"Litigation risk is something we keep an eye on as events occur.'' That from Alison Sullivan, a credit analyst for Standard & Poor's in New York, commenting on the troubles facing Chiquita Brands International after news that the company may be forced to pay more than $780 million to the families of five American missionaries murdered by Marxist rebels a decade ago in Colombia.But wait a sec -- how can the actions of a U.S. business be held responsible for the crimes of a terrorist group...and in another country, no less?
Well, the connection comes from Chiquita's admission a year ago that it engaged in "transactions with a global terrorist," paying Colombian paramilitary militias $1.7 million from 1997 to 2004. And this latest lawsuit marks the seventh since Chiquita's guilty plea in last year's case. According to Erik Larson and Joshua Goodman's story for Bloomberg, "Four were filed under a different law on behalf of about 600 Colombian FARC victims, seeking at least $11.8 billion in damages. Those cases were consolidated in Miami with two shareholder actions in which Chiquita is accused of harming the company's reputation with the illegal payments."
"Chiquita's admission that they paid these groups is half the battle,'' said Jean-Charles Brisard, a Lausanne, Switzerland-based consultant on terrorism financing..."All that's left is for the plaintiffs to prove the much easier claim that the company knew or could've known the FARC was planning to carry out crimes against Americans.''
"The missionaries' families sued March 12 in Miami, accusing Chiquita of paying the FARC guerrilla group for protection and supplying it with weapons from 1989 to 1997. The case is the first against a U.S. company under a 1992 law allowing Americans to sue U.S. organizations over terrorism deaths abroad. It may reveal whether Chiquita paid the FARC to thwart competition."
But have investors shied away from the company because of these shocking revelations? Not yet. Chiquita's stock rose 65% in the past 12 months due to expectations that the European Union will eliminate the tariff on South American bananas. And just yesterday, the Chiquita stock went up another 54 cents to $23.45, a one-year high.
Now, I'm afraid I'm of the economic class that couldn't play the market if I wanted to. But I do spring for the occasional bunch of bananas. And I guarantee that the next time I feel the urge, I'll be looking for Dole or Del Monte...anything but Chiquita.
