Cablegate: Mafias Battle for Turf in Civil Construction

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E.O. 12958: N/A
TAGS: ELAB ETRD PE PGOV
SUBJECT: MAFIAS BATTLE FOR TURF IN CIVIL CONSTRUCTION
INDUSTRY

1. (U) Summary: Brawls and violent crime at construction
sites in Callao and Lima have caused three deaths in the past
four months and put scores of workers in the hospital. The
industry has long attracted leg breakers and goons, but union
officials, business firms, and labor analysts say the level
of violence is escalating as well-organized and well-armed
mafias infiltrate one of the fastest growing sectors of the
Peruvian economy. Union officials at the Federation of Civil
Construction Workers (FTCC), one of Peru's strongest and best
organized unions, report weekly death threats, and
construction companies warn labor strife could choke off the
industry's explosive growth. Most observers dismiss claims
by some union officials that that labor trouble is
politically motivated and cite tight competition for jobs as
the cause of the ongoing violence. End Summary

2. (U) Civil construction in Peru has always been a
bare-knuckle industry, but the violence has escalated in the
last four months. In February, in the port city of Callao, a
stray bullet killed a 12-year old girl after a confrontation
between rival groups of workers led to an exchange of
gunfire. One month later, four men were wounded, one
fatally, when two gunmen fired into a crowd at a second
construction site in Callao. Police arrested the two, who
were reportedly tied to organized crime. On May 23, police
in Lima arrested two construction workers for kidnapping and
murder after an extortion attempt at a construction firm went
awry, leading to the death of a guard. One week later,
police arrested eight construction workers and charged them
with extortion at more than 30 construction sites throughout
Lima.

3. (U) Lelio Balarezo, president of the Peruvian Chamber of
Construction (CAPECO), said the violence threatens to
undermine economic expansion in an industry that grew by 10
percent in March 2007. Balarezo estimated that at least 15
mafias operate in Lima, threatening construction businesses
with vandalism, labor unrest, and murder. Balarezo said the
threats posed by organized crime can add as much as 30
percent to the cost of construction projects in Lima.

4. (U) Mario Huaman, the secretary general of Peru's largest
union -- the General Confederation of Peruvian Workers (CGTP)
-- headed the FTCC from 1992 to 2004. He told poloff that
problems in the industry date back to 1992, when ex-president
Alberto Fujimori organized gangs of unemployed youth in
Callao to battle construction workers. After Fujimori's
fall, these gangs formed loose coalitions and transformed
themselves into criminal organizations. They also began
infiltrating construction unions. As a case in point, Huaman
cited Vincent Apunte, a union official from Callao, who in
February 2007 was removed as head of a Lima local by the
CGTP. Huaman said that Apunte worked with organized crime
groups to shake down construction companies. In May, Huaman
filed a police complaint, alleging Apunte had pilfered union
funds; Apunte was arrested May 24 and remains in custody.
Huaman says that since February assailants have tried to bomb
his house twice and his car once, and he and other union
officials receive weekly death threats. Huaman blames
Apunte's associates.

5. (U) Huaman claims violence in the industry is increasing
because men like Apunte receive covert funding from the
Garcia administration, which is seeking to undermine civil
society groups like the FTCC. Apunte said the paymaster is
Carlos Armas, a former APRA congressman from Callao, who lost
a re-election bid in 2006 and returned to Callao to organize
anti-FTCC unions. Armas denied these charges in a June 1
meeting with poloff and said as congressman, he was
responsible for running Apunte out of Callao in 2004, after
Apunte was accused of stabbing a rival at a construction site
(charges were never filed). Armas said that threats have
always been part of the construction industry, but conflict
became deadly three years ago when the economic boom allowed
criminals to buy guns -- and forced construction firms to
hire more guards. The violence, he says, is a product of
hungry gangs competing for space at the construction trough.

6. (U) Juan Sheput, a Labor Minister during the Toledo
Administration, confirmed Armas' analysis in a June 14
meeting with poloffs. According to Sheput, construction
firms only use a small core of trusted workers to avoid the
danger of employees pilfering expensive materials. As a
result, the majority of workers seeking jobs never have a
chance to break into the field and respond with violent
attacks against union members at construction sites. Sheput
said union officials are reluctant to change the system,
because there are not enough jobs to meet demand.

7. (U) Embassy contacts within the Ministry of Labor (MOL)
also dismiss claims that the violence is politically
motivated. The MOL meets regularly with CGTP
representatives, including Human. MOL sources note that
since February 2007, the CGTP has tried to block its chief
rival, the Confederation of Peruvian Workers (CTP), from
registering new construction unions with the MOL, an effort
that has largely been successful. The CTP is affiliated with
the ruling APRA party. MOL sources say Minister of Labor
Pinilla -- an APRA party member -- has remained impartial in
this dispute and has allowed lower-level bureaucrats to rule
on the validity of CGTP legal challenges against the CTP.

8. (U) Comment: Civil construction is the only industry in
Peru where unions have the right to negotiate by sector. The
CGTP has sought for years to extend sector-wide bargaining to
other industries, and the demand has been a central point of
controversy in the debate surrounding the draft General Labor
Law. But the unrest roiling the industry shows that
legislation alone, no matter how well crafted, will not bring
labor peace to a sector long accustomed to violence. The
unrest also shows how labor disputes provide fertile ground
for conspiracy theories. By all accounts, Mario Huaman is a
tough guy, respected for surviving 12 years in a dangerous
job, but he is savvy enough to realize that charges of
union-bashing reverberate in a US Congress debating the PTPA,
which the CGTP opposes. Post agrees with the majority of
labor analysts who reject the charge that the GOP is fueling
construction unrest, but the violence is likely to continue
as workers and unions battle for jobs. End Comment.
STRUBLE

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