US embassy cable - 04TEGUCIGALPA141

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 000141 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IFD/OIA AND WHA/CEN 
STATE PLEASE PASS TO USTR FOR BHartman 
STATE PLEASE PASS TO EXIM, OPIC 
 
E.O. 12958: N/A 
TAGS: EINV, BTIO, KIPR, CASC, PGOV, HO 
SUBJECT: AmCit-owned Cable TV Company Claims Harassment by 
Powerful Honduran Rival 
 
 
1. (SBU) Summary.  A U.S.-owned cable TV company, Mateo's 
Cable Vision, claims that it has been subject to an unusual 
number of audits and investigations from various GOH 
agencies over the past year.  The owners of this company, 
Michael and Sally Mitrovic, see these investigations as acts 
of harassment that are being orchestrated by their main 
competitor, who is an influential Honduran Congressman. 
This case was first brought to the attention of USTR in 
Washington, which notified the Embassy.  EconOffs have 
looked into the case and clarified the situation, and have 
provided advocacy by bringing the case to the attention of 
the appropriate GOH officials.  We have encouraged Honduran 
officials to ensure that their agencies conduct 
investigations fairly, not focusing only on U.S.-owned 
companies or allowing themselves to be affected by political 
considerations.  End Summary. 
 
------------------------------ 
U.S. Company Claims Harassment 
------------------------------ 
 
2. (SBU) Michael Mitrovic, a U.S. citizen, and his wife 
Sally Navarrete-Mitrovic, a Honduran-born, naturalized U.S. 
citizen, are owners of a cable TV company named Mateo's 
Cable Vision.  The company operates in the north coast city 
of Tela. 
 
3. (SBU) The only other cable TV company which operates in 
Tela is called SatelCab, and is owned by Rodolfo Irias 
Navas, a very powerful Congressman from the National Party. 
Congressman Navas served as President of Congress from 1990 
to 1994, and has been involved in other controversial 
business projects.  According to the Mitrovics, their own 
company, Mateo's Cable Vision, is doing very well, and 
steadily taking market share from SatelCab.  They believe 
that, as a result, Congressman Navas is using his political 
influence to bring pressure upon Mateo's Cable Vision 
through various government agencies.  The Mitrovics say that 
over the past year, they have been subject to an unusual 
number of investigations and audits from several government 
agencies, which constitute "harassing and discriminatory 
acts." 
 
4. (SBU) Post first learned of the Mitrovics' case from a 
December 12th letter sent from the Mitrovics' U.S. attorney 
to Ambassador Zoellick of USTR.  This letter was then 
forwarded to post.  At the time, the only record of the 
Mitrovics in embassy files was the consular section file 
regarding the kidnapping attempt against Mrs. Navarrete- 
Mitrovic in 1999 (see paragraph 19 below); we had no record 
of the company's investment dispute.  Upon making contact 
with Mrs. Navarrete-Mitrovic, we arranged a meeting at the 
embassy to learn the details of the case, and have been in 
contact with the Mitrovics ever since.  After this meeting, 
Mrs. Mitrovic filled out an advocacy request, which the 
embassy received on January 13th. 
 
5. (SBU) The specific investigations and audits to which 
Mateo's Cable Vision has been subject are as follows: 
 
-- ENEE 
 
6. (SBU) In May 2003, the Honduran Electricity Company ENEE 
threatened to cut off electricity for Mateo's Cable Vision 
unless bills were paid immediately upon receipt.  The 
Mitrovics believe this reflects political pressure, because 
Mateo's Cable Vision holds a 42,000 Lempira (about USD 
2,300) bank bond in the name of the electricity company, and 
because the usual practice is to allow 30 to 60 days to pay 
electricity bills. 
 
-- Immigration Department 
 
7. (SBU) An Argentine national who works for Mateo's Cable 
Vision as a Technical Director was nearly deported from 
Honduras in early 2003.  The Mitrovics' Honduran counsel 
quickly filed a request for residency papers for this 
consultant to avoid the deportation.  They believe that 
Congressman Navas was behind the unusually quick and 
efficient action taken by the GOH Immigration Department on 
this case. 
 
-- CONATEL 
 
8. (SBU) The Mitrovics claim that four times during 2003, 
officials from CONATEL, the GOH agency which regulates cable 
TV companies, have performed unannounced audits and 
inspections of Mateo's Cable Vision.  The Mitrovics believe 
that it is highly unusual for one company to be the subject 
of four audits and inspections during the course of a year. 
In the first three audits, the Mitrovics say that their 
company was found to be fully in compliance with 
regulations.  In the most recent audit, it was discovered 
that Mateo's Cable Vision had missed a payment earlier in 
the year; they have acknowledged this and agreed to make the 
payment and pay a late fee. 
 
-- IPR Division 
 
9. (SBU) The Copyright Office of the Division of 
Intellectual Property Rights (IPR), in the Ministry of 
Industry and Trade, is conducting an investigation into 
allegations that Mateo's Cable Vision has broadcast about 
thirty channels for which it does not have a contract.  The 
investigation was triggered by a complaint from ESPN, but 
the Mitrovics believe that ESPN received the information 
about Mateo's Cable Vision from Congressman Navas, their 
competitor.  Note: When the Mitrovics first established 
Mateo's Cable Vision in 2002, they simultaneously denounced 
Congressman Navas' company, SatelCab, to the IPR Division, 
correctly alleging that SatelCab was broadcasting sixteen 
pirated channels.  It seems very feasible, though we have 
seen no direct evidence, that Congressman Navas is indeed 
involved behind the scenes as this same tactic is now being 
used against Mateo's Cable Vision.  End note. 
 
