o J J 7 0 TO DATE FROM PHONE SUBJECT HIGHLY CONFIDENi IAL - PRIVILEGED CLIENT-ATTORNEY INFORMATION MEMORANDUM Chiquita Brands International January 5 1991 Reportable Payments in Colombia and Manager's Expense Payments h This memo documents my understanding of the Turbo and Santa Marta Divisions' tral1saetions JI 1 that are reportable on the Statement of Policies and Procedures and Manager's Expense b summaries Also I will include my understanding of the Divisions' handling and reporting of i payments for security purposes and payments to the respective trade association This JS v information is based on inquiries of local Management and through my observation ofdocuments ff that were made available to me This memo with attachments will constitute our working papers W related to this area and the documentation of the work that we performed j 1 We limited the scope of our testing and the related procedures performed to disbu ements and certain corporate compliance areas Our work prim ly consisted of a disbursement sample review of policies and procedures and discussions with management since this engagement constitutes a disbursement review We did not perfonn detailed substantive testing of balance sheet values and compliance testing beyond the disbursement-related systems $ditjonal procedures or bad W p rfeffiied a complete attdit of each of the areremeatioR0Qentitjes other matters may have eeme to oor attention mat wf t1I ha' e been reported in this memor nd lin and detailed in the related working paper lt - Manager's Expense qlfJ I understand based on my discussions with Management and ed on my review doc Management made available to me that the Manager's Expens Account at both D' ision f -ef SeQU Qm5lH Ift ' Co 'S 1 ent yD Mthroug 7 l t O 1 rf d- c t ' ' t e is-om contact with the various guerrilla groups In oth Divisions Management in Santa Marta advised me that -aft 8A iEiR1payments o o currendywmatea i through the Security Department and recorded in the respective Division's accountmg recor s 10 an account named Oastos de Seguridad Ciudadana lGiiiSiifiiii'Ahat these payments are not supported by any receipt by any outside recipient-anti ate being cmpended as a Campa expense Totals of such payments w re - - d at Santa marta for the period January I 1993 through October 25 1993 These amounts b ve been expensedta ExpenseAccount sin 1993 are lfVJ' h 1 b -k iCt T - t d 'l f' ct s CBI-V1-003-000267 CHIQUITA NSD 6460 HIGHLY CONFIDENTIAL - PRIVILEGED CLIENT-ATTORNEY INFORMATION Memorandum to January 5 1994 Page 2 w -- ' Esq hhe Turbo General Manager told me that the Guerilla Groups are used to supply security This is not practiced at he Santa Marta Division -f ersonnel at the various fanus Ough October 1993 the Divisions are in a loss position for financial and ta 'C purposes of $2 3 1't million for Turbo and $6 1 million for Santa Marta Therefore local Management is not veryll t 7' concerned that they are expensing these payments without supporting documentation 'Y' J-l Management believes that the loss situation the divisions are experiencing woul the lack l 01 of documentation for the payments in the event that the Divisions are audited by local tax If et AV' 5% %lr o4 fl l V J authorities Nevertheless I believe that Management should explore other methods to make andl ' ' J sV to record these payments to mitigate any potential personal risk to local management J Jp % i f'I I have included schedules 1fSjI grn W of the manager's expense accounts for both 1 divisions for the period January through October 1993 r have'Jgt these to the gener lledger -f' J5- activity and noted only two differences with a zero net effect Both of the differences were at J the Turbo Division which r have documented on Exhib'it U i ' t f ' ' Statement r or Policies and Procedures Disclosures t '1iv1'f 1 1 Based o discussio had with each of the General Managers at both of the Divisions the only l raflsaGtiotls to governments governmental agencies governmental w-eY ' employees political parties or political candidates that they were aware of are the cre totaIling $1 441 at Turbo and $444 at Santa Marta for the period January I V 1993 through October 5 19 3 as outlined in Exhibit I I noted no othe - -4 o --- traruaccioAli from my review of the entity r discussed the nature o payments with them They seem to better understand and committed to properly report-tlre payments that eORstaate a reportaele Q RsaetieR ' r' f 2 lJfJifuJit tCPottSjif iiSn nrsbUisem liK ssuea iif e ii'lY- 4 7 Both Divisiolfhelong to trade assoc' 0 at represent the respective ateas in promoting the region's bananas in imp in the general infrastructure and coordinating' the facilitation of government rvic and romoting overall safety in the region The involvement in an ov the asso iation yaries by Division The Turbo Division appears to have some WiliE iRI over t eir respective trade association AUGURA Management receives a budget and certain ransaction details such as information relating to facilitating payments and donations to t e various entities Whereas the Santa Marta Division receives no such transaction info atian or budgets from its regional trade association FUNDEBAN Due to the and knowledge factors the Turbo Division reports the governmental-related AUGURA payments made by' the trade CBI_V1 o03 o00268 'CH QUITA NSD 6461 HIGHLY CONFIDENTIAL - PRIVILEGED CLIENT-ATTORNEY INFORMATION Memorandum t Esq January 5 1994 Page 3 associati90 on its quarterly Statement of Policy and P cedure disclosure these started third quarter 1993 while the Santa Marta Division d es not r eport governmental-related FUNDEBAN payments on its quarterly disclosure The trade associations assess the Divisions $0 Q2 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 1 1993 through October 25 1993 were approximateJy SlO6M at Turbo and $133M at Santa Marta In the event that you should have questions or comments regarding the aforementioned areas please feel free to contact me attachments CBI V1 003 000269 CHIQUITA NSD 6462                     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