AmCit-owned Cable TV Company Claims Harassment by

UNCLAS SECTION 01 OF 03 TEGUCIGALPA 000141

SIPDIS

SENSITIVE

STATE FOR EB/IFD/OIA AND WHA/CEN
STATE PLEASE PASS TO USTR FOR BHartman
STATE PLEASE PASS TO EXIM, OPIC

E.O. 12958: N/A
TAGS: EINV BTIO KIPR CASC PGOV HO
SUBJECT: AmCit-owned Cable TV Company Claims Harassment by
Powerful Honduran Rival



1. (SBU) Summary. A U.S.-owned cable TV company, Mateo's
Cable Vision, claims that it has been subject to an unusual
number of audits and investigations from various GOH
agencies over the past year. The owners of this company,
Michael and Sally Mitrovic, see these investigations as acts
of harassment that are being orchestrated by their main
competitor, who is an influential Honduran Congressman.
This case was first brought to the attention of USTR in
Washington, which notified the Embassy. EconOffs have
looked into the case and clarified the situation, and have
provided advocacy by bringing the case to the attention of
the appropriate GOH officials. We have encouraged Honduran
officials to ensure that their agencies conduct
investigations fairly, not focusing only on U.S.-owned
companies or allowing themselves to be affected by political
considerations. End Summary.

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U.S. Company Claims Harassment
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2. (SBU) Michael Mitrovic, a U.S. citizen, and his wife
Sally Navarrete-Mitrovic, a Honduran-born, naturalized U.S.
citizen, are owners of a cable TV company named Mateo's
Cable Vision. The company operates in the north coast city
of Tela.


3. (SBU) The only other cable TV company which operates in
Tela is called SatelCab, and is owned by Rodolfo Irias
Navas, a very powerful Congressman from the National Party.
Congressman Navas served as President of Congress from 1990
to 1994, and has been involved in other controversial
business projects. According to the Mitrovics, their own
company, Mateo's Cable Vision, is doing very well, and
steadily taking market share from SatelCab. They believe
that, as a result, Congressman Navas is using his political
influence to bring pressure upon Mateo's Cable Vision
through various government agencies. The Mitrovics say that
over the past year, they have been subject to an unusual
number of investigations and audits from several government
agencies, which constitute "harassing and discriminatory
acts."


4. (SBU) Post first learned of the Mitrovics' case from a
December 12th letter sent from the Mitrovics' U.S. attorney
to Ambassador Zoellick of USTR. This letter was then
forwarded to post. At the time, the only record of the
Mitrovics in embassy files was the consular section file
regarding the kidnapping attempt against Mrs. Navarrete-
Mitrovic in 1999 (see paragraph 19 below); we had no record
of the company's investment dispute. Upon making contact
with Mrs. Navarrete-Mitrovic, we arranged a meeting at the
embassy to learn the details of the case, and have been in
contact with the Mitrovics ever since. After this meeting,
Mrs. Mitrovic filled out an advocacy request, which the
embassy received on January 13th.


5. (SBU) The specific investigations and audits to which
Mateo's Cable Vision has been subject are as follows:

-- ENEE


6. (SBU) In May 2003, the Honduran Electricity Company ENEE
threatened to cut off electricity for Mateo's Cable Vision
unless bills were paid immediately upon receipt. The
Mitrovics believe this reflects political pressure, because
Mateo's Cable Vision holds a 42,000 Lempira (about USD
2,300) bank bond in the name of the electricity company, and
because the usual practice is to allow 30 to 60 days to pay
electricity bills.

-- Immigration Department


7. (SBU) An Argentine national who works for Mateo's Cable
Vision as a Technical Director was nearly deported from
Honduras in early 2003. The Mitrovics' Honduran counsel
quickly filed a request for residency papers for this
consultant to avoid the deportation. They believe that
Congressman Navas was behind the unusually quick and
efficient action taken by the GOH Immigration Department on
this case.

-- CONATEL


8. (SBU) The Mitrovics claim that four times during 2003,
officials from CONATEL, the GOH agency which regulates cable
TV companies, have performed unannounced audits and
inspections of Mateo's Cable Vision. The Mitrovics believe
that it is highly unusual for one company to be the subject
of four audits and inspections during the course of a year.
In the first three audits, the Mitrovics say that their
company was found to be fully in compliance with
regulations. In the most recent audit, it was discovered
that Mateo's Cable Vision had missed a payment earlier in
the year; they have acknowledged this and agreed to make the
payment and pay a late fee.

-- IPR Division


9. (SBU) The Copyright Office of the Division of
Intellectual Property Rights (IPR),in the Ministry of
Industry and Trade, is conducting an investigation into
allegations that Mateo's Cable Vision has broadcast about
thirty channels for which it does not have a contract. The
investigation was triggered by a complaint from ESPN, but
the Mitrovics believe that ESPN received the information
about Mateo's Cable Vision from Congressman Navas, their
competitor. Note: When the Mitrovics first established
Mateo's Cable Vision in 2002, they simultaneously denounced
Congressman Navas' company, SatelCab, to the IPR Division,
correctly alleging that SatelCab was broadcasting sixteen
pirated channels. It seems very feasible, though we have
seen no direct evidence, that Congressman Navas is indeed
involved behind the scenes as this same tactic is now being
used against Mateo's Cable Vision. End note.


