ADDRESSING LABOR VIOLATIONS BY US FIRMS: THE

UNCLAS SECTION 01 OF 02 GUATEMALA 000251

SIPDIS

DEPT FOR WHA, DRL/IL, AND EB
USTR FOR BUD CLATANOFF
DOL FOR ILAB:JORGE PEREZ-LOPEZ

E.O. 12958: N/A
TAGS: ELAB EINT GT
SUBJECT: ADDRESSING LABOR VIOLATIONS BY US FIRMS: THE
GALLERY APPAREL CASE



1. Subject: Since mid-December, a U.S.-owned maquila has
been closed, throwing up to 800 workers, mainly single
mothers, out of work after failing to meet a payroll. The
GOG has requested USG assistance resolving the workers'
claims against the U.S. owners, Robert and Steven Alexander
of Medley, Florida. Embassy efforts to encourage dialogue
between the U.S. owners and their former employees, and
compliance with Guatemalan labor laws, have been fruitless.
Coming in the context of GSP review and CAFTA Track Two
efforts, this case undermines the U.S. interest in promoting
labor law enforcement in Guatemala. Embassy appreciates the
Department's efforts to help move this case toward
resolution. End Summary.

Facts of the Case
--------------


2. According to legal documents and information gathered
from worker representatives and U.S.-based owners, these are
the facts in the case:

-- A maquila factory in Mixco, a municipality adjacent to
Guatemala City, rented by Gallery Apparel Services, S.A. and
employing between 650 and 800 workers, was closed by the
police on December 21, 2003. Police reportedly intervened to
quell looting by employees, and continue to guard the
facility.

-- Gallery Apparel's local managers had abandoned the factory
after missing payment of the workers' biweekly salary and
mandated extra month's salary on December 16, fearing for
their safety.

-- In addition, workers were not paid severance before the
factory was closed, according to worker representatives and
the GOG.

-- Workers have petitioned the Ministry of Labor, Human
Rights Ombudsman's Office, this Embassy and the Public
Ministry, requesting assistance to have the company meet its
legal obligations. The workers are being assisted by the
prominent human rights NGO Center for Legal and Human Rights
(CALDH),which has appealed for support from the Presidential
Commissioner for Human Rights, Frank LaRue. (Note: LaRue
told LabAtt on January 31 that labor disputes are not within
his commission's mandate.)

-- Gallery Apparel is owned by AmCits Robert Michael
Alexander (age 45) and Steven Edward Alexander (44) of
Medley, Florida (tel. 954-624-1934).

-- Gallery Apparel's legal representative listed in its
Mercantile Registry is John Thomas Maitland.

-- The Embassy received a diplomatic note from the Foreign
Ministry dated January 12, 2004, which attached a request for
USG collaboration on this case from former Labor Minister
Victor Moreira. The note mentioned Maitland by name, and
listed his address in Florida (11305 N.W. 128th St. Medley,
Florida 33178, USA). On January 20, Ambassador Ana Maria
Dieguez, Director of Migration Affairs at the Foreign
Ministry, told LabAtt that Maitland is a Canadian citizen but
renewed the MFA's request for USG assistance to resolve the
complaints against the U.S. owners of Gallery Apparel. The
MFA sent a second diplomatic note on January 16 which
clarified that Maitland is a Canadian but Steven and Robert
Alexander, the co-owners, are AmCits; the note repeated the
earlier request for USG assistance. The Embassy has not yet
responded to either diplomatic note, pending guidance from
the Department.

-- On January 9, LabAtt spoke with Mr. Robert Alexander at
his number in Florida. He said that he and his brother
Steven are co-owners of Gallery Apparel, which has operated
for six years in Guatemala, former under the name
"Gringotex." He estimated the number of workers at between
625-650. He said times had been hard (a truck had been
hijacked, an employee fired for embezzling),and the company
informed workers before December 16 that the company would
have difficulty making the mandated Christmas bonus payment.
Mr. Alexander claimed to be a good employer, who won a
second-place award from VESTEX, the maquila association. He
normally visited the factory regularly, but now fears to
return.

-- According to Mr. Alexander, the day after the December 16
payroll and bonus was missed, workers took over the factory.
Management employees walked out of the factory on December

17. His local general manager and legal representative, Mr.
Andres Vielman Rosales, then quit. Eventually, after a
committee of workers sold off bolts of fabric and reportedly
started looting the factory and scuffles broke out, police
intervened to secure the factory. Mr. Alexander said he was
in the process of determining his legal and insurance
responsibilities and the current condition of the factory,
which is a rented facility. He has heard that his sewing
machines were strewn outside the factory and may be
irreparably damaged.

-- LabAtt encouraged Mr. Alexander to meet his legal
obligations to his workers and to contact worker
representatives, who wish to speak with him. He suggested
seeking the assistance of local counsel or VESTEX to help
communicate with his workers. Mr. Alexander said he would
probably be in touch with Guatemalan authorities shortly,
perhaps through new legal counsel. He is concerned about
taking responsibility for his rented facility from the police
and securing it.

-- Mr. Vielman did not attend a meeting with Labor Ministry
inspectors on January 19, citing scheduling conflicts. The
inspectors cited him to attend a conciliatory panel meeting
on January 27, and indicated that the Ministry will fine him
if he does not appear. When Mr. Vielman did not appear
personally on January 27, sending a legal representative in
his place, the MOL inspector cited Mr. Vielman to appear in
person on February 5.

-- LabAtt met with worker and CALDH representatives on
January 21; they requested LabAtt assure Robert Alexander
they would guarantee his safety if he were to return to
Guatemala to negotiate an amicable resolution of the dispute.
LabAtt conveyed this message to Steven Alexander by TelCon
on January 22. Alexander did not reveal any intention to do
so.

-- So far, this case has not entered the courts, since the
MOL is seeking an amicable resolution. If that does not
happen, they will likely impose a fine on Gallery and the
workers will be free to go to court. The workers claim they
would prefer to avoid that if the Alexanders are willing to
negotiate.

Comment
--------------


3. We are unclear what legal obligations might be
enforceable in the U.S. in these cases, and not unsympathetic
to the U.S. owners fears for their security should they
return to the Guatemala. Embassy appreciates the
Department's ongoing review of legal options in cases of
labor violations by U.S. employers abroad, and guidance on
how to proceed.


4. It is clearly in the USG interest to send a consistent
signal on labor rights enforcement. Encouraging the
Alexander brothers of Florida to address the complaints of
their former workers now would advance the USG (and the
company's) interest by resolving the case before it enters
the tortuous labor justice system. Experience with past
cases (e.g. DYMEL, Crowley containers) argues for early
intervention in labor disputes to prevent delayed justice
(and escalating costs to the employer). Anything less risks
sending an ambiguous signal to the GOG at a moment we are
pressing for its commitment to enforce labor law in Guatemala.

HAMILTON