10. (SBU) The Mitrovics and their attorneys claim that the 
company has never broadcast ESPN, and that the company 
possesses contracts for most, but not all, of the channels 
that they have been accused of pirating.  However, 
one of the company's attorneys has indicated that at least 
one station was listed as available to Mateo customers, 
without the company having a contract, and that the company 
might be subject to a fine for this misleading advertising. 
In addition, Mrs. Navarrete-Mitrovic privately admitted that 
they have at times brought down signals for which they do 
not have a contract. 
 
11. (SBU) Of these four types of government audits or 
investigations cited as examples of harassment, the only one 
that is currently ongoing is the investigation of the IPR 
Division of the Ministry of Industry and Trade. 
 
-- Defamation 
 
12. (SBU) In addition, according to the Mitrovics' 
attorneys, Michael Mitrovic has been described on a 
television station owned by Congressman Navas as having 
connections to Colombian narcotraffickers, apparently in an 
effort to damage Mr. Mitrovic's reputation and discourage 
customers from subscribing to his company's cable service. 
Mr. Mitrovic's attorneys acted to stop the television 
station from making defamatory accusations. 
 
---------------- 
Embassy Advocacy 
---------------- 
 
13. (SBU) In conversations with both Mr. and Mrs. Mitrovic 
and their lawyers, EconOffs have made it clear that we can 
not ask Honduran government agencies to refrain from 
auditing companies or investigating claims of wrongdoing - 
in effect, to refrain from doing their job.  We have also 
discussed the importance of correcting any weak points in 
the Mitrovics' case.  The Mitrovics and their counsel are 
now focusing on addressing these aspects of their situation 
and responding to the IPR Division's investigation through 
the established legal channels. 
 
14. (SBU) However, we do find it highly credible that the 
pattern of audits and investigations experienced by the 
Mitrovics reflects the influence of their competitor, 
Congressman Navas.  We have raised the case with the 
appropriate GOH officials in order to draw attention to the 
perception that a U.S.-owned company is being harassed by a 
politically influential rival. 
 
15. (SBU) First, on December 18th, EconCouns spoke with 
Marlon Tabora, the President of CONATEL, the Honduran 
telecommunications regulatory agency.  Tabora was unfamiliar 
with the audits of the company by his office, but indicated 
willingness to speak directly to the Mitrovics or their 
counsel and address the issue. 
 
16. (SBU) On December 23rd, EconOff spoke with Marvin 
Discua, Director of the Intellectual Property Division of 
the Ministry of Industry and Trade.  EconOff expressed 
approval that Discua's office is pursuing claims of 
satellite piracy, but stressed that it is important that all 
such claims be given equal attention, and that a company not 
be singled out because it is U.S.-owned.  Discua assured 
EconOff that this is not the case, and has promised to send 
the embassy information regarding all investigations 
performed by his division during 2003. 
 
17. (SBU) EconCouns has also mentioned the case to the 
President's Special Advisor for Foreign Investment, Camilo 
Atala. 
 
18. (SBU) On January 13th, the embassy received an advocacy 
request from Mrs. Mitrovic, which we have faxed to the 
Department of Commerce.  In the request, Mrs. Mitrovic asks 
that the embassy "investigate if CONATEL, the copyrights 
office, ENEE and other offices are as persistent with their 
inspections of other companies as with Mateo's Cable 
Vision."  Embassy does not recommend an investigation of 
this issue per se, but will work with Commerce to determine 
if any further actions are advised to be responsive to this 
advocacy request. 
 
-------------- 
Consular Issue 
-------------- 
 
19. (SBU) A separate issue concerns Mrs. Navarrete- 
Mitrovic's personal safety and, in particular, a kidnapping 
attempt against her which took place in 1999.  The alleged 
perpetrator of this crime was arrested on the day of the 
attempt, but released from prison after three months.  A new 
warrant was eventually issued for his arrest, based upon the 
kidnapping attempt and other past crimes that he is accused 
of committing, but he has not yet been arrested. 
 
20. (SBU) While the kidnapping attempt is unrelated to the 
Mitrovics' investment dispute, the two issues were linked 
when the case was brought to the attention of USTR, and thus 
to the embassy.  Mrs. Navarrete-Mitrovic is now in contact 
with the consular section concerning the kidnapping case, 
and the assistance that the consular section can provide in 
tracking the GOH's efforts to apprehend the suspect. 
EconCouns and the consular section have urged the Mitrovics 
to place the highest possible priority on their personal 
security. 
 
------- 
Comment 
------- 
 
21. (SBU) Comment: EconOffs have proceeded cautiously with 
this case, considering that the various Honduran government 
agencies accused of harassing Mateo's Cable Vision are, 
after all, doing their jobs, and given the indication of 
some limited IPR violations on behalf of the U.S. company. 
At the same time, it does seem very plausible to EconOffs, 
given our knowledge of the political and business climate of 
Honduras, that an influential Congressman is pulling strings 
to make life difficult for a growing, U.S.-owned competitor. 
Congressman Navas has been involved in some other high- 
profile business disputes in the past, including seeking to 
influence the adjudication of a permit to build a hydro- 
electric dam on the Cangrejal River.  Probably the most 
worrisome issue of all has been the spread of false rumors 
in Tela about the Mitrovics, with some versions alluding to 
ties to Colombian narcotraffickers. 
 
22. (SBU) We have been successful in clarifying the various 
issues of this complicated case, explaining the proper role 
of the embassy to the Mitrovics and their attorneys, and 
encouraging them to correct any minor disputes immediately, 
so that their company will have nothing to fear from 
government investigations.  Post will continue to follow the 
issue, as the case is an example of the difficult investment 
climate that at times prevails for U.S.-owned businesses in 
Honduras.  End Comment. 
 
Palmer