10. (SBU) The Mitrovics and their attorneys claim that the
company has never broadcast ESPN, and that the company
possesses contracts for most, but not all, of the channels
that they have been accused of pirating. However,
one of the company's attorneys has indicated that at least
one station was listed as available to Mateo customers,
without the company having a contract, and that the company
might be subject to a fine for this misleading advertising.
In addition, Mrs. Navarrete-Mitrovic privately admitted that
they have at times brought down signals for which they do
not have a contract.


11. (SBU) Of these four types of government audits or
investigations cited as examples of harassment, the only one
that is currently ongoing is the investigation of the IPR
Division of the Ministry of Industry and Trade.

-- Defamation


12. (SBU) In addition, according to the Mitrovics'
attorneys, Michael Mitrovic has been described on a
television station owned by Congressman Navas as having
connections to Colombian narcotraffickers, apparently in an
effort to damage Mr. Mitrovic's reputation and discourage
customers from subscribing to his company's cable service.
Mr. Mitrovic's attorneys acted to stop the television
station from making defamatory accusations.

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Embassy Advocacy
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13. (SBU) In conversations with both Mr. and Mrs. Mitrovic
and their lawyers, EconOffs have made it clear that we can
not ask Honduran government agencies to refrain from
auditing companies or investigating claims of wrongdoing -
in effect, to refrain from doing their job. We have also
discussed the importance of correcting any weak points in
the Mitrovics' case. The Mitrovics and their counsel are
now focusing on addressing these aspects of their situation
and responding to the IPR Division's investigation through
the established legal channels.


14. (SBU) However, we do find it highly credible that the
pattern of audits and investigations experienced by the
Mitrovics reflects the influence of their competitor,
Congressman Navas. We have raised the case with the
appropriate GOH officials in order to draw attention to the
perception that a U.S.-owned company is being harassed by a
politically influential rival.


15. (SBU) First, on December 18th, EconCouns spoke with
Marlon Tabora, the President of CONATEL, the Honduran
telecommunications regulatory agency. Tabora was unfamiliar
with the audits of the company by his office, but indicated
willingness to speak directly to the Mitrovics or their
counsel and address the issue.


16. (SBU) On December 23rd, EconOff spoke with Marvin
Discua, Director of the Intellectual Property Division of
the Ministry of Industry and Trade. EconOff expressed
approval that Discua's office is pursuing claims of
satellite piracy, but stressed that it is important that all
such claims be given equal attention, and that a company not
be singled out because it is U.S.-owned. Discua assured
EconOff that this is not the case, and has promised to send
the embassy information regarding all investigations
performed by his division during 2003.


17. (SBU) EconCouns has also mentioned the case to the
President's Special Advisor for Foreign Investment, Camilo
Atala.


18. (SBU) On January 13th, the embassy received an advocacy
request from Mrs. Mitrovic, which we have faxed to the
Department of Commerce. In the request, Mrs. Mitrovic asks
that the embassy "investigate if CONATEL, the copyrights
office, ENEE and other offices are as persistent with their
inspections of other companies as with Mateo's Cable
Vision." Embassy does not recommend an investigation of
this issue per se, but will work with Commerce to determine
if any further actions are advised to be responsive to this
advocacy request.

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Consular Issue
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19. (SBU) A separate issue concerns Mrs. Navarrete-
Mitrovic's personal safety and, in particular, a kidnapping
attempt against her which took place in 1999. The alleged
perpetrator of this crime was arrested on the day of the
attempt, but released from prison after three months. A new
warrant was eventually issued for his arrest, based upon the
kidnapping attempt and other past crimes that he is accused
of committing, but he has not yet been arrested.


20. (SBU) While the kidnapping attempt is unrelated to the
Mitrovics' investment dispute, the two issues were linked
when the case was brought to the attention of USTR, and thus
to the embassy. Mrs. Navarrete-Mitrovic is now in contact
with the consular section concerning the kidnapping case,
and the assistance that the consular section can provide in
tracking the GOH's efforts to apprehend the suspect.
EconCouns and the consular section have urged the Mitrovics
to place the highest possible priority on their personal
security.

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Comment
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21. (SBU) Comment: EconOffs have proceeded cautiously with
this case, considering that the various Honduran government
agencies accused of harassing Mateo's Cable Vision are,
after all, doing their jobs, and given the indication of
some limited IPR violations on behalf of the U.S. company.
At the same time, it does seem very plausible to EconOffs,
given our knowledge of the political and business climate of
Honduras, that an influential Congressman is pulling strings
to make life difficult for a growing, U.S.-owned competitor.
Congressman Navas has been involved in some other high-
profile business disputes in the past, including seeking to
influence the adjudication of a permit to build a hydro-
electric dam on the Cangrejal River. Probably the most
worrisome issue of all has been the spread of false rumors
in Tela about the Mitrovics, with some versions alluding to
ties to Colombian narcotraffickers.


22. (SBU) We have been successful in clarifying the various
issues of this complicated case, explaining the proper role
of the embassy to the Mitrovics and their attorneys, and
encouraging them to correct any minor disputes immediately,
so that their company will have nothing to fear from
government investigations. Post will continue to follow the
issue, as the case is an example of the difficult investment
climate that at times prevails for U.S.-owned businesses in
Honduras. End Comment.

Palmer