US embassy cable - 03KATHMANDU352

C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 000352 
 
SIPDIS 
 
STATE FOR SA/INS AND DS/IP/SA 
LONDON FOR POL - RIEDEL 
TREASURY FOR OFAC - NEWCOMB 
 
E.O. 12958: DECL: 02/26/2013 
TAGS: PTER, PINS, ASEC, CASC, BEXP, NP, Maoist Insurgency 
SUBJECT: NEPAL:  COCA-COLA FACES CONTINUED MAOIST EXTORTION 
 
REF: A. (A) 02 KATHMANDU 2440 
 
     B. (B) KATHMANDU 0138 
     C. (C) KATHMANDU 0311 
     D. (D) KATHMANDU 0262 
 
Classified By: AMB. MICHAEL E. MALINOWSKI.  REASON:  1.5 (B,D). 
 
Summary 
--------- 
 
1.  (SBU) Nepal's Coca-Cola bottler is continuing to receive 
extortion demands from the Maoists, despite the cease-fire 
and a claimed commitment by Maoist leader Prachanda to stop 
such practices (Ref C).  In coordination with Coca-Cola's 
Country Manager and its corporate offices in Atlanta and 
Bangkok, the Embassy is executing an action plan aimed at 
ending the continued extortion.  End summary. 
 
Threats to Coca-Cola in Nepal 
----------------------------- 
 
2.  (C) In December 2002 and January 2003, the Maoists sent 
extortion letters to Coca-Cola's local representative in 
Kathmandu, demanding USD 38,000 from the company, and 
containing implied threats of further violence at company 
facilities (Refs A and B).  (Note:  The Maoists have set 
bombs at Coca-Cola facilities here on three separate 
occasions since 2001.  End note.)  In a January 22 meeting 
with the RSO, DCM, and econoff, Coca-Cola security officials 
presented a strategy they described as "defer and deflect," 
in which the bottler would spin out discussions with the 
Maoists without ever paying the insurgents any money. 
Emboffs suggested a public relations campaign calling 
attention to the extortion activities, highlighting the 
potential damage to the local economy if foreign investors 
and employers like Coca-Cola leave Nepal.  The Coca-Cola 
security officials undertook to discuss the idea with company 
public relations officials. 
 
 
Extortion:  A Grandfather Clause? 
--------------------------------- 
 
3.  (C)  One week after the meeting, the Maoists declared a 
ceasefire with the Government of Nepal (GON).  Apparently 
stung by public criticism that Maoist extortion persisted 
despite the ceasefire, on February 16 insurgent leader 
Prachanda announced that he had instructed his cadre to 
desist from collecting any funds other than "voluntary 
donations" (Ref D).  On February 25, however,  N.N. Singh, 
Coca-Cola's Country Manager, reported to Emboffs that two 
Maoists had come to his office again on February 22 to pursue 
their earlier demands.  (Note:  One of the visitors Singh 
said he has met with several times; the other he had not seen 
before.  End note.)  Singh said that when he raised 
Prachanda's directive to his cadre to cease extortion, his 
interlocutor replied that the demand remained valid because 
it predated Prachanda's Feb. 16 order.  In fact, the Maoist 
claimed that the ceasefire had actually raised his local 
funding requirements, since he now must pay to feed and house 
the many Maoist cadre streaming into Kathmandu.  Singh said 
he told the Maoist representatives the demand would have to 
be referred to corporate headquarters in Atlanta, and asked 
them to contact him on February 28 for a formal response. 
 
4.  (C)  Singh told emboffs he knows that Coca-Cola will not 
pay, and is worried about his Feb. 28 appointment with the 
Maoists.  He doubts they would use violence against him 
during the ceasefire, but fears they may exact revenge after 
the ceasefire ends (which he apparently believes will be just 
a matter of time).  When asked if he had notified the GON of 
the demand and requested police protection, he noted ruefully 
the last time he had done so the drunken carousing of the 
five policemen assigned to his house had kept him up all 
night.  He added that the Maoists  had themselves said they 
prefer not to visit him at home anyway because of his 
proximity to a U.S. Embassy house.  (Note:  Mr. Singh's 
residence is on the same street as that of the DATT.  End 
note.)  He asked that the Embassy pass a message to the 
Maoists, possibly through Physical Planning Minister Narayan 
Singh Pun, who is coordinating GON efforts to begin 
negotiations, to desist from extortion.  Emboffs undertook to 
include this suggestion in its ongoing consultations with 
regional Coca-Cola officials about possible future actions. 
 
Embassy Action Plan 
------------------- 
 
5.  (C) On February 25 Lee Winfield, Coca-Cola's Director of 
Public Affairs and Communications for South East and West 
Asia, contacted econoff to relay approval of the public 
relations strategy outlined in Para 2 above.  Econoff, noting 
Singh's visit earlier in the day, proposed a three-part 
strategy for Embassy action:  a) contacting Minister Pun to 
urge him to raise the issue with the Maoist leadership; b) 
sending a parallel message to other Maoist intermediaries; 
and c) should these efforts fail to prevent continued 
extortion, issuing a public statement condemning Maoist 
threats to U.S.-affiliated businesses.  Winfield endorsed the 
strategy with the support of Coca-Cola's corporate offices in 
Atlanta, with the proviso that Coca-Cola not be specifically 
mentioned in any public or private communication. 
 
At Ambassador's Request, GON Support 
------------------------------------- 
 
6.  (C) The Ambassador called Minister Pun on February 26 to 
request that the GON raise the continued extortion of 
American businesses as a point of concern with the Maoist 
leadership.  The Ambassador did not mention Coca-Cola, but 
emphasized that threats to U.S. business are taken seriously 
by the USG, which continues to review the possibility of 
adding the Maoists to one of its terrorist lists.  Pun 
committed to raising the issue during a February 27 meeting 
with Maoist representatives. 
 
Working with the Chambers of Commerce 
------------------------------------- 
 
7.  (SBU)  At a February 27 breakfast with the Nepal-USA 
Chamber of Commerce, the Ambassador asked other businessmen 
if they were continuing to receive extortion demands.  Most 
said no, but a few, while not acknowledging direct threats, 
indicated that the practice is continuing.  Noting the 
Maoists' continued need for funds, some speculated that the 
demands might resume shortly.  The participants all said they 
believed a general statement from the Embassy condemning 
extortion (but not mentioning any company or individual 
names) might prove beneficial.  The members' also agreed with 
the Ambassador's suggestion to raise the matter with other 
bilateral Chambers of Commerce and their respective embassies 
and explore the possibility of issuing a joint statement 
condemning extortion.  The Ambassador has raised the problem 
with the British and Indian Ambassadors and with the head of 
the Nepal-India Chamber of Commerce. 
 
Comment 
------- 
 
8.  (C)  It is difficult to determine whether the extortion 
demands are persisting with the complicity of the Maoist 
leadership, or whether this is an independent local 
initiative.  Whatever the source of the demands, we are 
hopeful that Pun's message will succeed in turning them off. 
If not, we are prepared, with Coca-Cola's blessing, to 
publicize the Maoists' hypocrisy. 
MALINOWSKI