an - - Chiquita Bra nd's International SUBJECT Reportable Payments in Colombia and Manager's Expense Payments This memo documents my understanding of the Turbo and Santa Marta Divisions' transactions that are reportable on the Statement of Policies and Procedures and Manager s Expense summaries Also I will include my understanding of the Divisions' handling and reporting of payments for security purposes and payments to the respective trade association This information is based on inquiries of local Management and through my observation of documents that were made available to me This memo with attachments will'constimte our working papers related to this that we performf 79 7m We limited the scape of our testing and the related procedures performed to disbursements and certain corporate compliance areas ten Our work primarily consisted of a disbursement sample review of policies and procedures and discussions with management since this engagement constitutes a disbursement review We did not perform detailed substantive testing of balance sheet values and compliance testing beyond the disbursement-related systems Had we performed additional procedures or had we performed a complete audit of each of the aforementioned entities other matters may have come to our attention that would have been reported in this memorandum and detailed in the related working papers Statement of Policies and Procedures Disclosures ased on discussions I had with each of the General Managers at both of the Divisions the only reportable transactions to governments governmental agencies governmental employees political parties or political candidates that they were aware of are the donations totalling $1 441 at Turbo and $444 at Santa Marta for-the period January 1 1993 through October 25 1993 as outlined in Exhibit I I noted no other reportable transactions from my review of the entity I discussed the nature of reportable payments with them They seem to better understand and committed to properly re art the pa cuts that constitute a reportable transaction W- tiwmenswear mm I understand based on my discussions with Management and based on my review of documents l 7249 CBI-V1-003-000281 CHIQUITA NSD 6445 HIGHLY CONFIDENTIAL - PRIVILEGED ORIENT-ATTORNEY INFORMATION Memorandum sq January 4 1994 Page 2 Management madeavailable to me that the Manager's Expense Account at both Divisions largely consists of guerilla extortion payments made by the Security Department through our intermediary or Security Consultant Rene Osorio I understand that the Security Consultant is our contact with the_various guerrilia groups in both Divisions Management in Santa Marta advised me that all extortion payments referred to as 'ti - urrently handled through the Security Department eithe Medellin and recorded in the respective Division s Vac accoiint named Gastos dc Seguridad Ciudadana I understand that these payments outside recipignt and are being expended as a Company expense Totals of such payments were at Turbo and at Santa marta for the period January 1 1993 through October 25 1993 These amounts have been expensed via the Manager s Expense Account in 1993 The Turbo General Manager told me that the Guerilla Groups are used to supply security personnel at the various farms This is run practiced at the Santa Marta Division ember of ement that sue yrne to guerilla groups are considered opinion verntne t and that naltiesinclu e70 yearjailt on of law Through October 1993 the Divisions are in a loss position for nancial and tax purposes of $2 3 million for Turbo and $6 1 million for Santa Marta Therefore local Management is not very concerned that they are expensing these payments without supporting documentation Management believes that the loss situation the divisions are experiencing would mitigate the lack of documentation for the payments in the event that'the Divisions are audited by local tax ori es ' 5 li ve that ex or er 41 4 W- it have included schedules Exhibits II through IV of the manager's expense accounts for both divisions for the period January through October 1993 I have agreed these to the general ledger activity and noted only two differences with a zero net effect Both of the differences were at girl W07 1 I have documented on Exhibit II wr ma dcm 3 am can mg Both Division belong to trade associations that represent the respective'areas in promoting the region's bananas in improving the general infrastructure and coordinating the facilitation of government services and promoting overall safety in the region The involvement in and CBI-V1-003-000282 CH IQUJ TA N80 5447 Memorandumt 2 January 4 1994 Page 3 in uence over the association varies by Division The Turbo Division appears to have some in uence over their respective trade association AUGURA Management receives a budget and certain transaction details such as information relating to facilitating payments and donations to the various entities Whereas the Santa Marta Division receives no such transaction information or budgets from its regional trade association FUNDEBAN Due to the in uence and knowledge factors the Turbo Division reports the governmental-related AUGURA payments made by the trade association on its quarterly Statement of Policy and Procedure disclosure these started third quarter 1993 while the Santa Marta Division does not report govemmentaI-related UNDEBAN payments on its quarterly disclosure The trade associations assess the Divisions $0 02 per box of exported fruit The Divisions pay for both produced and associate producer-purchased fruit Amounts assessed by such associations for the period January I 1993 through October 25 1993 approximately at Tu 3M at Santa Marta 'rr ent that you should have questions or comments regarding the aforementioned areas please feel free to contact me attachments CBI-V1-OO3-000283 a CHIQUITA NSD 6448                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu