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Viewing cable 07LIMA2298, MAFIAS BATTLE FOR TURF IN CIVIL CONSTRUCTION

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Reference ID Created Released Classification Origin
07LIMA2298 2007-07-05 20:38 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0002
PP RUEHWEB

DE RUEHPE #2298/01 1862038
ZNR UUUUU ZZH
P 052038Z JUL 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 6057
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 4828
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 2958
RUEHCV/AMEMBASSY CARACAS PRIORITY 0517
RUEHLP/AMEMBASSY LA PAZ JUL 4343
RUEHMN/AMEMBASSY MONTEVIDEO PRIORITY 9224
RUEHQT/AMEMBASSY QUITO PRIORITY 1314
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 1360
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 4420
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHMFIUU/CDR USSOUTHCOM MIAMI FL PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
UNCLAS LIMA 002298 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS, USEU FOR DCM MCKINLEY 
 
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