HILTON HOTELS CAUGHT BETWEEN US CUBA SANCTIONS AND

UNCLAS SECTION 01 OF 02 LONDON 000780

SIPDIS

SIPDIS

TRESAURY 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


1. Summary and action request: Hilton Hotels International,
faced with a conflict between US sanctions on Cuba and UK law
banning discrimination, has instructed its employees not to
violate local UK law, putting them on a potential collision
course with US law. Post would welcome any guidance
Washington agencies could provide for discussions with Hilton
and press guidance in response to inquiries post has received
from the press. End Summary and action request.


2. As reported reftel, UK labor unions have threatened to
boycott Hilton in the United Kingdom because a Hilton-owned
hotel in Oslo, in compliance with the Cuban Assets Control
Regulations, refused to accept a reservation from a Cuban
delegation in December 2006. The unions contend that a
similar action by Hilton in the UK would violate the British
1976 Race Relations Act, which bans discrimination by
national origin. The penalties under the UK are comparable
to those under US Cuba sanctions, according to Linda Bain,
director of communications for Hilton International.


3. A representative complaint to Hilton is the following
letter, addressed to Bain, and cc'ed to Ambassador Tuttle,
from Joni McDougall, International Solidarity Officer at the
union GMB.

Begin Text:

We have received recent reports that the Hilton Group
proposes to ban Cuban delegations from all their hotels
around the world. We understand that this step has been
taken to protect the company from criminal liability under
the United States' Cuban Liberty and the Solidarity Act of

1996. However, discriminating on legal grounds, which
includes nationalities, in the provision of good, facilities
or services is unlawful under the 1976 Race Relations Act.

Our union has used the services of the Hilton Group for
delegations at numerous events both in the UK and abroad but
we will have to reconsider our position in light of the
above. Could you therefore provide clarification on your
policy please?

On moral and legal grounds we would be unable to do business
with any company which pursued racist policies.

We look forward to hearing from you.

End text.


4. Bain told LabCouns February 23 that Hilton conferred with
its legal staff for three weeks before responding. In the
end, they determined that their critics' legal argument was
valid. Hilton International has instructed its staff to
obey all local law, including the Race Relations Act, even if
doing so violates US Cuba sanctions. Bain said Hilton has
asked the US hotel industry trade association to begin a
dialogue with the US government on this issue on behalf of
all US hotels operating abroad. She said she would provide
Embassy with a copy of Hilton's response.


5. Bain continued that GMB has cancelled 50 rooms from its
Brighton hotel. UNISON international affairs officer Nick
Cook told LabCouns on February 27 that his union had decided
to maintain its current bookings with Hilton, but would not
conduct any additional business with them.


6. On February 27, Hilton sent the Embassy a letter, signed
by Simon Vincent, President, Hilton UK and Ireland, which
Bain said was sent to a number of political leaders and union
chiefs:

Begin Text:

Hilton Hotel Corporation's Position on Trade Sanctions with
Cuba

As you are aware there has been recent media coverage and
political commentary in the UK regarding Hilton Hotels
Corporation (footnote 1) (HHC) being prohibited by the US
embargo of Cuba from hosting Cuban guests in our hotels. As
a US based company, we face a legal dilemma - with a strict
ban on trading with Cuba imposed by the Cuban Assets Control

LONDON 00000780 002 OF 002


regulations ("US Sanctions"),and contradictory legislation
in the UK making it illegal to discriminate on the grounds of
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