NICARAGUA: DOLE PITCHES NEMAGON SETTLEMENT TO

C O N F I D E N T I A L MANAGUA 002021 SIPDIS SIPDIS STATE FOR WHA/CEN, EB/IFD, AND L STATE PASS USTR E.O. 12958: DECL: 09/04/2017 TAGS: EINV SENV SOCI ELAB NU SUBJECT: NICARAGUA: DOLE PITCHES NEMAGON SETTLEMENT TO ORTEGA REF: 06 MANAGUA 0440 Classified By: Ambassador Paul Trivelli, reasons 1.4 (b) and (d). Summary -------------- ¶1. (C) Dole Food Company President and CEO David DeLorenzo met with President Ortega on August 28 to deliver a new proposal for the settlement of health claims related to the pesticide Nemagon. DeLorenzo reports that Ortega was receptive to the proposal, which would include payments to affected individuals as well as investment in a health clinic. However, Ortega said he could not push for the removal of Law 364, which Dole believes must be part of any final resolution. Division between groups representing those affected by Nemagon further complicates Dole's efforts to negotiate a settlement. End Summary. Dole Offers Direct Compensation and Health Clinic -------------- -------------- ¶2. (C) Dole Food Company President and CEO David DeLorenzo and Dole General Counsel Michael Carter met with President Ortega on August 28 to deliver a new proposal for the settlement of health claims related to the use of Nemagon in Nicaraguan banana farms prior to 1980. Under the proposal, the National Assembly would repeal Law 364, which required Nicaraguan courts to provide special treatment to Nemagon cases, including a lower burden of proof and expedited resolution. According to DeLorenzo, $32.5 billion in claims have been filed in Nicaragua under Law 364. The proposal also requires the National Assembly to pass a law that would allow the Nicaraguan Government to negotiate a settlement on behalf of the claimants, as the Honduran Government has done. ¶3. (C) In exchange, DeLorenzo said Dole would provide a settlement package worth $15 million. He claimed that Dole employed only 3,500 in Nicaragua, and only 500 had exposure to Nemagon. However, all 12,000 Nicaraguans claiming exposure and related health issues would be invited to participate in a screening program. Those proven sterile, a demonstrated effect of Nemagon exposure, would receive about $6,000 from Dole in compensation, while those with low sperm counts would receive $2,000. The company would also build a modern medical clinic in Chinandega, where Dole's farms were located, and fund its operation for five years. The clinic would handle claims, which DeLorenzo said are unfounded, that Nemagon exposure has caused other health problems such as renal malfunction. DeLorenzo said that Shell is prepared to provide a settlement package worth a similar amount, while Dow is still deciding whether to join in. Ortega Wants to Settle--Without Repealing Law 364 -------------- -------------- ¶4. (C) DeLorenzo told the Ambassador that Ortega, who was accompanied by Attorney General Hernan Estrada in the August 28 meeting, was generally receptive to the proposal. DeLorenzo reported that they had an "interesting, good, friendly, and focused" discussion. However, Ortega labeled two key elements of the proposal "politically difficult," repeal of Law 364 and passage of a new law allowing the government to settle all claims. DeLorenzo said he explained to Ortega that these elements were essential to any settlement--otherwise, Dole would remain the target of a never-ending barrage of Nemagon litigation. Ortega recommended that Dole talk to his &top guy8 Carlos Arguello, Nicaraguan Ambassador to the Hague, and continue the dialogue with Estrada. Dole's General Counsel will follow up with Arguello, while Fernando Medina, Dole's local attorney, plans to meet with Estrada later this week. Banana Workers Split -------------- ¶5. (C) Over the past several months, Dole has garnered support from several groups of former banana workers for a negotiated settlement. Carter and representatives of three groups--ASTROEXDAN, AOBON, and Alianza Nacional--wrote Ortega on June 28 requesting his support in negotiating a "permanent resolution to the Nemagon problem and all related litigation, claims, and judgments." Other groups, however, wish to pursue compensation through the courts. In addition to litigation in Nicaragua under Law 364, the trial for the first of five cases filed in Los Angeles County Court, involving more than 5,000 workers from throughout Central America, began on July 19, 2007. ¶6. (C) Since May 30, 2007, several hundred former banana workers have camped in a park near the National Assembly to draw attention to their claims regarding Nemagon. On August 29, a crowd of 2,000 former banana workers and their supporters, including some of those camped near the National Assembly, marched peacefully to the Embassy and delivered a letter to the Ambassador. The letter, signed by representatives of several banana employee groups and their lawyers, thanks the Embassy for issuing visas to Nicaraguans affected by Nemagon so that they could testify in U.S. trials. The marchers carried a large banner to this effect. The letter also requests Embassy assistance in executing Nicaraguan judgments against Dole and others in the United States and seeks assistance in improving medical care in Chinandega. The signatories purport to represent 23,800 persons affected by Nemagon. Highlighting the division between groups, the letter explicitly states that the signatories have no connection with Victorino Espinales, one of the representatives of banana workers who signed Dole's letter to Ortega. Comment -------------- ¶7. (C) Dole executives are optimistic they can negotiate a settlement with those who claim health issues as a result of Nemagon exposure; they point out that they have settlements in place already in Costa Rica and Honduras. Ortega's unwillingness to push for the repeal of Law 364 in the National Assembly, however, may prove a stumbling block. It is unclear what real incentive Ortega has to resolve this issue quickly--he would likely gain politically by drawing out a process that vilifies Dole and other U.S. companies that for him undoubtedly represent the "savage capitalism" he so frequently criticizes. He is, however, being pressed by former banana workers to honor his campaign promise to resolve their plight. We also note that the division between worker groups does complicate Dole's efforts to limit legal claims by negotiating settlement. End comment. TRIVELLI