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04KATHMANDU1553 2004-08-07 02:49:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kathmandu
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1. (U) According to reports August 5 in both English and
Nepali-language newspapers, the Maoist affiliated All Nepal
Trade Union Federation has issued a warning to more than a
dozen companies to shut down operations for an indefinite
period. Included in the warning was the American company,
Coca Cola and several other multinational companies. The
apparent basis for selection of these companies was not
national affiliation, but various other reasons including
royal relatives having major stakeholdings, accused
exploitation of workers, and ''spying.'' One company, Surya
Tobacco, has been ordered to shut down immediately for ''not
giving fair prices to farmers,'' while newspaper reports
suggest that other companies must shut down by August 17.
The companies involved have not received any specific
warning directly from the Maoists. The warning did not
specify what could happen if the companies fail to shut down

2. (SBU) COMMENT: The ostensible goal of the threat is to
pressure the Government of Nepal into serious talks
regarding a charter of eleven points made by the All Nepal
Trade Union, which includes withdrawing the organization
from Nepal's terrorist list. N.N. Singh, Managing Director
of Coca Cola, contacted the Embassy to convey his concern
regarding the announcement. The Embassy also contacted Aqua
Mineral Water owner Sanjay Dugar. Neither company suggested
it would comply with the Maoist demands. Dugar informed the
Embassy that a similar list of company names had been
published about four months ago, and that his company had
also been on that list. This latest list was smaller than
the prior list, and Dugar suggested this might be the result
of companies having ''entered negotiations'' with the
Maoists. While no repercussions had occurred to the
companies that had failed to meet the previous demands,
Dugar expressed concern for himself and his family.

3. (SBU) Both companies have resisted extortion overtures
from the Maoists in the past. Dugar suggested that the
Maoists had such specific information regarding the
companies revenues, VAT payments and tax payments that he
suspected the information was leaked from sources inside the
government. Dugar was expecting new extortion demands
following this announcement. This incident continues to
demonstrate the difficulty for American and multinational
companies to do business in Nepal. Already fighting
difficult bureaucratic hurdles, they also must deal with
extortion demands and fear for the safety of themselves and
their families. END COMMENT.