NEPAL: ADDITIONAL INFORMATION ON THE BOMBING OF

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