Chiquita Brands Part III-B, Deterrence: How Private Litigation Can Supplement Anti-Terrorist Enforcement Actions

Increasingly, the crux of the Chiquita Brands case may be more than just admitted payments totaling US$1.7M to the paramilitary AUC from 1997-2004, but additional forms of support, including weapons shipments.

In testimony before the U.S. Senate Judiciary Committee, Subcommittee on Crime and Drugs, Lee Wolosky, a former National Security Council official and now lead counsel to many plaintiffs in the cases against Chiquita, addressed how private litigation can supplement anti-terrorist enforcement actions. The Subcommittee is considering The Justice Against Sponsors of Terrorism Act, S. 2930.

At the same time that Wolosky is arguing for this new legislation, he is arguing that there is sufficient legal basis to hold providers of material support for terrorist acts liable for damages.

Wolosky testified that:

The Chiquita case provides another example of how civil litigation may complement U.S. government enforcement actions in deterring financial transactions involving foreign terrorist organizations.

Chiquita has admitted to providing the United Self-Defense Forces of Colombia (AUC) – which the State Department designated a foreign terrorist organization in 2001 – with a total of $1.7 million from 1997 to 2004. Chiquita is also alleged to have facilitated arms shipments to AUC, including the shipment of thousands of assault rifles and millions of rounds of ammunition.

The AUC has been responsible for some of the worst atrocities in Colombia`s ongoing civil conflict and participates heavily in the cocaine trafficking industry. According to the State Department, during the period of Chiquita`s support payments “the AUC engaged in terrorist activity through a variety of activities including political killings and kidnappings of human rights workers, journalists, teachers, and trade unionists, among others.“

Chiquita also admitted to providing money to the Revolutionary Armed Forces of Colombia (FARC), which, like AUC, is on the State Department`s list of foreign terrorist organizations. In 2007, Chiquita pleaded guilty to engaging in transactions with a specially-designated global terrorist and agreed to pay $25 million in fines. That year, Chiquita had annual revenues of $4.5 billion.

Soon after the guilty plea, families of over two hundred Colombian victims killed by the AUC filed a purported class action lawsuit against Chiquita in federal court. Five other suits have been filed against Chiquita on behalf of U.S. citizens and Colombian plaintiffs. These suits (which rely principally on the Anti-Terrorism Act and the Alien Torts Statute) demonstrate the deterrent role that civil litigation can play against support for terrorism: Chiquita faces potentially significant civil damages as a result of the litigation – far in excess of the $25 million it agreed to pay as the result of U.S. government enforcement actions.

Corporations, self-avowed charitable organizations, and other large entities will continue to provide material support for terrorist organizations until it is financially unpalatable for them to do so. Although government sanctions are clearly an integral part of the effort to stem the flow of funds to terrorist groups, civil litigation can substantially enhance the financial consequences that such entities face. This proposed bill will make it easier for litigants to sue those who provide support to terrorists who kill or injure Americans. It will thereby deter future such support.  (Transcript courtesy of Roll Call, available at 2010 WLNR 14105662, Copyright 2010 by Roll Call, Inc. )

Wolosky, according to his firm’s website, has offered testimony on terrorism financing on several occasions.  Indeed, the legislation he is supporting is intended to make such cases as the one he has brought against Chiquita easier to prove and win. The deterrent angle that he argues in this testimony is undeniable. Any organization that is weighing a response to extortion threats for payments must be carefully evaluating whether it will face criminal fines and sanctions, and much larger potential damages awards under legal standards that are more easily satisfied than the high burden of proof for criminal conviction.

That is not, however, to presume the truth of the allegations Wolosky makes about Chiquita.  Cases against Coca-Cola and Drummond involving payments to the FARC were dismissed by the courts, but those were lacking in detailed evidence of a direct nexus to acts of murder and kidnapping. 

The statement that “Chiquita is also alleged to have facilitated arms shipments to AUC, including the shipment of thousands of assault rifles and millions of rounds of ammunition,” must have something to stand behind it, but that allegation has not been tested or proven yet, and it would seem crucial to the case against Chiquita.  Such proof was not found, however, when the Chiquita Brands Board’s Special Committee conducted its investigation, including when Special Committee counsel asked plaintiffs’ counsel to produce proof of these allegations.

Is that kind of evidence now available?  In my next installment, a review of the detailed allegations in the complaint that Wolosky filed.