08/23/13 - Cuba Standard (Tampa) - Decree may affect foreign companies caught up in corruption trials
CUBA STANDARD - Saying it wants to avoid confiscated properties sitting
idle for extended periods of time, the Cuban government published a decree
regulating seizure of personal assets in cases of "illegal enrichment and
drug-related events, corruption, or other unlawful conduct."
Amid a slew of anti-corruption investigations and trials, Decree No.
313/2013 impacts both Cubans and foreigners caught up in the
anti-corruption campaign. The decree, published in the Gaceta Oficial Aug.
21 and effective Oct. 1, describes procedures to be followed with assets
seized in judicial trials and administrative confiscations.
More than answering questions about what happens to the assets of foreign
companies that have been caught up in less-than-transparent corruption
trials, the publication of the decree raises more questions.
The new regulations talk about "personal goods" and do not mention
corporate assets. Even so, the examples listed in the decree cover a broad
range, from cash to securities and other financial instruments, to
emergency power generators and high-tension cables. They only cover
"movable assets"; however, since there is no outright real estate ownership
by foreigners and foreign companies in Cuba, many of these companies'
assets may be considered "movable."
At least four foreign companies in Cuba - Alimentos Río Zaza, Coral Capital
Group, Tokmakjian Group and Tri-Star Caribbean - have been subject to
corruption investigations and shut down while company executives were in
prison or abroad.
The Cuban government has not announced how it proceeds with the assets of
these companies. Nor has it publicly described the exact nature of the
allegations, causing speculation among foreign businesspeople.
"Your intrepid reporters could usefully investigate the individuals and
cliques who are benefitting from the market reorganization and newly
nationalized assets resulting from this 'war on corruption'," wrote Stephen
Purvis, former chief operating officer of Coral Capital, in a recent letter
to Britain's Economist magazine. Purvis returned to his native Britain this
summer after 15 months at the infamous Villa Marista prison in Havana,
including eight months of interrogations over alleged acts of corruption. A
Cuban court, according to Purvis, finally convicted and sentenced him on
minor issues, such as "breaches of financial regulations."
In his letter, Purvis suggests that Canadian and European businesspeople
are being harassed by the Cuban government, while their Chinese, Brazilian
and Venezuelan competitors aren't. The Cuban government has established
strategic economic partnerships with China, Brazil and Venezuela.
In the case of Coral Capital, a Chinese consortium reportedly took over a
golf course project East of Havana that had been planned by the British
group; no public announcement has been made. Coral Capital also was the
foreign joint venture partner in the Saratoga hotel in Old Havana; Cuba
Standard was unable to obtain information as to the current ownership of
The new rules establish that, depending on the type of assets, the Central
Bank of Cuba, and the ministries of Interior, Energy and Mines,
Communications, Health, Agriculture and Domestic Trade will manage the
"deposit, storage and disposal" of these assets. All assets that are not
returned to their owners become state property.
In 2010, Max Marambio, the Chilean citizen who co-owned Alimentos Río Zaza
with the Cuban government, filed legal proceedings against Cuba before the
international court of arbitration of the Paris-based International Chamber
of Commerce (ICC). Marambio, who in 2011 was convicted of fraud and
sentenced in absence by a Cuban court to 20 years of prison, asked for $143
million in lost profits and $10 million for "moral damage."
Independent of the criminal proceedings against Marambio by Cuban courts,
in 2012 the arbitration court declared the joint venture between Marambio
and Cuban state company Coralsa dissolved and ordered its liquidation. In
July this year, it found that Coralsa owed him $18 million for "lack of
good faith" in the dissolution of Río Zaza.
The court consisted of one judge suggested by Marambio, a Cuban judge, and
a third agreed upon by both parties.
Original Source / Fuente Original:
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