US embassy cable - 04KATHMANDU949

C O N F I D E N T I A L SECTION 01 OF 03 KATHMANDU 000949 
 
SIPDIS 
 
STATE FOR SA/INS, DS/IP/SA 
STATE ALSO FOR DS/OSAC 
LONDON FOR POL/GURNEY 
NSC FOR MILLARD 
 
E.O. 12958: DECL: 05/17/2014 
TAGS: ASEC, CASC, ETRD, NP, PTER, Maoist Insurgency 
SUBJECT: NEPAL: MAOISTS EXPAND ATTACKS ON BUSINESSES, 
INCLUDING SOME IN THE TOURIST SECTOR 
 
REF: A. A) 03 KATHMANDU 2020 
     B. B) 03 KATHMANDU 2042 
 
Classified By: Charge d'Affaires Janet Bogue for reasons 1.5 (B, D). 
 
SUMMARY 
-------- 
1.  (U) Since the beginning of May, the Maoists have renewed 
their rhetoric, threats and sabotage against prominent 
businesses in Nepal.  On May 3, the Maoist-affiliated All 
Nepal Federation of Trade Unions issued a statement 
blacklisting twenty-three businesses.  The statement, 
although not widely circulated (only excerpts have been 
published in Maoist-leaning newspapers), charges the 
industries with unfair labor practices.  Two of the listed 
industries, Moondrops and Roli Garments, have recently been 
bombed by the Maoists.  Of particular note, Colgate Palmolive 
(100 percent owned and operated by Colgate Palmolive-India) 
was included on the Maoist's blacklisted industries.  In 
addition, within the past two weeks the Maoists detonated 
bombs at two tourist hotels and abducted five tourist 
industry entrepreneurs, two of whom were subsequently killed. 
 There are rumors of unspecified Maoist action against the 
tourist sector scheduled for June 7-9 to be followed by a 
nationwide Maoist strike ("bandh") on June 10-12.  The 
Embassy, however, has been unable to confirm this report. 
END SUMMARY. 
 
BLACKLISTED INDUSTRIES 
---------------------- 
 
2.  (C) On May 3, the Maoist-affiliated All Nepal Federation 
of Trade Unions issued a statement and a list of twenty-three 
blacklisted industries and businesses. Apparently excerpts of 
the statement were published in Maoist-leaning, 
Nepali-language newspapers during the weeks of May 3 and May 
10. To date, the list has not been widely circulated or 
published in its entirety.  On May 17, the General Manager of 
Colgate-Palmolive notified the Embassy that his company had 
appeared on the list.  (Note: the local plant, which produces 
toothpaste, is 100 percent owned and operated by 
Colgate-Palmolive (India). END NOTE) 
 
3. (U) The translated statement alleges that the blacklisted 
industries "have been exploiting, suppressing, and torturing 
the laborers."  The statement does not include direct threats 
of pending action against these listed industries.  However, 
two of the industries have recently been bombed by the 
Maoists: Moondrops, a manpower employment agency with 
connections to the royal family, was bombed on May 10 and 
Roli Garments Factory was bombed on May 16.  Both bombings 
were in Kathmandu. 
 
4. (U) The twenty-three blacklisted industries include: 
IN KATHMANDU 
-- Hotel Soaltee 
-- Moondrops 
-- Kiran Shoes 
-- Group 4 
-- Nebico Biscuits 
-- Aqua Hundred Mineral Water 
-- Roli Garment 
-- Balkrishna Garment 
-- Amadabalam Trekking 
-- Trolly Bus Transportation 
IN LALITPUR 
-- Sangai Group 
-- Alina Garment 
-- Sajha Transport 
IN BHAKTAPUR 
-- Pashupati Spinning Mills 
-- Riddhi Samriddhi Textile 
-- Logo Garment 
-- Myshop Pvt. Ltd. 
IN HETAUDA 
-- National Soap 
-- Laxmi Lime 
-- Colgate Palmolive 
-- Shanti Vegetable Ghee 
-- Surya Nepal, Ltd. 
IN PARSA 
-- Jyoti Group 
5.  (SBU) COMMENT.  While many are manufacturing companies, 
some are particularly noteworthy. 
-- Hotel Soaltee: A four-star hotel located in Kathmandu, the 
Soaltee is among the royal family's business holdings.  The 
hotel has a management contract with Holiday Inn Crowne 
Plaza.  The Soaltee Group, which is the parent company, is 
the Nepali partner with a U.S. company in the Bhote Koshi 
Power Company. 
--Moondrops: A manpower agency specializing in sending Nepali 
workers to South Korea.  The owner of the agency is Pukar 
Rana, a distant relative of Princess Himani.  On 10 May, the 
Maoists detonated a bomb at Moondrops' office, located less 
than a kilometer from the Embassy. 
-- Group 4: The local subsidiary of the multinational 
security company that provided the U.S. Embassy's contract 
guard force until 31 August 2003.  It still provides contract 
guards for many diplomatic missions and private expat 
residences in Nepal. 
-- Aqua Hundred Mineral Water: Drinking water distributor 
which supplies various diplomatic missions, including the 
U.S. Embassy, and also Government Ministries. 
-- Roli Garment: On May 16, Maoists detonated a bomb at the 
Roli Garment Factory, located across the street from the 
Coca-Cola Bottling factory in the Balaju industrial estate in 
Kathmandu. 
-- Pashupati Spinning Mills:  Victim of two Maoist bomb 
attacks, allegedly because they have not conceded to Maoist 
extortion demands.  The first attack was in November 2000; 
the second, in September 2003, caused significant damage, 
forcing the mill to close completely. 
-- Trolly Bus Transportation: A state-owned government 
enterprise which first started operations in 1975 with 
Chinese assistance.  The company operates electric buses. 
-- National Soap: Nepalese manufacturer of Unilever soap 
products. 
-- Colgate Palmolive: the local plant, which produces 
toothpaste, is 100 percent owned and operated by 
Colgate-Palmolive (India). 
-- Shanti Vanaspati Ghee:  The factory falls under the 
auspices of the Salt Trading Company of which late-Princess 
Shanti Shah was a major shareholder. 
-- Jyoti Group: Prominent family business house in Nepal. 
Roop Jyoti is a member of the National Assembly, the Upper 
House of Parliament. 
 
