'Hannity' Investigates Shocking New Scandal Involving Eric Holder

This is a rush transcript from "Hannity," January 14, 2009. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: Attorney general nominee Eric Holder may meet some heavy resistance when his nomination hearings begin tomorrow. Now he could again face tough questions about his involvement in the controversial pardons during his days in the Clinton administration, but another problem is also emerging.

His connection to a company with ties to a known terrorist organization during his years in private practice. Lets take a look.

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HANNITY (voice over): These are Colombian terrorists. The AUC and FARC are responsible for kidnapping and murdering thousands of Colombians and Americans alike. But lesser known is the trail that leads from these groups to the man who may be our next attorney general.

• Video: Watch the 'Hannity' investigation

The story begins with the case of the United States of America versus Chiquita International Brands.

Chiquita, one of the world's most recognizable brands exports more than 2.4 billion pounds of bananas from Colombia to North America each and every year, but in the highly competitive banana trade being one of the top producers comes with a price.

From 1997 to 2004 Chiquita funneled $1.7 million in protection money to the AUC. These two groups have been responsible for some of the worst massacres in Colombia's civil conflict and account for a sizeable percentage of the country's cocaine exports.

On September 10, 2001, the AUC was designated by the U.S. government as a foreign terrorist organization.

Chiquita claims they paid the protection money to keep their employees safe from the para-military groups, but victims' families disagree.

JONATHAN REITER, ATTY. FOR PLAINTIFF IN CIVIL CASE: I represent more than 600 families of murder and torture victims that seek damages against Chiquita for providing material support to a terrorist organization, the AUC.

We believe this was active support to a terrorist organization which was functioning as a security force for the Chiquita company that was doing the bidding of the Chiquita company. Chiquita was instrumental in facilitating the illegal importation of 3,000 AK-47 machine guns and 5 million rounds of ammunition through its private port in Colombia.

HANNITY: After seven years of lining the pockets of terrorists, Chiquita admitted their wrongdoing to the Justice Department and hired and extremely influential man to bail them out, former deputy attorney general, Eric Holder.

Holder had left the DOJ after the Clinton administration and was now in private practice. On March 19, 2007, with Holder as lead counsel, Chiquita pleaded guilty to one count of, quote, "engaging in transactions with a specially designated global terrorist organization."

Holder then brokered what some call a sweetheart deal in which Chiquita only had to pay a $25 million fine over five years, yet not one of the half dozen company officials who approved the payments would receive any jail time.

REITNER: The entire liability for the wrongdoing involved in supporting this terrorist organization was placed solely upon the corporation. The individual corporate officers, directors, and others who were the guilty parties, those people, as I said, got a complete pass.

HANNITY: Ironically, Holder's stance on the criminal case contrast part of a 1999 document that he wrote while at the Justice Department, a document that became known as the "Holder Memorandum."

REITNER: He stated, quote, "Charging a corporation, however, does not mean that individual directors, officers, employees, or shareholders should not also be charged. Prosecution of a corporation is not a substitute for the prosecution of criminally culpable individuals within or without the corporation."

HANNITY: In a 2007 Washington Post article Holder made the case for not charging individuals, quote, "If what you want to encourage is voluntary self-disclosure, what message does this send to other companies?"

So was he changing his tune after getting paid by Chiquita? Well, some say no.

VICTORIA TOENSING, FMR. DEPUTY ASST. ATTORNEY GENERAL: There's no conflict whatsoever. The "Holder Memorandum" talks about the law as it has been ever since I've known it, for decades, and that is that if — the prosecutor decides to indict the corporation, the prosecutor can also decide to indict individuals.

It wasn't Eric Holder who decided that. It was the Justice Department.

HANNITY: But what is raising the most eyebrows is the argument that Holder made as lead attorney in the ongoing civil case against Chiquita.

According to court documents Holder wanted the case dismissed, because, quote, "There is no clearly defined rule of international law prohibiting material support of terrorism."

Indeed, there is not even consensus on the definition of terrorism. What?

JAY SEKULOW, AMERICAN CENTER FOR LAW AND JUSTICE: It's very troubling that the presumptive attorney generally of the United States, the nominee, doesn't know or doesn't believe that there's a legal definition internationally for terrorism or a terrorist.

First of all, he's the person charged with prosecuting terrorists, and of course, since 9/11 the attorney general's role is also to prevent acts of terror, so to say that there's no definition of terrorists or terrorism I think is very, very dangerous.

HANNITY: And even some Holder critics say his argument may actually hold up.

ANDY MCCARTHY, NATIONAL REVIEW CONTRIBUTOR: He's not saying that terrorism doesn't exist or that there's not a definition under American law of terrorism. He's saying that there is not a universally recognized material support to terrorism claim that can be brought under that civil statute.

HANNITY: Even though some may argue that this is a fair legal argument, do we really want the next attorney general to be a man who cannot define what terrorism is?

Holder had already been mired in controversy stemming from his involvement in President Clinton's last-minute pardons, and just last week the highest ranking Republican on the Senate Judiciary Committee suggested that as deputy attorney general under Bill Clinton he was all too willing to do the president's bidding.

ARLEN SPECTER (R), PENNSYLVANIA SENATOR: Sometimes it is more important for the attorney general to have the stature and the courage to say no instead of to say yes.

HANNITY: Confirmation hearings are set to begin on Thursday, so will Eric Holder's representation of Chiquita, a company guilty of funding terrorists, raise questions about his fitness to be the top law man in this country?

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