HILTON HOTELS CAUGHT BETWEEN US CUBA SANCTIONS AND

UNCLAS SECTION 01 OF 02 LONDON 000764 SIPDIS SIPDIS TREASURY FOR OFAC E.O. 12958: N/A TAGS: ETTC ELAB CU UK SUBJECT: HILTON HOTELS CAUGHT BETWEEN US CUBA SANCTIONS AND UK NON-DISCRIMINATION LAW REF: LONDON 525 LONDON 00000764 001.2 OF 002 ZFR ZFR ZFR ZFR ZFR ZFR ZFR ZFR ZFR ZFR CANCEL THIS MESSAGE A NEW ONE WILL BE SENT WITH NEW MRNS ZFR ZFR ZFR ZFR ZFR ZFR ZFR ZFR ZFR ZFR LONDON 00000764 002 OF 002 nationality. Violations of both the US and UK laws are subject to severe civil and criminal penalties. The U.S. Sanctions, administered by the Office of Foreign Assts Control ("OFAC") at the U.S. Treasury Department, clearly prohibit US companies and their foreign subsidiaries from engaging in any transaction with Cuba, Cuban entities or Cuban nationals wherever located. Aspects of these sanctions, particularly as to dealings with Cuban nationals, run counter to UK law. The United States has long been at the forefront of combating discrimination, including on the basis of national origin. Yet as a result of compliance with the US sanctions, Hilton is facing allegations of discriminatory practices against Cuban nationals on the basis of their national origin. It is particularly difficult for a US based company such as Hilton to respond to such recriminations in light of the seeming inconsistency between the US anti-discrimination ethos as well as Hilton's own anti-discrimination policy, and the impacts of the sanctions as applied to Cuban national seeking lodging in our UK hotels. It is Hilton's policy to comply with all laws applicable to its operations. This puts employees of Hilton in the UK in the extremely difficult situation of being left to choose between compliance with US Sanctions or UK law. It also subjects Hilton to irreparable reputational harm if as a result of compliance with US Sanctions, Hilton is seen as a company that discriminates against travelers in violation of UK law. Hilton would like to see a reform of the US Sanctions within the tourism industry for US hotel companies (last three words in bold print) operating outside the United States so that this contradiction between US law and the laws of other countries, such as UK law, is eliminated. To that end, we have submitted our own formal license application to OFAC for a specific license to authorize service to Cuban nationals. We are also working with the American Hotel and Lodging Association to make representations to the US State Department and Treasury to review these laws particularly with respect to their discriminatory effect based on nationality. (footnote 1: On 23rd March 2006 Hilton Group plc sold its hotel division, Hilton International, to the US based Hilton Hotels Corporation. Hilton UK and Ireland currently operate 73 hotels with over 14,000 rooms and 15,200 staff.) End text. ¶7. Embassy was contacted February 27 by The Guardian newspaper asking for comments on a statement it had received from Hilton on trade sanctions with Cuba. The statement forwarded by the Guardian differs in some respects from the text in para 6. One key difference is the following in the third paragraph of the statement: "However, notwithstanding this very serious dilemma, Hilton does not expect, require or counsel, its employees to violate their own country's laws. Accordingly, when dealing with bookings at our hotels in the UK, we do not expect or require that our UK employees do anything in violation of UK law." The Guardian statement also calls on the UK government to "make representations to the US and to bring a resolution to these issues." The text of both documents has emailed to EUR/UBI and WHA/CCA desk, L/EB and L/WHA. Visit London's Classified Website: http://www.state.sgov.gov/p/eur/london/index. cfm Tuttle