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Cablegate: Award for Corporate Excellence (Ace) Due Diligence

VZCZCXRO2641
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3155/01 2310552
ZNR UUUUU ZZH
P 180552Z AUG 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 9237
RUCPDOC/USDOC WASHDC
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEHIN/AIT TAIPEI 7050
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 003155

SENSITIVE
SIPDIS

FROM AMBASSADOR RANDT TO E-U/S JEFFERY
STATE FOR EEB/EPPD/NSMITH-NISSLEY
STATE FOR EAP/CM/JHABJAN/PARKP

E.O. 12958: N/A
TAGS: BEXP EINV TBIO SENV ELAB ETRD CH
SUBJECT: AWARD FOR CORPORATE EXCELLENCE (ACE) DUE DILIGENCE
- CARGILL

REF: STATE 84836

1. (SBU) Summary: I have reviewed Cargill's performance as
requested in reftel regarding nominees for the 2008
Secretary's Award for Corporate Excellence (ACE). I can
reaffirm that the company's performance in China has been
exemplary. End summary.

2. (U) Specific answers to the questions posed in reftel
below:

A) Could there possibly be any downside or embarrassment
caused by the selection of your post's nominee?

Post is not aware of any potential downside or
embarrassment. Cargill is widely recognized in China as a
leader in the field of corporate and social responsibility.
In fact, several local organizations recognized Cargill's
contributions in 2007 and 2008, including the China
Children and Teenager's Fund award to Cargill for its
commitment to building schools and educating youth in rural
areas. In addition, Cargill's "Animal Nutrition and Farmer
Training Program" (CAN) has trained over 2 million farmers
in China in modern farming and animal nutrition techniques
and continues to train 200,000 farmers annually at 15 CAN
farmer-training centers across China.

B) Do you have any information concerning job creation in
the United States resulting from the operations of the
company you nominated?

Cargill's operations in China have a positive impact on job
creation in the United States. Cargill is the world's
largest grain exporter, and China is Cargill's largest
market for soybean trade, exporting over 1.5 million tons
of soybeans per year. The firm's sales in China of
soybeans, cotton, fertilizer and agricultural commodities
create jobs in the United States and contribute to
employment in the agricultural and food processing sectors
in the United States including tens of thousands of United
States Cargill employees.

C) What is your assessment of the company's trade and
investment activities with regard to helping stimulate
economic growth in the U.S. and increasing American exports
(what is the U.S. content of its products)?

Cargill's trade and investment activities in China
stimulate economic growth in the United States and increase
American exports. Cargill is expanding rapidly in China.
In 2007, the company reported total revenue of USD 88.3
billion. Cargill's current annual trade with China exceeds
USD 5 billion. Cargill China's focus is the importation
and sale into the Chinese market of United States grain,
agricultural commodities, livestock feed and ingredients
for processed foods and pharmaceuticals. This process
substantially boosts American exports of agricultural
commodities and stimulates economic growth for farmers and
food processors in the United States. The steady increase
in Cargill's sales revenues in China has contributed to the
overall increase in the volume of American exports to China.
Cargill's exports to China also provide food security for
millions of Chinese people and support the Chinese
Government's efforts to raise the incomes and living
standards of its rural population.

D) What is the state of labor conditions in the company's
facilities and are workers unionized?

Post is not aware of any labor problems at Cargill's
facilities. Cargill has demonstrated its commitment to
providing a respectful, safe and supportive workplace.
Many employees spend their entire careers with the company.
Cargill China told Embassy officials that it is not aware
of any unions that represent its approximately 320 mostly
white collar workers at its headquarters in Shanghai and
Beijing. However, many of its plant operators, rural sales
agents, and factory plant workers are unionized. Cargill
employs local people from the rural communities in which it
operates, and says it does not make hiring decisions based
on union affiliation.

E) Are you aware of any litigation pending in local courts
involving the company?

BEIJING 00003155 002 OF 002

Cargill China's legal department told Embassy officials
August 15 that there are four cases pending in local courts
against Cargill China involving Cargill China as a
defendant.

-- One case involves an individual employed by a Cargill
service provider, Cargill Feed in Zhengjiang, Hunan
Province, requesting severance and overtime payments from
Cargill. Cargill China received favorable decisions from
the labor arbitrator and the district court. The plaintiff
has now appealed the decision to the intermediate court.

-- A second case involves a former employee of Cargill
Grain and Oilseeds in Yangjiang, Guangdong Province who
claimed he was entitled to overtime payments. Cargill
received a favorable decision from the labor arbitrator and
the plaintiff has appealed the decision to the district
court.

-- A third case involves the investment company Crosstown
China Investments 2, LLC in Xiamen. This company sued
Cargill over actions that Cargill says it took to protect
its investment after the plaintiff sold an asset owned by
Cargill to a related party of the plaintiff for an
unreasonably low value. Cargill believes that its actions
were legal and consistent with business practices in China.

-- The last case involves Crosstown China Investments 5,
LLC in Changsha, Hunan Province. Cargill alleges that the
plaintiff introduced improper evidence regarding a debt
repayment case and Cargill has appealed this decision to
the Hunan High Court.

F) Please confirm that the Chief of Mission and others
involved in the nominating process do not hold share of
stock or have other financial interests in the company.

Cargill is a privately-held company. Neither I nor any
other member of the Embassy involved in the nominating
process holds stock or has any financial interest in
Cargill.

RANDT

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