US embassy cable - 02ABUJA187

S E C R E T SECTION 01 OF 04 ABUJA 000187 
 
SIPDIS 
 
 
C O R R E C T E D  C O P Y( CORRECTING DECL AND REASON) 
 
 
DEP FOR EB/ESC/ESP, S/CT, AF/W 
 
 
E.O. 12958: DECL: 1.6X6 
TAGS: PTER, PREL, ECON, ETTC, NI 
SUBJECT: (S) NINTH TERRORIST LIST: NASCO GROUP (NIGERIA) 
LIMITED 
 
REF: A. STATE 10592 
     B. STATE 11652 
     C. LAGOS 144 
 
 
Classified by Ambassador Howard F. Jeter; Reason 1.6X6 
 
 
1. (S) Summary:  The question of including the NASCO Group 
(Nigeria) Ltd AND other NASCO SUBSIDIARIES IN NIGERIA in the 
assets freeze is a question of balancing our national 
security interests in confronting terrorism and its many 
components against our interests in Nigeria and the resultant 
strain the designation of the NASCO subsidiaries would have 
on the bilateral relationship. The national security 
imperative against counter terrorism is of paramount 
importance and that effort must not be found wanting. 
However, pursuit of this objective in a given situation, may 
undercut other important objectives and interests we may have 
in a particular country. This is the case with Nigeria and 
NASCO.  The Mission does not know the extent to which NASCO's 
Nigerian operations contribute to the global network of 
terrorism; Nor are we arguing that the NASCO group should not 
be placed on the list. If NASCO has abetted terrorism, it 
should pay the price for that affiliation. However, we would 
like to make Washington aware of the potential reaction in 
Nigeria to such a move and to the effect it might have on our 
relations here. If NASCO is added, the public disclosure of 
corroborative evidence would go far in reducing the 
inevitable criticism of our move. Additionaly, we offer other 
thoughts in paras 13 and 14 below on how the NASCO Group link 
with terrorism could be severed, but in ways that would tend 
to reduce the fallout inimical to the US-GON bilateral 
relationship. These ideas include the proposal that any 
freezes ordered should be limited to the NASCO parent company 
in Turkey, not the Nigerian subsidiaries.  (Reftel C was 
transmitted in error and should be disregarded.) End summary. 
 
 
2. (S) Ref A includes (29) NASCO Group (Nigeria) Limited, the 
holding company for twelve NASCO companies (30-41), the 
majority of which manufacture consumer products and are 
co-located in a large industrial complex located on a 
one-kilometer stretch of Yakubu Gowon Way, Old Airport Road 
Junction, Jos, Plateau State, Nigeria. Telephone numbers 
(234)73-463-175, (234)73-463-347 and facsimile 
(234)73-461-554.  Group President and Managing Director is 
Mr. Attia A. Nasreddin.  Muslim owned NASCO is the largest 
private employer in Plateau State and one of the largest 
private employers in mostly-Muslim northern Nigeria.  NASCO 
is a functioning industrial enterprise that meets the real 
needs of the Nigerian consumer, even as much of Nigeria's 
industrial plant is moribund or operating at under 30% of 
installed capacity. .  A huge industrial complex with 
distribution centers across the country, NASCO Group sources 
95 percent of its industrial inputs locally, directly employs 
over 1500 Nigerians and indirectly sustains the employment of 
10,000 to 12,000 additional people.  We estimate that, 
including family members, between 80,000 and 125,000 persons 
would lose their major source of income if NASCO were shut 
down. 
 
 
3. (U) NASCO began operations in Nigeria in 1963 as carpet 
and blanket maker Northern Nigeria Fiber Products Limited. 
NASCO has since expanded into seven manufacturing companies 
(NASCO Fibre Products Limited, PolyFibre Industry Limited, 
NASCO Foods Nigeria Limited, NASCO Household Products 
Limited, NASCO Beauty Care Products, NASCO Pack Limited and 
NASCO Confectionery Company Limited), one marketing company 
(NASCO Marketing Company Limited), one service company (NASCO 
Management Service Limited), one trading company (NASCO 
Trade) and one land development company (NASCO Property and 
Investment Company Limited). 
 
 
4.  (S) Ref A notes (35) NASCO Rice & Cereals Company 
Limited, for which Post has no reference.  Descriptions of 
the NASCO companies follow: 
 
 
--(31) NASCO Fibre Products manufactures three types of 
carpets, two sizes of blankets, jute twine, jute cloth and 
jute sacks.  According to company information found on the 
internet, NASCO Fibre Products also produces car components 
such as floor mats, molded carpets, wheel archlining and roof 
felt carpets for Peugeot Automobile and ANAMMCO (a bus and 
truck assembler with links to DaimlerChrysler). 
 
 
--(40) NASCO Polyfibre Industries Limited produces polyfiber 
and yarn for industrial use. 
 
