US embassy cable - 03KATHMANDU2042

C O N F I D E N T I A L KATHMANDU 002042 
 
SIPDIS 
 
STATE FOR SA/INS AND DS/IP/SA 
 
E.O. 12958: DECL: 10/20/2013 
TAGS: BEXP, PTER, ASEC, NP, Maoist Insurgency 
SUBJECT: NEPAL: MAOISTS THREATEN CLOSURE OF 
COLGATE-PALMOLIVE 
 
REF: KATHMANDU 2020 
 
Classified By: DCM ROBERT K. BOGGS. FOR REASONS: 1.5 (B,D) 
 
1. (C) Summary:  Representatives of Colgate-Palmolive in 
Nepal indicated to EconOff on October 21 that the company 
will close permanently if the Maoists do not withdraw their 
exortion demand (reftel).  Colgate-Palmolive representatives 
during the meeting requested that the U.S. Embassy follow up 
with the Government of Nepal (GON) on an outstanding request 
for a police check point close to the plant.  Representatives 
mentioned that they were disturbed by the local government's 
"nonchalant and noncommittal" response for security 
assistance following the Maoist demand.  Colgate-Palmolive 
has no current plans to publicize the reasons behind the 
temporary closure.  End Summary. 
 
2.  (C)  During a meeting with EconOff on October 21, Suresh 
Nimonkar, the local Colgate-Palmolive factory manager, and 
his associate, Ramesh Raphore, indicated that if the Maoists 
do not withdraw on their extortion demand for NRs. 2.5 
million (approximately USD 33,800), Colgate-Palmolive will 
pull out of Nepal permanently (reftel).  Colgate-Palmolive 
(Nepal), suspended operations temporarily on October 17 for a 
seven business day period.  In the event that the factory 
re-opens, Colgate-Palmolive representatives requested that 
the U.S. Embassy follow up with the GON on our earlier 
request for an Armed Police Force checkpoint near the plant. 
For the time being, Colgate-Palmolive has no plans to 
challenge publicly the Maoist request.  Instead, the company 
is merely "hoping that the message will trickle down" when 
the effect of the closure is felt on local contractors. 
(Note: the local plant, which produces toothpaste is 100 
percent owned and operated by Colgate-Palmolive (India). End 
Note.) 
 
3.  (C)  The Colgate-Palmolive representatives indicated that 
they have received little support and few assurances from 
local government officials.  For example, Nimonkar reported 
that when he told the local Chief District Officer (CDO) (the 
civil servant responsible for security in the district) that 
Colgate-Palmolive was considering closing the plant, the CDO 
responded, "Maybe you should." 
 
4.  (U)  The exortion demand comes at the peak of a labor 
dispute with Colgate-Palmolive's local employees, who are 
requesting increased salaries and benefits.  Local media 
reports characterize the plant closure as a result of both 
the Maoist demand and the labor dispute. 
5.  (C) Comment:  This is not the first time that a major 
high-profile foreign investor has been targeted by the 
Maoists.  Extortion is commonplace, but many businesses 
choose to pay for "security."  Those who refuse to pay, like 
Coca-Cola and Colgate-Palmolive, complain that they receive 
inadequate support from the GON in protecting their security 
and investment.  During a period of economic and political 
instability and declining business activity in Nepal, this 
does not bode well for the future of foreign investment here. 
 
MALINOWSKI