GON OFFICIALS AND BUSINESSMEN EXPLAIN MAOIST

C O N F I D E N T I A L KATHMANDU 001596 SIPDIS SIPDIS E.O. 12958: DECL: 06/20/2016 TAGS: PTER PGOV ECON NP SUBJECT: GON OFFICIALS AND BUSINESSMEN EXPLAIN MAOIST FINANCING REF: A. KATHMANDU 1532 ¶B. KATHMANDU 1433 ¶C. KATHMANDU 1522 Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b/d). MAOISTS "TAXING" AND EXTORTING -------------- ¶1. (C) During June 15-16 meetings, Government of Nepal (GON) officials and businessmen explained to Emboff how the Maoists go about funding their movement by looting rural banks, "taxing" businesses and organizations and engaging in flagrant extortion by preying on some of the country's poorest people using threats and intimidation. ¶2. (C) Senior Superintendent of Police (SSP) Puskar Regmi, head of the Nepal Police's Anti-Terrorism Cell, explained that police had found financial documents of a group of district-level Maoists that indicated that 60 percent of money collected/extorted at the district level was sent to central Maoist leadership. (Note: Regmi's office is designated to handle all reports of Maoist threats and extortion. End Note:) Lila Prasad Sitaula, Acting Executive Director of Nepal Rastra Bank (Nepal's central bank) suggested that some of the money collected in Nepal was used to invest in real estate in India while other money was converted from Nepali to Indian Rupees and held in Indian Banks. SSP Regmi stated that thus far there had been no evidence of Maoists receiving any outside financing - instead funds are all locally raised. Regmi stressed that no Nepali business voluntarily gave "donations" to the Maoists "They have been terrorized, he said." But the amounts add up. He explained, for example, that Maoists had collected 30 million Nepali Rupees (USD 422,000) in the Karnali zone (mountainous northwestern Nepal) in 2005 by "taxing" people that gather a precious fungus called Yarcha Gumba (ref A). Diwakar Golcha, First Vice-President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI),noted that Maoists charged a "toll tax" for the movement of goods and people on Nepal's highways. ¶3. (C) Ever creative in seeking to siphon money from legitimate programs, as reported in ref B, the Maoists recently tried to issue a USD 422,000 tender for services in the name of the Maoist government in southwestern Rupandehi District. In western Tanahu and Lamjung Districts Maoists have been asking teachers to donate twelve days of their salary and civil servants to donate three month's salary to support the party (ref C). MAOISTS STARTED BY LOOTING RURAL BANKS -------------- ¶4. (C) Nepal Rastra Bank's Sitaula outlined the history of Maoist financing. He noted that when the Maoist insurgency started in 1996, Maoists focused on stealing money from smaller rural development and cooperative banks, as well as some larger commercial banks. Rajendra Khetan, President of the Confederation of Nepalese Industries (CNI) reported that over 20 branches of Nepal Bank Limited (40 percent government-owned) and Rastriya Banijya Bank (fully government-owned) were looted in the early years of the insurgency. Sitaula estimated that since 1996, 300 million Nepali Rupees (USD 4.2 million) had been stolen from banks. He said that over the years Maoists had developed tactics such as collecting "tax" from public servants and people with money in rural areas, but only asking for "donations" from households, particularly those homes that were receiving foreign remittances from a family member working outside the country. COMMENT -------------- ¶5. (C) From bank robbery to extortion to intimidation, the Maoists are raising money in Nepal - even today - for their terrorist activities, not to deliver services to the Nepali people. They prey upon this country's productive as well as upon its weakest citizens without providing services. MORIARTY