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Paper Apologizes, Pays for 'Untrue' Stories on Chiquita

Monday Business

June 29, 1998|From Bloomberg News

In a rare move in the newspaper industry, Gannett Co.'s Cincinnati Enquirer renounced on its front page today articles it wrote on Chiquita Brands International Inc. and agreed to pay at least $10 million to settle claims by the fruit-and-vegetables company.

Under the headline "An Apology to Chiquita," Enquirer Publisher Harry Whipple and Editor Lawrence Beaupre said they were renouncing the articles alleging that Chiquita engaged in questionable business practices because they were partly based on voicemail messages illegally obtained by reporter Michael Gallagher.

"It taints the whole package," said Whipple in a phone interview. While the Enquirer's apology refers to "untrue conclusions" reached in the articles, Whipple wouldn't comment further on whether the paper had some or all of its facts wrong.

Whipple said that although Chiquita hadn't filed suit against the Enquirer, the paper paid the company "in excess of $10 million." The payment is one of the largest ever by a media company to settle claims against it.

Officials at Cincinnati-based Chiquita, the world's largest marketer and distributor of bananas, couldn't be reached to comment on the articles, most of which were contained in an 18-page special section titled "Chiquita Secrets Revealed" on May 3.

The articles alleged that officials at Chiquita's Latin American operations may have used life-threatening pesticides, orchestrated the kidnapping of a competitor's former agent, had the Honduran Army raze a village to close a plantation, bribed Colombian officials and through lax supervision allowed drugs to be smuggled to Europe on its ships. Just weeks before, the U.S. Securities and Exchange Commission had begun an investigation of Chiquita.

In addition to the apology--which takes up most of the top of the front page--the Enquirer said it fired Gallagher Friday for misconduct and removed the articles from its Internet site. The paper also said it continues to investigate whether others involved in the Chiquita articles engaged in similar misconduct.

At the same time, a criminal investigation by the Sheriff's Department of Hamilton County, Ohio, is now in progress under a special prosecutor, the Enquirer said.

Gallagher couldn't be reached to comment.

In April, the SEC began its investigation into the company's business practices, including its compliance with the Foreign Corrupt Practices Act and whether it made illegal payments to foreign officials, according to the company's quarterly filing with the SEC.

In its filing, Chiquita said it was cooperating with the investigation, the status of which couldn't immediately be determined. A SEC spokesman couldn't be reached for comment.

Many of the charges listed in the Enquirer were based on voicemail messages that the Enquirer said it initially believed were legally obtained by a high-ranking Chiquita executive with authority over the Chiquita voicemail system.

When Chiquita took issue with the reports, the Enquirer said it stood by the series, which relied--in addition to the voicemails--on its own past stories, lawsuit records, interviews with unidentified company officials, internal company voicemail and visits to sites in Central America. Reporters working on the stories used translators for interviews and documents in Spanish.

In the days after the original articles ran, Chiquita's stock fell more than 8%. It has since recovered.

The Enquirer is part of Arlington, Va.-based Gannett's newspaper chain, the largest in the U.S. with 87 daily papers, including USA Today. The apology is available at http://www.enquirer.com.

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