Identifier
Created
Classification
Origin
09KATHMANDU56
2009-01-20 06:25:00
CONFIDENTIAL
Embassy Kathmandu
Cable title:
NEPAL: COLGATE NEGOTIATES LABOR SETTLEMENT
how-toVZCZCXRO0364 OO RUEHCI DE RUEHKT #0056 0200625 ZNY CCCCC ZZH O 200625Z JAN 09 FM AMEMBASSY KATHMANDU TO RUEHC/SECSTATE WASHDC IMMEDIATE 9664 INFO RUEHBJ/AMEMBASSY BEIJING PRIORITY 6779 RUEHLM/AMEMBASSY COLOMBO PRIORITY 7067 RUEHKA/AMEMBASSY DHAKA PRIORITY 2381 RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 5113 RUEHLO/AMEMBASSY LONDON PRIORITY 6296 RUEHNE/AMEMBASSY NEW DELHI PRIORITY 2797 RUEHCI/AMCONSUL KOLKATA PRIORITY 4419 RUEKJCS/SECDEF WASHDC PRIORITY RUCNDT/USMISSION USUN NEW YORK PRIORITY 3413 RHEFDIA/DIA WASHDC PRIORITY RHMFISS/CDR USPACOM HONOLULU HI PRIORITY RUEAIIA/CIA WASHDC PRIORITY RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L KATHMANDU 000056
SIPDIS
E.O. 12958: DECL: 01/20/2019
TAGS: ECON ETRD ELAB NP
SUBJECT: NEPAL: COLGATE NEGOTIATES LABOR SETTLEMENT
REF: 08 KATHMANDU 1234
Classified By: Classified By: Deputy Cheif of Mission Randy W. Berry.
Reasons 1.4 (b/d).
Colgate Manages to Strike A Deal
-------------------------------
C O N F I D E N T I A L KATHMANDU 000056
SIPDIS
E.O. 12958: DECL: 01/20/2019
TAGS: ECON ETRD ELAB NP
SUBJECT: NEPAL: COLGATE NEGOTIATES LABOR SETTLEMENT
REF: 08 KATHMANDU 1234
Classified By: Classified By: Deputy Cheif of Mission Randy W. Berry.
Reasons 1.4 (b/d).
Colgate Manages to Strike A Deal
--------------
1. (C) On November 21, Colgate Palmolive announced it had
sold its entire interest in its Nepal operation,
Colgate-Palmolive Nepal),to a private Nepali concern
(reftel). Although the purchase agreement included
provisions ensuring continued employment under the new
ownership, the former Colgate employees staged a violent
protest, demanding a settlement package and refusing to work
under the new ownership. On January 13, Colgate officials in
India informed post that after a prolonged and painful
negotiation, a settlement with the former employees had
finally been reached. On January 12, after the employee
settlement was finalized, the Director General at the
Department of Industries approved the share transfer. This
gives approval in principle for the remittance of the sale
proceeds. However, the actual remittance has now been
delayed pending completion of certain formalities regarding
Colgate's 2005 restructuring of the Nepal operation. At this
time, Colgate officials do not foresee any serious issues
with the conditions for submitting documents regarding the
restructuring.
Comment
--------------
2. (C) Colgate's painful and costly exit from Nepal will do
nothing to strengthen investor confidence. The numerous
problems the company faced doing business in Nepal were, at
the end of the day, the same problems the company faced
departing Nepal. These issues including the mismanagement
and misuse of labor unions and systemic corruption, will have
to be honestly addressed before Nepal will be able to attract
new foreign investment. The more immediate problem will be
how to retain the investors who are already here. Faced with
a severe energy shortage, government interaction and labor
unrest, many are already looking across the border.
POWELL
SIPDIS
E.O. 12958: DECL: 01/20/2019
TAGS: ECON ETRD ELAB NP
SUBJECT: NEPAL: COLGATE NEGOTIATES LABOR SETTLEMENT
REF: 08 KATHMANDU 1234
Classified By: Classified By: Deputy Cheif of Mission Randy W. Berry.
Reasons 1.4 (b/d).
Colgate Manages to Strike A Deal
--------------
1. (C) On November 21, Colgate Palmolive announced it had
sold its entire interest in its Nepal operation,
Colgate-Palmolive Nepal),to a private Nepali concern
(reftel). Although the purchase agreement included
provisions ensuring continued employment under the new
ownership, the former Colgate employees staged a violent
protest, demanding a settlement package and refusing to work
under the new ownership. On January 13, Colgate officials in
India informed post that after a prolonged and painful
negotiation, a settlement with the former employees had
finally been reached. On January 12, after the employee
settlement was finalized, the Director General at the
Department of Industries approved the share transfer. This
gives approval in principle for the remittance of the sale
proceeds. However, the actual remittance has now been
delayed pending completion of certain formalities regarding
Colgate's 2005 restructuring of the Nepal operation. At this
time, Colgate officials do not foresee any serious issues
with the conditions for submitting documents regarding the
restructuring.
Comment
--------------
2. (C) Colgate's painful and costly exit from Nepal will do
nothing to strengthen investor confidence. The numerous
problems the company faced doing business in Nepal were, at
the end of the day, the same problems the company faced
departing Nepal. These issues including the mismanagement
and misuse of labor unions and systemic corruption, will have
to be honestly addressed before Nepal will be able to attract
new foreign investment. The more immediate problem will be
how to retain the investors who are already here. Faced with
a severe energy shortage, government interaction and labor
unrest, many are already looking across the border.
POWELL