C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 001823

SIPDIS

DEPT FOR SA/INS AND DS/IP/SA
ISLAMABAD FOR AMBASSADOR POWELL
LONDON FOR POL/GURNEY
NSC FOR MILLARD

E.O. 12958: DECL: 09/14/2013
TAGS: PTER ECON ASEC NP
SUBJECT: NEPAL: INDUSTRIAL SECURITY GROUP DISCUSSES MAOIST
EXTORTION AND THREATS

REF: KATHMANDU 1369

Classified By: Ambassador Michael E. Malinowski for reasons 1.5 (b) and
(d).

Summary
========


1. (SBU) On September 11, the Industrial Security Group,
comprised of the bilateral chambers and foreign missions of
the U.S., U.K., France, Germany, and India, held a meeting to
discuss the deteriorating security situation in Nepal. The
group reviewed the Government's security plans, Maoist
extortion demands, and next steps. End summary.

Government Plans for Dialogue on Security Issues
============================================= ====


2. (SBU) On September 11, British Ambassador Keith
Bloomfield chaired a session of the Industrial Security
Group, which includes members from the chambers of commerce
and foreign mission of the U.S., U.K, France, Germany, and
India (reftel). The meeting was attended by the U.S.
Ambassador and RSO, German and French Charges', a
representative from the Indian Embassy, and heads of the
bilateral chambers of commerce. Ambassador Bloomfield and
the head of the British Chamber of Commerce and Industry,
Rajendra Khetan, reviewed discussions they held with Home
Secretary Ananta Raj Pandey the week of August 18 regarding

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security for Nepal's industrial sector. Pandey reported that
the Government of Nepal (GoN) has adopted four points to
discuss with industry: a) Request the private sector to
contribute funds for a proposed Industrial Security Force; b)
A recommendation on whether the stationing of troops in
industrial areas would increase or decrease Maoist targeting
of industries; c) The monitoring of Maoist activity in and
around company facilities; and d) The development of a
package of options that would increase security. Ambassador
Bloomfield reported that while the Home Secretary had opened
the door for dialogue, he has not re-engaged on the topic in
the two weeks since the meeting.

Participants Report a Peak in Extortion

========================================


3. (SBU) Chamber representatives reported that in the past
week, Maoists have increased their extortion demands, which
are now backed with threats of retaliation. In addition to
the Maoists' traditional practice of soliciting from
companies, Maoists are now sending letters to prominent
individuals. These letters are signed by area commanders
using pseudonyms. For the first time, according to a member
of the British Chamber, Maoists are making extortion demands
of banks and financial companies. (Note: In the past,
Maoists would attack financial institutions to steal money
rather than try to extort it. End note.)


4. (SBU) Nepal-USA Chamber of Commerce and Industry
President, Sunil Sakya, reported that in the historic city
and tourist site of Lumbini (the birthplace of Buddha), there
is almost no presence of security personnel. The police that
are posted in the district are sleeping in temples and fields
and are inconsistently reporting for duty during the day. A
member of the British Chamber reported that the Chief
District Officer of Makwanpur, a six-hour drive south of
Kathmandu, is threatening to withdraw a six-man police unit
guarding Nepal/Lever's plant, a force the facility has
enjoyed for nearly two years.

Germans Shutdown Development Projects
======================================


5. (SBU) German Charge' Klaus Tesch reported to the group
that the German development agency, GTZ, has ended its
hydro-electric project on the Marsygahdi River in Kaski
District (west of Kathmandu), since the break in the
cease-fire due to Maoist extortion demands. Shortly after
the resumption of hostilities, the Maoists added a ten-day
deadline.

"Where are the Police?"
========================


6. (SBU) Ambassador Bloomfield asked about the Joint
Secretary within the Home Ministry designated as the single

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point of contact to report extortion demands. British
Chamber President Khetan replied that while the Joint
Secretary is taking reports, he does not have the resources

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to conduct investigations or arrests. Ambassador Malinowski
and Ambassador Bloomfield recommended that anti-extortion
training and capacity building would be a good area in which
to direct bilateral programs. Ambassador Malinowski directed
RSO to solicit Home Ministry views on conducting
anti-extortion operations and standing up a special unit to
conduct investigations.

Comment
========


7. (C) Despite two years of promises to form an Industrial
Security Force, the GoN has not been able to deliver. But
neither have the businesses given the cash-strapped GoN the
funds needed to form a specialized force. The reported
increases in extortion demands track with other reports the
Embassy has received. The break in the cease-fire,
unfortunately, provides the Maoists an opportunity to make
good on their "or else" threats by attacking hold-outs who
refused to meet Maoist demands. The proposal to assist the
Ministry of Home to develop a capacity to pursue Maoist
extorters garnered general support from the group and will be
pursued by RSO. The concept would not only address the
current problem of Maoist extortion, but it could also be
transformed into a financial crimes unit later.
MALINOWSKI