiquita employees mostly revolved around the
technical aspects of the payments, Forton’s deposition is testament to the thin
line between paying extortion and willingly funding the operations of a violent
group.


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/12.jpg


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/13.jpg


SEC Testimony of Jorge Forton, April 27, 1999, pp. 90-91.


Other
documents obtained by the National Security Archive indicate that Chiquita’s
outlays to guerrillas were perhaps not as innocent as the company portrayed
them in negotiations with Colombian and U.S. authorities. As the following
draft legal memorandum demonstrates, at least some Chiquita officials believed
the payments were illegal under Colombian law, while others wanted to eliminate
evidence of such knowledge from the record.


The
same memo also suggests that not all of the payments were the result of
extortion. If indeed the multinational made the payments to protect itself from
guerrilla threats, it is equally clear that some of Chiquita’s farms were
supplied with “security personnel” from “Guerrilla Groups.”


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/14.jpg


http://nsarchive.gwu.edu/NSAEBB/NSAEBB589-Chiquita-Papers-Show-Concern-About-Funding-Colombia-Guerrillas/images/15.jpg


Why
did Chiquita Brands make payments to virtually every guerrilla group in Urabá?
How much did the FARC, ELN, EPL and the other groups receive each year,
according to company records? Were there any contracts or agreements with
insurgent groups?


The
complex relationship between Chiquita Brands and Colombian guerrillas will be
the subject of the next report in this series, to be published next Tuesday by
the National Security Archive and VerdadAbierta.com.


*
The depositions of the seven Chiquita employees interviewed by the SEC were
obtained by the National Security Archive after seven years of litigation.
Although the names of those officials remained hidden, it was possible to
identify them by comparing
the transcripts to other official sources
.


READ THE DOCUMENTS


https://assets.documentcloud.org/documents/3690950/pages/Document-01-Bill-for-Services-Rendered-p1-thumbnail.gif


Document 01


 


1992-12-14


[Bill for Services Rendered]


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Bill for services rendered to Compañia Frutera
de Sevilla on letterhead of “Rene Alejandro Osorio J.”



https://assets.documentcloud.org/documents/3690951/pages/Document-02-Contract-for-Provision-of-p1-thumbnail.gif


Document 02


 


1992-12-18


[“Contract for Provision of Professional
Services”] [Includes original attachment]


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Copy of a contract between a Chiquita
subsidiary and Rene Osorio, identified by the initials “R.O.” The
attached forms indicate that the three million Peso payment was to a “security
advisor” who “works as liaison with activist groups.”



https://assets.documentcloud.org/documents/3690952/pages/Document-03-Reportable-Payments-in-Colombia-and-p1-thumbnail.gif


Document 03


 


1994-01-04


“Reportable Payments in Colombia and
Manager’s Expense Payments” [Draft; includes original annotations


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Draft Chiquita legal memorandum on payments to
guerrilla groups in Colombia identifies intermediary employed by Security
Department to handle payments to guerrilla groups.



https://assets.documentcloud.org/documents/3690953/pages/Document-04-Reportable-Payments-in-Colombia-and-p1-thumbnail.gif


Document 04


 


1994-01-05


“Reportable Payments in Colombia and
Manager’s Expense Payments” [Draft; includes original annotations


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Draft Chiquita legal memorandum on payments to
guerrilla groups in Colombia identifies members of the Security Department,
John Stabler and Juan Manuel Alvarado.



https://assets.documentcloud.org/documents/3690954/pages/Document-05-SEC-Testimony-of-Jorge-Forton-April-p1-thumbnail.gif


Document 05


 


1999-04-27


[SEC Testimony of Jorge Forton], April 27,
1999, pp. 45-48.


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Forton describes the challenge of auditing
payments to guerrillas since the groups do not provide any kind of receipt.



https://assets.documentcloud.org/documents/3690955/pages/Document-06-SEC-Testimony-of-Jorge-Forton-April-p1-thumbnail.gif


Document 06


 


1999-04-27


[SEC Testimony of Jorge Forton], April 27,
1999, pp. 57-60.


