KILLINGS OF GARMENT BUSINESSMEN RECALL DISPUTE

UNCLAS GUATEMALA 000192

SENSITIVE
SIPDIS

DEPT FOR DRL/AWH AND DRL/ILCSR
DOL FOR PCHURCH

E.O. 12958: N/A
TAGS: ELAB KCRM ETRD PHUM KJUS KDEM PGOV GT
SUBJECT: KILLINGS OF GARMENT BUSINESSMEN RECALL DISPUTE
WITH UNION


1. (SBU) Summary: Although there are no indications of union
involvement, the January 21 killings of two representatives
of a garment factory (Industria Textil Choishin, S.A.)
highlighted tension between management and a workers union
(SitraChoi). Through November of last year, Choishin and
SitraChoi had been involved in an ongoing legal dispute over
the union's claim that the company illegally closed in July
2008 and subsequently refused to pay workers their full
severance. It remains unclear whether the killings resulted
from lingering discontent by workers forced out of economic
necessity to accept what they viewed as an unjust
compensation or was a common crime as the press reported.
End Summary.

Killing of Garment Factory Businessmen
--------------

2. (U) On January 21, after receiving an anonymous phone tip,
first responders located the bodies of Korean businessmen You
Chang Okey and Kim Dong Ha in a shallow grave on the property
of their garment factory, Industria Textil Choishin, S.A., in
the high crime area of Villa Nueva on the outskirts of
Guatemala City. The businessmen had been missing for three
days. Their bodies had been burned and, according to the
Public Ministry, buried less than 24 hours before they were
discovered. Later that day, police arrested and charged five
private security agents who worked for the factory with the
double homicide. The arrests came after police discovered
computer equipment and other materials that belonged to the
company in the homes of the accused.


3. (SBU) The killings occurred in the aftermath of tension
between Choishin and the workers' union SitraChoi. SitraChoi
had accused the company of illegally closing in July 2008 and
failing to pay employees their full severance required under
Guatemala's labor law. Press reports of the Public
Ministry's (Attorney General) investigation did not mention
union involvement in the killings and AFL-CIO Solidarity
Center Central America Representative Rob Wayss told poloff
that he had no reason to believe that any SitraChoi members
were involved.

Company Blames Low Worker Productivity for Closure
-------------- --------------

4. (SBU) You and Kim were the legal representative and human
resources manager respectively for Industria Textil Choishin,
a multinational textile company with headquarters in South
Korea. The company produced textiles for the well-known
brands Liz Claiborne, Macy's Federation, and Ralph Lauren
Polo and exported a majority of its products to the United
States. In a meeting with poloff in September 2008, You
estimated that the company lost $1.6 million in 2007 and $1
million in the first six months of 2008. He blamed the
company's losses on low worker productivity, especially among
union members whom he felt the law protected against
justified dismissals. He said the downturn in the U.S.
economy was not a significant factor in the company's losses.



5. (SBU) The losses forced the company to close on July 18,
2008, according to You. According to Kim, Choishin could
only afford to pay its employees 52 percent of their
severance. However, representatives of SitraChoi and Vice
Minister of Labor Mario Illescas believed that Choishin could
have paid all employees their full severance. (Note:
Illescas and SitraChoi did not have access to Choishin
financial statements and we do not know how they arrived at
this conclusion. End note.) Illescas and Roberto Gatica,
Qthis conclusion. End note.) Illescas and Roberto Gatica,
Deputy Director of the Labor Inspectorate, confirmed to
poloff that 602 of the company's 792 workers accepted
Choishin's offer of 52 percent severance in July shortly
after the closing while the remaining 190 employees sued the
company for the full 100 percent. The company paid a total
amount of almost 3.5 million quetzales (USD 449,000) to the
602 workers.


