China Mall violates FTA Will Ortega dare to apply sanctions? 

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By LatAm Reports Editor

In the midst of the great expectation that the Ortega Murillo regime generated around the increase in exports and investments that will boost the Free Trade Agreement (FTA) that Nicaragua signed with China, the China Mall arrived in Managua, a warehouse that was announced as the first major commercial investment. With an injection of $500,000, he generated two hundred jobs and opened its doors, but he is disrespecting local laws and workers’ rights. Something that is even recorded in the FTA that came into force on January 1. This exposes it to fines and other sanctions.

After six weeks of operation, the China Mall or the Dragon or Giant of Savings, as is also called the warehouse located in the Plaza San Dionisio de la Pista Suburbana, already accumulates various complaints. Employees of the establishment entrusted to THE PRENSA that the company hired them and pays more than 9,000 córdobas per month. That is, it pays them the minimum wage for trade, which until 29 February will be 9,531.14 córdobas per month. However, he did not join the Nicaraguan Institute of Social Security (INSS), as required by law to companies and even more so, to a foreign investor who cannot be in informality.

The lack of affiliation of workers is a clear violation of the Social Security Act, the regulations of which in chapter two, article 3, provide that employers must apply for registration and that of their workers, within three days of the date of commencement of their activity.

Read also: Sweet savour among China Mall employees

Not affiliated with employees causes surcharges

Failure to affiliate social security to workers exposes companies to surcharges. Even chapter two, article 6 clarifies that employers are obliged to join even apprentice workers. Therefore, after six weeks of operation, the company cannot claim that it is at the staff training stage.

This violation of the Social Security Act exposes the China Mall to various fines. Chapter three, Article 7 of that Regulation, provides that non-compliance with this obligation shall result in an administrative surcharge of 250 córdobas for each calendar month or fraction of a delay, without prejudice to the other penalties to which it is applicable.

Among the other sanctions mentioned by law is the payment of a surcharge for extemporaneous notification of the entry of new workers, the amount of which will depend on the days of delay, ranging from 10 to 500 córdobas. Also, 50 córdobas for each omission, when omitted or includes erroneous information on the sheets; and 2 percent of the amount paid for the lack of presentation or late presentation of the 

Ortega wants to be gratated with the Chinese

For Enrique Sáenz, an economist and former exiled opposition MP, the only explanation for this violation of local laws and workers’ rights is that Daniel Ortega wants to be gratized with Chinese investors.

Is the dictatorship opting for a soft and surrendering position to grace Chinese investors. Well, even if it was declared foreign investment, it would not be exempt from membership of INSS, Sáenz says.

It should be mentioned that the FTA between Nicaragua and China, which has been in force since 1 January, establishes in chapter 11 on investment, which each country party will grant to investors and the investments covered by the other nation – treatment no less favourable than that granted, in similar circumstances, to its own investors with regard to the establishment, acquisition, expansion, administration, management, operation and sale or other disposition of investments in its territory.

What about the INSS inspectors?

The text of the FTA clarifies that the investments covered are those that already existed at the time of the entry into force of the FTA, but also those that are established or extended under the agreement. China Mall is therefore covered by these commitments.

Sáenz believes that in the financial crisis facing INSS there is a money that is not being applied to this Chinese company. Anyone knows they’re like vampires looking for someone to suck blood, riding even onerous fines. That in this case they do not act alone could be explained by the existence of direct orders emanating from Daniel Ortega or his immediate circle, says Sáenz.

Sáenz’s statement arises because INSS law provides that inspectors and staff authorized by the Institute have the power to verify compliance with the obligations of employers and workers… To this end, they may examine accounting books, salary and salary payment sheets, employment contracts, proof of income and capital tax returns, financial statements, collective agreements and other documents necessary for the verification of all data related to Social Security.

The Nicaraguan Social Security Institute (INSS) accumulates 11 years of financial crisis, following the loss not only of affiliated workers but also of companies. By 2023, the Government projected that the entity would close with a deficit of 3.595.8 million córdobas, the third highest since 2013 when this debacle began, which according to official projections will continue to sharpen, as they project a deficit of 4.5.6 million córdobas.

This article has been translated from the original which first appeared in La Prensani