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Forton recounts a call with company staff who
told him about a massacre of some 20 bus travelers in Urabá.



https://assets.documentcloud.org/documents/3690956/pages/Document-07-SEC-Testimony-of-Jorge-Forton-April-p1-thumbnail.gif


Document 07


 


1999-04-27


[SEC Testimony of Jorge Forton], April 27,
1999, pp. 89-92.


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Forton says it was “questionable” whether
payments to guerrillas were for self-protection or for “funding their
activities.”



https://assets.documentcloud.org/documents/3690957/pages/Document-08-SEC-Testimony-of-John-Ordman-p1-thumbnail.gif


Document 08


 


1999-10-23


[SEC Testimony of John Ordman], November 23,
1999, pp. 121-128.


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Ordman says there is “no way of determining”
whether money channeled through the Security Department and third-party
intermediaries ever reached the intended recipients.



https://assets.documentcloud.org/documents/3690958/pages/Document-09-SEC-Testimony-of-John-Paul-Olivo-p1-thumbnail.gif


Document 09


 


1999-12-15


[SEC Testimony of John Paul Olivo], December
15, 1999, pp. 61-64.


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Olivo says his “concern since day one” was
that he could never be sure that money intended for guerrillas and other groups
was not being stolen by a third-party intermediary.



https://assets.documentcloud.org/documents/3690959/pages/Document-10-SEC-Testimony-of-Robert-Kistinger-p1-thumbnail.gif


Document 10


 


2000-01-06


[SEC Testimony of Robert Kistinger], January
6, 2000, pp. 65-68.


Source: Freedom of Information Act Request to
U.S. Securities and Exchange Commission


 


Kistinger does not recall telling “Jorge” the
way to know whether company funds had reached illegal armed groups was “if
there are no killings.”


NOTE


[1] While the name of the SEC witness
identified here as Jorge Forton was redacted from the transcript, there is
abundant evidence indicating that Forton is the Chiquita witness interviewed by
the SEC on April 27, 1999.


·        
A 1998 series in the Cincinnati Enquirer identified Forton as one of the
officials central to the bribery case that triggered the SEC probe.


·        
The witness describes the role he
played overseeing Chiquita’s financial operations in Colombia from 1994-1998,
while an account for “Jorge Forton” on the popular social media network LinkedIn
indicates that he held various positions at Chiquita from 1990-1998, including
Country
Controller.


·        
Throughout the testimony, the witness
describes how he sent financial reports to his superiors about so-called
“sensitive payments” that were made in Colombia, mainly to government officials
and to guerrilla insurgent groups.


·        
The witness describes a conversation
he had about these payments with a superior at the company: “… I questioned the
nature of the payment. And he said: [Redacted], don’t get involved in this. I’m
handling this and I know this is correct.” And basically, that was an
invitation to get out. I mean, I wasn’t—I shouldn’t worry about questioning
those payments, because, as I said, if no killings are, meaning that the
payments were correct, reached the end user.”


·        
Another witness who has been
separately identified as Robert Kistinger, is asked by the SEC about this same
conversation during his later testimony: “[Redacted] also said that … that you
had responded to him, “Jorge, if there are no killings, you know the money is
getting to the guerrillas.”


·        
Another witness separately identified
as Orlando Dangond mentions “Jorge” as being present at a key meeting where the
bribe was discussed: “[Redacted] and myself may have explained to Jorge what
had been going on, and then I believe [Redacted] explained to him about the
payment.”


·        
While questioning a witness separately
identified as John Ordman the SEC investigator mentions “Jorge Forton” during a
discussion of how certain sensitive payments were recorded and reported to
corporate headquarters: “… [T]his document related to Jorge Forton and this
document contains disclosures…”


·        
Information at beginning of interview
reveals that the witness is from Arequipa (assumed to be Peru). The LinkedIn
account for Jorge Forton (mentioned above) says that he is a graduate of
Catholic University of Santa María, a university in Arequipa, Peru.


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