CONDÉ NAST PORTFOLIO INVESTIGATES WHETHER
CHIQUITA FINANCED MURDER IN COLOMBIA

PLUS: INSIDE KAHR ARMS, AN EXCLUSIVE INTERVIEW WITH C.E.O. JUSTIN MOON, HEIR TO THE UNIFICATION CHURCH; STARWOOD’S BARRY STERNLICHT EXACTS HIS REVENGE; AND RITA BENSON LEBLANC SAVES THE SAINTS

New York—In the October 2007 issue of Condé Nast Portfolio, senior writer Kevin Gray investigates how, for years, Chiquita Brands International, the $655 million fruit giant, secretly paid off death squads in Colombia, slipping into a bloodsoaked scandal which has implicated major players in the U.S., and may engulf other U.S. firms doing business in Colombia. (“Banana Wars,” p. 166). Gray reports how between 1997 and 2004, Chiquita gave $1.7 million to the United Self-Defense Forces of Colombia, or A.U.C., whose death squads destroyed unions, terrorized workers, and killed thousands of civilians. Chiquita’s top officials admit approving the payments but say they thought that if they didn’t pay, the A.U.C. would kill its employees and attack its facilities, Gray writes, noting that in an agreement with the Justice Department, Chiquita negotiated a plea agreement and will pay a $25 million fine. Gray notes that the links between Colombia’s political and military elite and the paramilitary group have so far led to the arrest of more than a dozen current and former Colombian congressmen. Two jailed leaders of the A.U.C. (which agreed to disband last year) have testified in Colombian courts that many multinational corporations doing business in Colombia paid them off. Congressman Bill Delahunt (D-MA), who is leading a House subcommittee investigation, tells Gray he plans to call the Coca-Cola Co., Nestlé, Occidental Petroleum, and Drummond, among others, into congressional hearings. “We want to know if American companies are fueling the violence that has beset Colombia for decades,” Delahunt says. All four companies deny they funded paramilitaries. Gray points out that Chiquita’s lawyers have struggled to explain publicly that the firm had to make a choice between “life and law” and that it chose the “humanitarian” route of protecting its workers. “This company was in a bad position dealing with bad guys,” says Eric Holder, a lawyer for Chiquita. “There’s absolutely no suggestion of any personal gain here. It’s not a case like Tyco, where someone is squirreling money away. No one is out buying great shower curtains.”

Also in the October issue:
“His Fault” (p. 68). Contributing editor John Cassidy writes that the current turmoil on Wall Street is largely a result of policy decisions former Chairman of the Federal Reserve Board Alan Greenspan made during his final years. “By keeping interest rates too low for too long, he encouraged a borrowing-fueled speculative binge, which has now given way to a credit squeeze. By failing to crack down on the mortgage industry, he allowed subprime hucksters to peddle dubious loans, which the financial industry’s math whizzes packaged for investors. “Coming on top of his role in creating the internet-stock mania a decade ago, the mistakes Greenspan made—now playing out in home foreclosures and hedge fund collapses—will surely color historians’ views of his long tenure, if not his own account of it,” Cassidy writes, describing how, instead of criticizing the housing and derivatives bubbles, Greenspan celebrated them, in a spirit reminiscent of Ayn Rand. “Given Greenspan’s inaction during his final years in office, our current crunch was pretty much inevitable. In addition to reducing interest rates to 1 percent, he rejected calls for more vigorous oversight of the mortgage industry…. Rather than ruminating over the conundrum of why long-term interest rates were so low, he should have been taking vigorous action to burst the credit bubble. For a Fed chairman to have one speculative bubble inflate during his tenure is an indictment; to have two of them qualifies him as a serial bubble blower.” Cassidy points out that Greenspan did get one thing right: his retirement date and how now his successor, Ben Bernanke, faces a daunting cleanup.

“Money, Guns, God” (p. 200). Contributing editor Christopher S. Stewart goes inside the growing gun empire of Justin Moon, the C.E.O. of Kahr Arms, which he has grown into one of America’s most-watched privately-owned handgun manufacturers, with sales of around $20 million a year and climbing at an annual rate of 30 percent. Kahr is facing a landmark lawsuit for negligence in connection with a death from a gun that was stolen and sold by a rogue Kahr Arms employee. Now the $2 billion-a-year gun industry is watching the case with trepidation, fearing that a successful suit could prompt other victims’ families to bring similar cases against other gunmakers. In an exclusive and rare interview, Stewart gains unprecedented access to Moon, who may someday lead the Unification Church, founded by his father, the Reverend Sun Myung Moon, the billionaire and self-proclaimed messiah, who controls a sprawl of real estate and businesses including food and media companies, presumably intended to sustain and defend his followers when the world as we know it ends. Stewart reveals how Justin was obsessed with guns at an early age, and used his connections to start Kahr. “I borrowed money…. I wanted to create the ultimate line of concealable pistols,” he tells Stewart. How closely Kahr is connected to the church is hard to pinpoint, as business names and relationships shift, and untraceable rafts of cash are sometimes used for major transactions, Stewart reports. Ex-church member Gordon Neufeld says, “The purpose of the guns would be, in theory, to protect the people that Moon has gathered to him from the general chaos. But by logical extension, it could also include using those weapons to ‘save’ other people by defeating the warlords or evil people who hold them captive.” Moon tells Stewart that he always has his PM9 on him: “I always carry my gun locked and loaded in a holster. Quick access. If you need it, you gotta be ready.”

