Prosecuting extortion victims. How counter‐terrorist finance measure Executive Order 13224 is going too far
| Pages | 262-288 |
| Date | 17 July 2009 |
| Published date | 17 July 2009 |
| DOI | https://doi.org/10.1108/13590790910973106 |
| Author | Montse Ferrer |
| Subject Matter | Accounting & finance |
Prosecuting extortion victims
How counter-terrorist finance measure
Executive Order 13224 is going too far
Montse Ferrer
Cornell Law School, Ithaca, New York, USA
Abstract
Purpose – The purpose of this paper is to explore the effects of USA Executive Order 13224, one of
the most important US counter-terrorist finance measures, on corporations operating in countries with
designated terrorist organizations.
Design/methodology/approach – The effects of Executive Order 13224 are focused on the case of
Chiquita Brands International, a major US banana-exporting corporation that operated in Uraba,
Colombia until 2004. The US Government prosecuted Chiquita for “engaging in transactions” with an
illicit, Colombian paramilitary group considered by the US a Foreign Terrorist Organization and as a
specially-designated global terrorist. This paper presents the duress defense that Chiquita could have
raised at trial under US federal law.
Findings – Executive Order 13224 was drafted hastily and under pressure leading to over-inclusive
language and over-broad implementation. Chiquita’s case suggests that Executive Order 13224,
drafted with the intention of reducing terrorist funding, has made it possible for an extortion victim to
be prosecuted for payments it has not chosen to make. This paper will suggest narrowly tailoring the
language of Executive Order 13224 or providing an exculpatory provision.
Research limitations/implications – Counter-terrorist finance measure Executive Order 13224
has not been sufficiently examined by scholars. Research on this topic should go hand in hand with
enquiry into possible defenses for corporations operating in countries with designated terrorist
organizations and having to make extortion payments.
Practical implications – Suggestions are put forward for corporations operating in countries with
designated terrorist organizations as well as for drafters of counter-finance terrorist measures.
Originality/value – Although the designation of terrorist organizations under the executive order
has been discussed, few scholars have addressed cases of over-broad application of the executive
order. The unexamined case of Chiquita is a unique case in that the extortion victim, and not the
extortion perpetrator, is prosecuted. Also, Chiquita was prosecuted for an activity (making extortion
payments to the Autodefensas Unidas Campesinas that became a crime after Chiquita began its
engagement with such an activity. Furthermore, examining this case thoroughly is important because
it has repercussions on at least two public policy levels: the US’ War on terrorism and the rights and
remedies of corporations investing in countries with designated terrorist organizations.
Keywords Crimes, Terrorism,United States of America, Legislation
Paper type Research paper
I. Introduction
In 1997, Carlos Castan
˜o, Head of the United Self-Defense Forces of Colombia
Autodefensas Unidas Campesinas (AUC[1]), a Colombian paramilitary group, met with
the general manager of the Colombian subsidiary of Chiquita Brands International
(Chiquita), a major multinational banana-exporting corporation[2]. In that meeting,
Carlos Castan
˜o informed Chiquita’s representative that the AUC was engaged in
military operations in the area[3]. Castan
˜o sent an “unspoken but clear message” that
failure to make payments to the AUC in exchange for its “protection” could result in
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JFC
16,3
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Journal of Financial Crime
Vol. 16 No. 3, 2009
pp. 262-288
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790910973106
physical harm to Chiquita’s personnel and property[4]. Castan
˜o’s threat was real: the
AUC had massacred hundreds of civilians, forced the displacement of entire villages,
and kidnapped many political figures[5]. Over the next six years, Chiquita paid over
$1.7 million to the AUC in exchange for its promised “protection”[5].
On September 10, 2001, the US Secretary of State designated the AUC as a Foreign
Terrorist Organization (FTO)[6] and subsequently as a “Specially-Designated Global
Terrorist” (SDGT) (Executive Order 13224, 2001). As a result of these FTO and SDGT
designations, it became a crime under Executive Order 13224 for any US person (or
corporation) to knowingly “engage in transactions” with the AUC7 (Executive Order
13224, 2001). Chiquita, a US corporation operating in Colombia and confronted with
threats of life and property loss, was found liable for making illicit payments to the
AUC[7]. This finding of liability underscores the unsettling irony of Executive Order
13224: despite its intention of reducing terrorist funding, it has made possible the
prosecution of corporations that are themselves victims of extortion, such as Chi quita.
Since September 11, 2001, there has been a proliferation of counter-terrorist finance
(CTF) measures, many of which, such as Executive Order 13224, have been hastily and
ambitiously drafted. According to Executive Order 13224, any individual or
corporation must cease to interact with the listed FTO/SDGT entities, or else risk
being listed itself as such an entity and having its assets frozen[8]. Furthermore, mere
association with an FTO/SDGT entity, and not demonstrated material support, can be
sufficient for the government to confiscate all property[9]. Chiquita’s case strongly
demonstrates how even extortion victims fall under the Executive Order’s grasp.
This note will argue that Executive Order 13224 exemplifies this dangerous trend in
US CTF measures: their hasty drafting has resulted in language and implementation
that have had overinclusive effects and has undermined – instead of promoted – US
policies against terrorism. This note will argue that, in order to rectify this failure,
Executive Order 13224 must include an exculpatory provision for corporations such as
Chiquita. In order to fully examine the overinclusive quality of Executive Order 13224,
this Note will analyze and present the duress defense that Chiquita could have raised had
the case gone to trial. Although the criminal duress defense is rarely raised successfully
in court (Westen and Mangiafico, 2003, p. 833), it warrants examination here because a
similar claim has received support in circumstances similar to those of Chiquita’s.
Without this duress defense, Chiquita and similarly situated corporations will not only
be deterred from investing in countries where terrorist organizations may operate, but
could also be criminally liable for payments it did not freely “choose” to make.
Although there has been some discussion related to the order’s overinclusiv e
language with respect to designation of terrorist organizations[10], scholars have failed
to address cases such as the recent Chiquita prosecution (Zaring and Baylis, 2007;
Jenkins, 2007; Nice-Petersen, 2005). The unexamined case of Chiquita, however,
demands academic attention and analysis for three major reasons. First, it is a unique
case in that the extortion victim, and not the extortion perpetrator, is prosecuted.
Second, Chiquita was prosecuted for an activity (making extortion payments to the
AUC) that became a crime after Chiquita began its engagement with such an activity.
Finally, a thorough examination of this case has repercussions on crucial public policy
levels: the US’ War on Terrorism, the rights and remedies of corporations investing in
war-torn countries, and the effects of such legislation on the foreign investment needed
to reinvigorate the depressed, rural Colombia.
Prosecuting
extortion victims
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