US embassy cable - 04KATHMANDU1178

S E C R E T SECTION 01 OF 02 KATHMANDU 001178 
 
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NOFORN 
 
STATE FOR SA/INS AND CA/OCS/ACS 
STATE ALSO FOR DS/IP/SA AND DS/DSS/OSAC 
DELHI FOR FBI 
LONDON FOR POL/GUERNEY 
NSC FOR MILLARD 
 
E.O. 12958: DECL: 06/17/2014 
TAGS: ASEC, CASC, BEXP, PTER, ECON, NP 
SUBJECT: NEPAL: ADDITIONAL INFORMATION ON THE BOMBING OF 
AMERICAN-OWNED OFFICE IN KATHMANDU 
 
REF: A. A) KATHMANDU 1119 
     B. B) KATHMANDU 1159 
 
Classified By: Charge d'Affaires Janet Bogue for reasons 1.5 (B,D) 
 
1.  (S/NF)  Post continues to look into the June 12 bombing 
of the American-owned carpet factory "Red Thread." (REF A) 
On June 18, RSO Jim Gayhart met with American business owner 
Leslie Shackleford (please protect) to discuss the recent 
Maoist bombing of her factory (REFTELS).  She expressed 
concern that this information NOT/NOT be widely disseminated 
fearing further Maoist retaliation.  Shackleford stated that 
she sought Embassy advice in December 2002 when the Maoists 
demanded a one-time donation of NRs. 500,000 (approximately 
USD 7,000) in order to guarantee the safety of her business. 
Shortly after receiving this demand, Shackleford reported 
this incident to CON and RSO.  Shackleford believes that her 
confidentiality was somehow breached, stating that she was 
 
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later approached by several American expatriates who 
indicated that they had heard during a public briefing that 
"an American carpet factory owner" had received an extortion 
demand. (NOTE: Shackleford's carpet business is one of the 
few American-owned carpet businesses in Kathmandu.  END 
NOTE.) 
 
2.  (S/NF)  Following her initial encounter in December 2002, 
Shackleford stated that she met with the Maoists several 
times and negotiated a reduced payment, eventually giving the 
Maoists what was agreed to be a one-time donation of NRs. 
300,000 (approximately USD 4000). (NOTE: This extortion 
figure is quite low for the carpet industry. END NOTE.)  She 
indicated during one of her meetings that she was able to get 
the Maoists to agree to have video footage and digital photos 
taken.  Shackleford claims that FBI SA John T. Dwyer with the 
AmEmbassy New Delhi LEGATTS Office had instructed her on how 
to convince the Maoists to pose for pictures and video 
footage and how to collect the Maoists' fingerprints from 
documents.  She indicated that Dwyer provided her with an 
evidence bag and instructed her how to use it.  (NOTE: This 
is the account of Shackleford as reported to RSO Jim Gayhart 
on June 18.  Neither the RSO at the time, Kevin Wetmore or 
FBI SA John T. Dwyer have been contacted.  Shackleford has 
not turned any photographs or other evidence into the 
Embassy.  Shackleford claims to still have the photos, tape 
and documents in her possession.  END NOTE.) 
 
3.  (S/NF)  Although the Maoists knew Shackleford was an 
American, she does not believe her factory was targeted 
because of its American ownership.  Rationalizing the event, 
she mentioned that there could be several factors leading to 
the incident: 
 
-- MINOR LABOR ISSUE:  Shackleford's carpet factory employs a 
number of temporary workers, who agree to work on short-term 
projects without additional compensation after the work is 
completed.  She indicated that the Maoists met with her in 
March 2003 under the pretext of collecting severance benefits 
on behalf of several of these temporary workers.  Shackleford 
explained to the Maoists that these workers agreed to a 
temporary employment contract and were not eligible for 
severance benefits.  Citing her previous one-time payment to 
the Maoists, she refused to pay any additional money. 
 
-- SAVING FACE:  During this March 2003 meeting, the Maoists 
demanded that she return all video footage and photos taken 
during the first meeting.  At the time, Shackleford refused. 
She now believes that the attack on her factory--although 
more than a year later--could be in retaliation for not 
returning the photos. 
 
-- CAN AFFORD TO PAY:  Shackleford believes that her 
business, like other foreign investments in Nepal, is an easy 
target for Maoist extortion because she can afford to pay. 
She claims that informal conversations with other American 
and third-country investors indicate that a majority of 
businesses have paid extortion money to the Maoists. 
 
4.  (S/NF)  As reported in Ref B, Shackleford believes she 
has received visits from Maoists subsequent to the bombing. 
She is not staying at her principal residence, plans to leave 
Nepal (at least temporarily) and may relocate her business to 
India.  While accepting advice on her personal safety she 
prefers no assistance from the U.S. Mission and asked that 
the Mission help her keep a low profile and protect the 
confidentiality of her information. 
 
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(S/NF) COMMENT.  On June 22, the Embassy's Emergency Action 
Committee convened to discuss this incident further.  Based 
on the RSO's conversation with the owner, it seems there may 
have been multiple factors involved with the Maoist bombing. 
In addition to Shackleford's theory, another contributing 
factor could have been "Red Thread's"  the Tibetan 
affiliation (she has a Tibetan business partner and most of 
her employees are Tibetan women).  The Maoists have long 
preyed on carpet factories, especially those connected to the 
Tibetan community.  The industry presents an easy target for 
Maoist extortion demands.  While the Maoists were aware of 
the factory's American ownership, it is hard to evaluate 
whether that was a factor in the bombing.  END COMMENT. 
BOGUE