“Revenge of the Hotel King” (p.172). Senior writer Daniel Roth profiles Barry Sternlicht, the 46-year-old founder, former C.E.O., and ex-chairman of Starwood Hotels, who just two years ago was the most influential person in the hotel world, commanding one of the industry’s largest operations with more than $5 billion in revenue. Roth details his personal background and how he revolutionized the industry and stole customers and glory from Marriott and Hilton, creating countless enemies. “In the hotel industry, he embarrassed a lot of people,” says Ted Darnall, chief operating officer of HEI Hotels & Resorts and former head of Starwood’s North American operations. Roth reports that after endless public fights with his successor, as Sternlicht stepped down in 2005 and is now starting over, launching three luxury hotel and condo brands aimed at the high-end customer. Sternlicht is financing his new empire with debt and $3 billion raised over the past two years by his real estate private equity firm, Starwood Capital (no ties to the hotel company) whose investors expect a full payout in the next six to eight years, Roth reports. And he is moving with a velocity that boggles the minds of those closest to him. Jeff Dishner, Starwood Capital’s chief operating officer and an associate of Sternlicht’s for 16 years, says, “I thought when he was stepping down from Starwood Hotels, he’d want to slow things down. But he went in absolutely the opposite direction and accelerated. I’d probably say he’s more insatiable than he ever was.” Sternlicht tells Roth, “You stop, you die. Right? You die.”

Plus:
“Trading Spaces” (p. 178). When the U.S. markets erupted this summer, the tremors were felt on trading floors around the globe, from Tokyo to Tehran. Contributing editor John Hockenberry narrates an exceptional photo portfolio shot by Robert Polidori, who presents stock exchanges around the world, from the open-outcry market in Kathmandu, to the all-male main floor of the Kuwait Stock Exchange (cover shot). “When things go seismic deep in the global economy, stock exchanges around the world react like so many volcanoes. From New York’s Wall Street to Tokyo’s Kabutocho district, their eruptions are the manifestations of trillion-dollar forces roiling under the surface, spouting volatility, and creating panic in a global market gone Vesuvius,” Hockenberry writes. “The future will belong to the market that can set up the biggest tent for investors who want to manage and chase risk.”

“Rita’s Hail Mary Pass” (p. 206). Contributing editor Franz Lidz profiles Rita Benson LeBlanc, the 30-year-old granddaughter of the New Orleans Saints’ owner, who guided the team through its post-Katrina wilderness, and who is now calling the plays, helping the team to become superbowl contenders. To save the Saints, Lidz reports, Benson LeBlanc has to buck the N.F.L.’s moneymaking formula and score big in a small market—while helping to restore it. Benson LeBlanc’s greatest innovation may have been making tickets affordable for more fans, offering tickets for under $35 apiece, with many as low as $14, helping the Saints to sell out every game in the Superdome last season—a franchise first. They now have a waiting list of more than 32,000 for season tickets. Benson LeBlanc also collaborated on the creative financing plan that bankrolled the Dome’s face-lift. “Disasters clarify what’s really important,” says Benson LeBlanc. “Katrina made us expand our relationships with groups and businesses, and focus on inclusion. People responded and came together.”

“The Great Laptop Forward” (p. 192). Contributing editor Kevin Maney explores how Chinese P.C. Maker Lenovo is trying to do for China what Sony did for Japan. Lenovo, which two years ago paid I.B.M. $1.3 billion for its PC group, the biggest buyout of a U.S. operation ever by a Chinese company, is a top-level sponsor of and the sole hardware technology supplier to the Olympic Games coming to China in 2008. Maney, who travels to China and interviews Lenovo C.E.O. Bill Amelio, writes that China needs a corporate hero and it is betting big that Lenovo can make the great leap forward.

“Crash Test Economy” (p. 76). Senior writer Jesse Eisinger writes how, twenty years after Black Monday, we’re in the same predicament as we were in 1987—except this time it’s worse. “The dollar is weak. A leveraged buyout frenzy has just ended. American politicians fret about a rising Asian competitor (Japan then, China now) while a scandal-plagued Republican president slinks out of his final term. And most important, we are now, like then, in the midst of fallout from an explosion of hedging strategies that had given rise to overconfidence. In other words, we are where the markets were in the fall of 1987. Then, the crash was deep, but its aftermath was fleeting. This time we’re in for something worse: a slow moving, grinding bear market. Think of the current situation as a deep-sea earthquake,” Eisinger writes.

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