Washington, D.C.

Litigation Release No. 17169 / October 3, 2001
Accounting and Auditing Enforcement Release No. 1464

SEC v. Chiquita Brands International, Inc., Civ. Action No. 1:01CV02079 (D.D.C.)(filed October 3, 2001)

Sec Settles Case against Chiquita Brands International, Inc.

The Securities and Exchange Commission today issued a settled cease-and-desist order against Chiquita Brands International, Inc. in which the Commission finds that Chiquita violated the books and records - Section 13(b)(2)(A) - and internal accounting controls - Section 13(b)(2)(B) - provisions of the Securities Exchange Act of 1934 in connection with a payment to foreign customs officials by a wholly-owned foreign subsidiary of Chiquita. Without admitting or denying the Commission's findings, Chiquita consented to the entry of an order that requires Chiquita to cease and desist from violating those provisions. The Commission also filed a settled complaint in federal court seeking entry of a consent order requiring Chiquita to pay a $100,000 civil penalty. Chiquita settled the action without admitting or denying the Commission's allegations.

The order finds that Chiquita violated the books and records and internal controls provisions as a result of the conduct of its Colombian subsidiary, Banadex. According to the order, without the knowledge or consent of any Chiquita employees outside Colombia and in contravention of Chiquita's policies, employees of Banadex authorized the payment of the equivalent of $30,000 to local customs officials to secure renewal of a license at Banadex's Turbo, Colombia port facility. The subsidiary's books and records incorrectly identified the two installment payments, which were made in 1996 and 1997. In 1997, Chiquita's internal audit staff discovered the payment during an audit review and, after an internal investigation, Chiquita took corrective action which included terminating the responsible Banadex employees and reinforcing internal controls at Banadex.