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Cablegate: Corrupt Cambodian Union Under Investigation

VZCZCXRO1535
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #1757/01 2700856
ZNY CCCCC ZZH
P 270856Z SEP 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 7383
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 PHNOM PENH 001757

SIPDIS

SIPDIS

STATE FOR EAP/MLS, DRL/IL--MARK MITTELHAUSER

E.O. 12958: DECL: PUBLIC ANNOUNCEMENT OF ACTION AGAINST KYFTU
TAGS: ELAB KCOR PGOV CB
SUBJECT: CORRUPT CAMBODIAN UNION UNDER INVESTIGATION


Classified By: Poleconoff Jennifer Spande for reason 1.4(b).

1. (C) SUMMARY. The Cambodian government has formed a
commission to investigate the Khmer Youth Free Trade Union
(KYFTU), a labor union notorious for extorting garment
factory management and beating rival union leaders. If the
commission can find sufficient evidence of illegal
activities, the union is likely to be dissolved and may be
fined as well. The Ministry of Labor is worried that such a
move may be misconstrued as an attack on freedom of
association. In conversations with Ministry of Labor
officials, Poleconoff stressed the need for the government to
emphasize that it was cracking down on one highly corrupt
labor union and not the labor movement as a whole, and has
offered to provide background information about KYFTU
activities. END SUMMARY.

Khmer Youth Union Under Investigation
--------------------------------------

2. (C) During a Sept. 12 meeting, Prak Chantha, Secretary of
State at the Ministry of Labor and Vocational Training, told
Poleconoff and Labor Assistant that Ith Sam Heng, Minister of
Social Affairs, Veterans, and Youth and chair of the National
Strike and Demonstration Commission, had recently formed a
sub-committee to investigate the Khmer Youth Free Trade Union
(KYFTU). The sub-committee, which includes representatives
from the Ministries of Justice, Labor, Social Affairs, and
Interior, as well as the municipality of Phnom Penh, was
currently gathering evidence against the union. While union
leaders could be subject to criminal charges for suspected
cases of arson, property damage, and other offenses, Prak
Chantha thought it was most likely that the union would
simply be dissolved and perhaps fined in accordance with
Cambodian labor law. No other unions are under investigation
or expected to be investigated.

3. (C) Despite receiving complaints about KYFTU activities
from the Ambassador, senior Gap officials, and the Garment
Manufacturers Association, Prak Chantha remained concerned
about the potential diplomatic and international reaction to
such a move. Poleconoff assured her that the Embassy was
well aware of the KYFTU's corrupt activities and the damaging
effect that they had on the garment sector and the reputation
of other unions, but said that the Ministry would have to
make it clear that it was cracing down on one extremely
corrupt union, and not the labor movement as a whole.

The Notorious KYFTU
-------------------

4. (SBU) In a country where corruption is endemic and even
the most credible labor unions are thought to have occasional
cases of bribery, the KYFTU has a well-earned reputation as
the nation's most corrupt union. Distrusted by employers,
government officials, other unions, and international
observers, the KYFTU operates as an extortionist gang, using
a small number of members at large factories to create labor
unrest unless they are paid off by factory management. In
the first eight months of 2006, the KYFTU was responsible for
22 garment sector strikes--more than any other union.
Several of these strikes involved less than 20% of the
workforce, but still managed to bring production to a halt.
In a recent case, two KYFTU supporters falsely claimed to
represent workers who had signed a petition with 14 demands
about working conditions. In fact, most of the demands had
already been resolved, the petition had been altered after
signatures were gathered, and KYFTU had just five supporters
in a factory employing 4,000 workers.

5. (SBU) The KYFTU has also been accused of being "thugs for
hire" utilized by unscrupulous garment factory management to
harass legitimate unions. During a recent meeting with
Poleconoff, the presidents of the Coalition of Cambodian
Apparel Workers Democratic Union (CCAWDU) and the Free Trade
Union (FTU) accused management at four garment
factories--Bright Sky, Suntex, Rainbow, and Yung Wah--of
hiring the KYFTU to beat CCAWDU and FTU factory-level union
leaders at those factories. Several other union presidents
reported KYFTU members threatening factory-level leaders of
rival unions.

6. (C) COMMENT. The government is taking a step in the right
direction by starting an investigation that is likely to lead
to the dissolution of the KYFTU. Combined with
garment-sector wide labor negotiations currently underway,
dismantling this extortionist gang could go a long way
towards quieting the excessive labor unrest in the garment
industry. However, the government's concerns about how such
a move will be perceived are well-founded, as KYFTU leaders

PHNOM PENH 00001757 002 OF 002


are likely to raise loud objections to buyers, international
press, and corporate social responsibility groups who may not
be familiar with the KYFTU's illegal activities. Poleconoff
has offered to provide background on alleged KYFTU activities
and its reputation. END COMMENT.
MUSSOMELI

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