6.  (C) During a phone conversation with Econoff on May 17, 
the general manager of Colgate Palmolive expressed surprise 
and concern when he heard from Colgate's employees that the 
company had been listed by the Maoists.  According to the GM, 
although the company experienced a labor dispute in October 
2003 (NOTE: This is the same timeframe that the company 
received an extortion demand of approximately USD 20,550 and 
threats from the Maoists (REF A & B). END NOTE), the dispute 
was amicably resolved in November.  He said that the company 
had not received any threats from the Maoists since the plant 
reopened in November 2003.  In fact, neither Colgate 
management nor its labor union were contacted by the Maoists 
about being included on the blacklisted industries list.  The 
GM contacted civilian authorities and was told that plain 
clothes police would be increased around the factory. 
However, the GM said he "has no way to verify this."  The 
Embassy plans to check with police contacts to verify this 
information. 
 
7.  (C) Sanjay Dugar, CEO of Aqua Hundred Mineral Water, told 
Econoff that he had received harassing phone threats and 
extortion demands (amounting to approximately USD 4000) from 
the Maoists and was told not to deliver water or work during 
the Maoist strike ("bandh") on May 18-20.  He added that 
police sources had told him that they had reason to believe 
that his company may be targeted by the Maoists, especially 
if he defied the bandh.  Interestingly,  Dugar referred to a 
subsequent call from an administrative officer at the Home 
Ministry, a client of Aqua Hundred, who told Dugar that the 
delivery "should proceed as scheduled" despite the bandh or 
the company would "lose its contract." (NOTE: The police 
report to the Home Ministry in the Nepalese government 
hierarchy. END NOTE.) 
 
RECENT TARGETING OF TOURIST INDUSTRY 
------------------------------------ 
8.  (U) Despite repeated assurances that they would not 
target Nepal's struggling tourist sector, the Maoists reneged 
with recent, visible and high-profile attacks on two tourist 
hotels and by murdering two tourist entrepreneurs.  In March 
2004 rumors surfaced that the Maoists planned action in the 
tourist sector for June 7-9 preceding a nationwide strike set 
for June 10-12.  The Embassy has not been able to verify this 
information but will provide further details as they become 
available.  If this information is confirmed, the Embassy 
will issue a warden's message. 
 
8.  (U) FISHTAIL LODGE, POKHARA:  On May 14, the Maoists 
forced the mostly Indian tourists staying at the Fishtail 
Lodge in Pokhara to leave the premises and then detonated a 
bomb, which according to police reports from the incident, 
caused approximately USD 40,500 in damage.  The Maoists 
allegedly targeted Fishtail Lodge because of its connections 
to the royal family (NOTE: The lodge was owned by the 
late-Princess Jayanti, killed in the royal massacre in June 
2001. END NOTE)  The Embassy has confirmed that there is no 
American investment in the property.  The lodge is run by a 
trust, and proceeds provide medical treatment to children 
with heart disease.  No injuries were sustained in the 
attack, and to the Embassy's knowledge, there were no 
Americans staying at the lodge at the time of the attack. 
 
9.  (U)  HOTEL GAIDA, CHITWAN: On May 17, the Maoists 
detonated a bomb in a hotel storeroom at the Hotel Gaida 
Wildlife Camp in Chitwan.  This is the second time that the 
Maoists have targeted the hotel. (NOTE: The first attack 
occurred in October 2003 (REF A). END NOTE)  According to 
news reports from the event, approximately 42 tourists 
(mostly Indians and Chileans) were staying at the hotel when 
the incident occurred.  However, the damage was not 
discovered until the next morning; reports indicate that at 
the time of the blast most "were enjoying a dance party." 
The hotel is owned by Dipak Bikram Shah and Prabhu Shah, 
distant relatives of the King.  To the Embassy's knowledge, 
there were no Americans staying at the hotel at the time of 
the attack. 
 
10.  (U) GHANDRUK (located north of Pokhara):  On 10 May, the 
Maoists reportedly abducted five prominent tourist 
entrepreneurs from Ghandruk and later murdered two of the 
hostages. (Ghandruk is located north of Pokhara and is a 
trekking stop on the Annapurna circuit.)  To date, the 
remaining three hostages have not been released.  According 
to news reports, Pokhara over the past two weeks saw a 90 
percent drop in arrivals as a result of the frequent 
politically-motivated strikes ("bandhs") and transport 
stoppages. 
 
COMMENT 
------- 
 
11.  (C) Businesses, including Nepal's tourist industry, are 
already hurting from recurrent bandhs, transport blockades 
and chronic political instability.  Given the recent Maoist 
campaign of violence, it seems unlikely that the business 
community will be spared during the upcoming monsoon season. 
The Maoists seem to be intensifying their rhetoric, threats 
and sabotage against the only thing--other than remittances 
from abroad -- keeping the Nepalese economy afloat.  END 
COMMENT. 
BOGUE