US embassy cable - 04GUATEMALA251

UNCLAS SECTION 01 OF 02 GUATEMALA 000251 
 
SIPDIS 
 
DEPT FOR WHA, DRL/IL, AND EB 
USTR FOR BUD CLATANOFF 
DOL FOR ILAB:JORGE PEREZ-LOPEZ 
 
E.O. 12958: N/A 
TAGS: ELAB, EINT, GT 
SUBJECT: ADDRESSING LABOR VIOLATIONS BY US FIRMS: THE 
GALLERY APPAREL CASE 
 
 
1.  Subject:  Since mid-December, a U.S.-owned maquila has 
been closed, throwing up to 800 workers, mainly single 
mothers, out of work after failing to meet a payroll.  The 
GOG has requested USG assistance resolving the workers' 
claims against the U.S. owners, Robert and Steven Alexander 
of Medley, Florida.  Embassy efforts to encourage dialogue 
between the U.S. owners and their former employees, and 
compliance with Guatemalan labor laws, have been fruitless. 
Coming in the context of GSP review and CAFTA Track Two 
efforts, this case undermines the U.S. interest in promoting 
labor law enforcement in Guatemala.  Embassy appreciates the 
Department's efforts to help move this case toward 
resolution.   End Summary. 
 
Facts of the Case 
----------------- 
 
2.  According to legal documents and information gathered 
from worker representatives and U.S.-based owners, these are 
the facts in the case: 
 
--  A maquila factory in Mixco, a municipality adjacent to 
Guatemala City, rented by Gallery Apparel Services, S.A. and 
employing between 650 and 800 workers, was closed by the 
police on December 21, 2003.  Police reportedly intervened to 
quell looting by employees, and continue to guard the 
facility. 
 
-- Gallery Apparel's local managers had abandoned the factory 
after missing payment of the workers' biweekly salary and 
mandated extra month's salary on December 16, fearing for 
their safety. 
 
-- In addition, workers were not paid severance before the 
factory was closed, according to worker representatives and 
the GOG. 
 
-- Workers have petitioned the Ministry of Labor, Human 
Rights Ombudsman's Office, this Embassy and the Public 
Ministry, requesting assistance to have the company meet its 
legal obligations.  The workers are being assisted by the 
prominent human rights NGO Center for Legal and Human Rights 
(CALDH), which has appealed for support from the Presidential 
Commissioner for Human Rights, Frank LaRue.  (Note:  LaRue 
told LabAtt on January 31 that labor disputes are not within 
his commission's mandate.) 
 
-- Gallery Apparel is owned by AmCits Robert Michael 
Alexander (age 45) and Steven Edward Alexander (44) of 
Medley, Florida (tel. 954-624-1934). 
 
-- Gallery Apparel's legal representative listed in its 
Mercantile Registry is John Thomas Maitland. 
 
-- The Embassy received a diplomatic note from the Foreign 
Ministry dated January 12, 2004, which attached a request for 
USG collaboration on this case from former Labor Minister 
Victor Moreira.  The note mentioned Maitland by name, and 
listed his address in Florida (11305 N.W. 128th St. Medley, 
Florida 33178, USA).  On January 20, Ambassador Ana Maria 
Dieguez, Director of Migration Affairs at the Foreign 
Ministry, told LabAtt that Maitland is a Canadian citizen but 
renewed the MFA's request for USG assistance to resolve the 
complaints against the U.S. owners of Gallery Apparel.  The 
MFA sent a second diplomatic note on January 16 which 
clarified that Maitland is a Canadian but Steven and Robert 
Alexander, the co-owners, are AmCits; the note repeated the 
earlier request for USG assistance.  The Embassy has not yet 
responded to either diplomatic note, pending guidance from 
the Department. 
 
-- On January 9, LabAtt spoke with Mr. Robert Alexander at 
his number in Florida.  He said that he and his brother 
Steven are co-owners of Gallery Apparel, which has operated 
for six years in Guatemala, former under the name 
"Gringotex."   He estimated the number of workers at between 
625-650.  He said times had been hard (a truck had been 
hijacked, an employee fired for embezzling), and the company 
informed workers before December 16 that the company would 
have difficulty making the mandated Christmas bonus payment. 
Mr. Alexander claimed to be a good employer, who won a 
second-place award from VESTEX, the maquila association.  He 
normally visited the factory regularly, but now fears to 
return. 
 
-- According to Mr. Alexander, the day after the December 16 
payroll and bonus was missed, workers took over the factory. 
Management employees walked out of the factory on December 
17.  His local general manager and legal representative, Mr. 
Andres Vielman Rosales, then quit.  Eventually, after a 
committee of workers sold off bolts of fabric and reportedly 
started looting the factory and scuffles broke out, police 
intervened to secure the factory.  Mr. Alexander said he was 
in the process of determining his legal and insurance 
responsibilities and the current condition of the factory, 
which is a rented facility.  He has heard that his sewing 
machines were strewn outside the factory and may be 
irreparably damaged. 
 
-- LabAtt encouraged Mr. Alexander to meet his legal 
obligations to his workers and to contact worker 
representatives, who wish to speak with him.  He suggested 
seeking the assistance of local counsel or VESTEX to help 
communicate with his workers.  Mr. Alexander said he would 
probably be in touch with Guatemalan authorities shortly, 
perhaps through new legal counsel.  He is concerned about 
taking responsibility for his rented facility from the police 
and securing it. 
 
-- Mr. Vielman did not attend a meeting with Labor Ministry 
inspectors on January 19, citing scheduling conflicts.  The 
inspectors cited him to attend a conciliatory panel meeting 
on January 27, and indicated that the Ministry will fine him 
if he does not appear.  When Mr. Vielman did not appear 
personally on January 27, sending a legal representative in 
his place, the MOL inspector cited Mr. Vielman to appear in 
person on February 5. 
 
-- LabAtt met with worker and CALDH representatives on 
January 21; they requested LabAtt assure Robert Alexander 
they would guarantee his safety if he were to return to 
Guatemala to negotiate an amicable resolution of the dispute. 
 LabAtt conveyed this message to Steven Alexander by TelCon 
on January 22.  Alexander did not reveal any intention to do 
so. 
 
-- So far, this case has not entered the courts, since the 
MOL is seeking an amicable resolution.  If that does not 
happen, they will likely impose a fine on Gallery and the 
workers will be free to go to court.  The workers claim they 
would prefer to avoid that if the Alexanders are willing to 
negotiate. 
 
Comment 
------- 
 
3.  We are unclear what legal obligations might be 
enforceable in the U.S. in these cases, and not unsympathetic 
to the U.S. owners fears for their security should they 
return to the Guatemala.   Embassy appreciates the 
Department's ongoing review of legal options in cases of 
labor violations by U.S. employers abroad, and guidance on 
how to proceed. 
 
4.  It is clearly in the USG interest to send a consistent 
signal on labor rights enforcement.  Encouraging the 
Alexander brothers of Florida to address the complaints of 
their former workers now would advance the USG (and the 
company's) interest by resolving the case before it enters 
the tortuous labor justice system.  Experience with past 
cases (e.g. DYMEL, Crowley containers) argues for early 
intervention in labor disputes to prevent delayed justice 
(and escalating costs to the employer).  Anything less risks 
sending an ambiguous signal to the GOG at a moment we are 
pressing for its commitment to enforce labor law in Guatemala. 
 
HAMILTON