 
--(32) NASCO Food (Nigeria) Limited sources good quality 
grains from Nigerian farmers.  These grains are processed 
into finished products, including twenty types of biscuits, 
five types of wafers and cornflakes.  The number of farmers 
C O R R E C T E D  C O P Y (CORRECTING DECL AND REASON) 
indirectly employed by this company is not known.  However, 
it is likely that hundreds of small and medium-size farms 
located near Jos supply products to NASCO.  These farms would 
employ or support thousands of low-income Nigerians. 
 
 
--(33) NASCO Household Products Limited, established in 1973, 
produces soaps, detergent powder, hair care products, 
glycerine and other industrial chemicals, such as sulfonic 
acid and textile auxiliaries.  This company sells to 
industrial consumers in the pharmaceutical and cosmetic 
sector. 
 
 
-- (39) NASCO Beauty Care Products started production in 1994 
and produces petroleum jelly, three types of shampoo, hair 
lotion, hair curl activator, hair conditioner, body cream and 
body lotion. 
 
 
-- (36) NASCO Confectionery Company (Nigeria) Limited, 
acquired by NASCO in 1985, produces sweets, toffees, jellies 
and bubble gum. 
 
 
-- (34) NASCO Pack Limited manufactures and sells packaging 
materials, including multi-color labels and cartons, 
cellophane, transwrap film, polythene bags and corrugated 
box-board cartons.  The company also offers professional 
services in packaging design. 
 
 
-- (37) NASCO Marketing Company Limited was incorporated in 
1990 to provide marketing services to other NASCO Group 
companies.  The company is involved in product development, 
packaging design, sales promotion, distribution, advertising 
and market research.  NASCO Marketing Company has 
approximately 450 distributors, 150 direct cash customers and 
85 appointed supermarkets.  These customers are serviced via 
eight depots located around the country in major state 
capitals. 
 
 
-- (30) NASCO Management Services Limited provides management 
support, such as manpower planning and financial and 
administrative services, to the NASCO Group companies. 
 
 
-- (38) NASCO Property and Investment Company Limited has 
responsibility for NASCO's cosmetics business and is 
developing (among other prjects) one of Nigeria's largest 
private housing estates, NASCO Town, a commercial and 
residential estate in Lagos. 
 
 
---------------- 
Economic Impact 
---------------- 
 
 
5. (S) NASCO is probably the largest private sector employer 
in Plateau State and the mainstay of the state capital's 
productive economy.  Unlike many of Nigeria's industrial 
plants, NASCO has functioned successfully in Nigeria for 
nearly 40 years.  Freezing its assets would shut the company 
down and sharply increase unemployment and poverty, the prime 
factor that led to September's massive bloodletting (over 
3,000 dead).  USG economic development policy in Nigeria 
encourages increased industrial capacity, particularly in the 
food processing/agribusiness sector.  Closing NASCO would run 
counter to these objectives, while also profoundly 
destabilizing an already restive area. 
6. (S) According to a published January 2000 interview with 
Mr. Attia A. Nasreedin, NASCO Group (Nigeria) Limited is the 
only fully integrated company in Nigeria that sources 95 
percent of its inputs from local raw materials.  In 1999, 
NASCO Group (Nigeria) Limited turnover equaled roughly N2.7 
billion (USD 27 million).  These companies combined directly 
employ over 1500 Nigerians.  Since each formal-sector worker 
in Nigeria typically supports between 9 and 15 dependents, 
the direct impact of an assets freeze (which would quickly 
halt production if implemented correctly) would have an 
enormous and highly negative impact.  Shutting down NASCO 
would have a powerful, albeit indirect, negative impact on 
the entire economy:  Nine depots, 450 distributors and 85 
appointed supermarkets around the country would suffer 
significant (perhaps total) loss of business without NASCO 
products.  Most of NASCO's suppliers would lose a critical 
(perhaps the critical) outlet for their products.  Entire 
farming communities in the vicinity of Jos could be ruined 
(high transport costs might make it uneconomical for them to 
sell to other buyers, assuming such buyers could be found. 
Nigerians would lose access to an entire range of affordable 
consumer goods, damaging their already lessened sense of 
well-being.  We could expect many consumers to be "priced 
out" of such staples as corn flakes and laundry soap.  Those 
who could afford to pay for imported substitutes would pay 
far more.  An economy just hit with a major fuel price 
increase would feel another blow. 
 
 
C O R R E C T E D  C O P Y (CORRECTING DECL AND REASON) 
------------------ 
Political Impact 
------------------ 
7. (S) The case of NASCO reflects the delicate balance we 
must strike between the national security imperative to 
confront and combat terror and our longer-term interests in 
minimizing the gulf between USG perceptions of our efforts 
and those of Muslims and the developing world.  If we are to 
retain key allies in the war on terror, our actions must not 
visit destruction (even economic destruction) on their 
people.  Nigeria has the largest Muslim population in Africa, 
and its economy is struggling to reach self-sustaining 
growth.  Reaction in the Muslim community would be strong and 
negative.  We are far from certain that the GON would agree 
to freeze NASCO's Nigerian assets (since that would 
effectively shut down the companies and leave tens of 
thousands destitute).  If it did, media and prominent 
individuals heretofore sympathetic to our anti-terror 
campaign could be expected to question our motives 
(suggestions that NASCO was being closed so that U.S. 
products could replace Nigerian ones) and to argue that the 
GON was putting Western economic interests ahead of those of 
Nigeria (recycling of the old "lackey of Western interests" 
charge). 
 
