VZCZCXYZ0000
RR RUEHWEB

DE RUEHGT #0192/01 0620920
ZNR UUUUU ZZH
R 030920Z MAR 09 ZDK
FM AMEMBASSY GUATEMALA
TO RUEHC/SECSTATE WASHDC 7035
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC

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