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Cablegate: Nicaragua: Dole Pitches Nemagon Settlement To

VZCZCXYZ0008
RR RUEHWEB

DE RUEHMU #2021/01 2471632
ZNY CCCCC ZZH
R 041632Z SEP 07
FM AMEMBASSY MANAGUA
TO RUEHC/SECSTATE WASHDC 1153
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

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

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