6. (SBU) Kim told poloff in September 2008 that Choishin had
reached a mutual agreement with the 602 employees to provide
a 52 percent severance and while it was a "sad reality" that
economic necessity may have forced some employees to accept
less than 100 percent, the company did not violate
Guatemala's labor laws given the mutual agreement that it had
signed with workers. Both You and Kim stated that they
continued to visit Choishin's factory daily in order to be
available should the remaining 190 employees decide to accept
the 52 percent severnce.


7. (SBU) In the ensuing months, an additioal 80 employees

accepted the company's offer of 52 percent severance out of
economic necessity and fear that if they did not accept, they
would risk not receiving any financial compensation from the
company, according to Sheny Godinez, Coordinator for the
Food, Agro-Industrial and Allied Workers Union (FESTRAS). By
mid-October, according to Godinez, Choishin offered
one-hundred percent severance to the remaining 110 employees,
an offer that 104 of the employees accepted. The remaining
six employees, who comprised SitraChoi's executive committee,
did not initially accept the offer and demanded that the
company reopen and offer former employees their previous
jobs. According to Godinez, by mid-November the six
executive committee members had accepted the 100 percent
severance after allegedly receiving anonymous death threats
and also out of fear that the longer they waited, the greater
the possibility that they would not get anything at all from
the company. According to Godinez, Choishin provided the
money for these six employees to the judiciary, but due to a
prolonged legal process the employees had not received their
severance to date.


8. (U) According to Alejandro Ceballos, President of the
Board of Directors of the Guatemalan Apparel and Textile
Industry Commission (Vestex),apparel exports to the U.S.
fell by 3.89 percent in 2008 and a total of 14 garment
factories closed their Guatemalan operations, resulting in
the loss of 8,000 jobs. Ceballos also stated that exports in
January 2009 were 31 percent lower than in January 2008. He
cited the global financial crisis and resulting decreased
consumer demand in the U.S. as the primary reasons for these
losses. Guatemalan textile exports have also suffered due to
increased competition from Asian producers.

Union Argues Company's Closure Illegal
--------------

9. (SBU) SitraChoi had a membership of between 150 and 180
employees. According to SitraChoi representatives, the
company had failed to give the majority of its workers their
rightful severance and the union doubted the company's claims
that it did not have adequate resources to pay the full
amount.


10. (SBU) SitraChoi representatives claimed that Choishin had
not presented to the Ministry of Labor (MOL) or the presiding
labor judge documentation to prove that it could not pay the
full severance, as requested by the labor judge. Choishin's
legal representative You stated that the company did not have
an obligation to present its financial documents to the MOL
and claimed that the presiding labor judge had not requested
these documents. SitraChoi representatives further accused
Choishin of illegally closing with a plan to reopen under a
different name in an attempt to avoid having to recognize the
existing union. Union representatives also suggested that
the MOL may have colluded with the company to take advantage
of the workers by providing Choishin with information on how
to avoid paying workers their full severance, a sentiment
echoed by Wayss.

Ministry of Labor as Mediator
--------------

11. (SBU) According to Illescas and Gatica, the MOL served as
mediator between Choishin and its former employees. Illescas
stated that Choishin had not complied with all of Guatemala's
labor laws and that the MOL had been investigating the
company to assess fines for non-compliance. According to
Illescas, the MOL had encouraged the workers to bring legal
action against Choishin so that a labor judge could hear the
Qaction against Choishin so that a labor judge could hear the
workers' grievances. However, Choishin employees voluntarily
chose to sign a consensual agreement with the company and the
MOL did not have the authority to force the workers not to
accept the offer.


12. (SBU) Illescas explained that the MOL also could not
intervene in the legal process between the company and the
workers who chose not to accept Choishin's proposal. Once
the case was brought before a judge, the MOL's role as
mediator ended. Illescas also stated that workers who had
accepted the agreement with Choishin could still bring a
legal case against the company requesting that the judge
adjust the compensation that they had already received.

Comment
--------------

13. (SBU) Although press reports suggest robbery as the
motive of the killings and press reports of the Public
Ministry's investigation do not indicate union involvement,
the murders occurred in the highly charged atmosphere of the

dispute between management and the union.
McFarland