 
8.  (S) Recognizing that our principal national interest at 
this time is eradicating terrorism and denying it support, 
the Mission notes that account must be taken of our other 
national interests.  We are not in a position to evaluate the 
negative impact that NASCO's continued operation in Nigeria 
might have on the war on terror, but we can say with 
certainty that, absent evidence that could be released to the 
Nigerian public, shutting down NASCO would seriously impair 
(possibly destroy) U.S. credibility as regards economic 
reform:  We cannot argue that investment in the Nigerian 
agro-industrial sector is a key to self-sustaining growth and 
then shut down a paragon of that sector without public 
explanation. 
 
 
9.  (S) As noted above, Plateau State and some areas that 
adjoin it are restive.  Widespread unemployment, notably 
among youth, was the prime factor underlying the horrible 
bloodletting in September of 2001 (3,000-plus deaths).  If we 
convince the GON to shut down NASCO, thousands more will lose 
their jobs, and tens of thousands will suffer.  The result 
will be greater instability in the eastern Middle Belt.  Such 
instability would be detrimental to our key objective of 
sustaining Nigeria's nascent democracy. 
 
 
10.  (S) Para 2 of Ref B sets forth strategic objectives for 
our public diplomacy efforts in support of the war on terror. 
 These include fostering an international environment 
conducive to our efforts to build and maintain coalitions for 
a war on terrorists with global reach, convincing 
international publics that the war on terrorism is in the 
interest of their nations, and reducing anti-American 
sentiment.  As we have explained above, the tactic of 
freezing NASCO's assets in Nigeria would run counter to each 
of these strategic objectives. At bottom, the average 
Nigerian, whether Moslem or not, would be hard pressed to 
understand how shutting down his supplier of cornflakes and 
cookies helps the global battle against terrorism. Many 
Nigerians sympathetic to the war against terror would view 
this as an example of the USG using its weight to overstep 
its bounds. Unless we can make a compelling public case, too 
many Nigerians would suspect an ulterior motive behind our 
action. The sympathy of many Nigerians, including some now 
positively disposed toward us and our anti-terror efforts, 
would turn against us unless we can tell them why this step 
is necessary. 
 
 
11.  (S) As briefly mentioned in para 7 above, placing NASCO 
on the assets freeze list would also place the Obasanjo 
Administration in awkward straits.  The GON has been 
pilloried by domestic opponents as too eager to please the 
West by joining the battle against terrorism and too eager to 
bend to Western pressure on belt tightening economic reform 
that might hurt the consumer in the short haul, e.g. the fuel 
increase.  These criticisms, one political, the other 
economic, converge in the case of the possible NASCO asset 
freeze.  Unless the freeze order is accompanied by the 
disclosure of corroborating evidence, the GON will face a 
barrage of public criticism if it decides to close this 
network of companies and negatively affect the national 
economy without receiving a tangible compensatory benefit 
(e.g., debt forgiveness) in return. 
 
 
12.  (S) Moreover, the GON will want to resist the notion 
that it allowed a conduit of terrorist financing not only to 
operate here, but to become a leading enterprise.  It could 
C O R R E C T E D  C O P Y (CORRECTING DECL AND REASON) 
be made to appear that the Obasanjo Administration does not 
know what is happening in its own backyard.  This could hurt 
the GON's credibility at a sensitive time.  Because the GON 
has been a staunch ally against terrorism we should do what 
we can to avoid placing it in this whipsaw. 
13. (S) Should Washington decide to include NASCO on the list 
but not to divulge convincing evidence, the impact to our 
interests here and the bilateral relationship perhaps could 
be lessened if the NASCO inclusion is limited, at the present 
time, to other NASCO operations, such as the parent based in 
Turkey.  If the freeze on the parent begins to affect the 
subsidiaries in Nigeria, it will be seen as the indirect 
consequence of action taken in a third country and not a 
direct result of a request made by the USG to the GON.  We 
could also engage with the GON to find a way to sterilize the 
proceeds of NASCO's Nigeria operations, so that they could 
not readily fund terrorism. 
 
 
14.  (S) Last, we foresee no great political or economic 
fallout in placing the handful of Nigerians and expatriates 
working in Nigeria for NASCO in key positions on the list. 
As long as NASCO keeps operating, most Nigerians will not 
care.  If NASCO fails some years down the road because of the 
withdrawal of management talent, we believe the public 
response will at that time be manageable. 
 
 
15.  (S) In the final analysis, not knowing the extent to 
which NASCO's Nigerian operations contribute to financing 
global terror, the Mission is unable to do a cost/benefit 
calculation in terms of U.S. national interests.  That will 
have to be left to those who have access to both parts of the 
equation.  What we can say, however, is that shutting down 
NASCO's industrial and commercial operations in Nigeria will 
have considerable negative fallout. 
 
 
16.  (U) Ref C was sent in error and should be disregarded. 
Jeter