Companies paying price for Cuba dealings

Friday, August 29, 2008
Modified: Monday, September 1, 2008 - 6:00 AM

Companies paying price for Cuba dealings
Denver Business Journal - by Renee McGaw

Two Colorado companies have been caught recently in a tightening U.S.
government net around communist Cuba — a reminder of a nearly
50-year-old economic embargo that's often easy to overlook.

Platte River Associates of Boulder, which makes geologic modeling
software used by oil and gas companies, and Denver-based RMO Inc., which
makes orthodontic equipment, have been accused of violating the embargo
on the Caribbean island nation.

Platte River is facing federal criminal charges. RMO, also known as
Rocky Mountain Orthodontics, paid a $941 penalty earlier this year.

But despite the government's tough stance on Cuba, some Colorado
business leaders are hoping to strengthen trade ties there.

Jim Reis, president of World Trade Center Denver, has been trying to
organize a trade mission to Cuba for Colorado politicians and business
people in the agricultural and medical industries — the two areas that
are exempt from the embargo — for roughly the last three years. He still
hopes to organize a trip by spring 2009.

"I'm still hoping to get it together, although obviously not until after
the election," Reis said. "It's not fair to ask a politician who's
running for office to join a trade mission to Cuba. Some people have
strong feelings about that."

Although he hasn't spoken to Gov. Bill Ritter yet, Reis hopes Ritter
would join a delegation.

The United States has imposed trade and travel restrictions on Cuba
since the early 1960s, shortly after Fidel Castro came to power. Castro
stepped aside earlier this year, and his brother Raul is now president.

But the embargo remains. Penalties for breaking it range up to 10 years
in prison, $1 million in corporate fines and $250,000 in individual
fines. Exceptions are made for licensed exports of agricultural and
medical products.

In recent years, the Bush administration has significantly tightened
travel restrictions and stepped up enforcement of the embargo. In 2006,
a new interagency Cuban Sanctions Enforcement Task Force was formed to
help prosecute embargo violations.

So far this year, U.S. companies have paid nearly $2 million in fines
for violating the Cuban embargo, up from $445,744 in the same period of
2007, according to OFAC.

Minxia Non-Ferrous Metals, a Maryland-based subsidiary of China's
MinMetals Corp., recently paid $1.2 million to settle charges of dealing
in Cuban metals. Gate Gourmet, a Swiss-American airline caterer, paid
roughly $582,000 for supplying meals to Air Cubana, Cuba's national airline.

But the Platte River Associates' case shows that a company doesn't have
to deal directly with Cuba to get into trouble.

Government prosecutors haven't yet released details of the charges. But
Platte River's attorney, Lee Foreman of Haddon/Foreman in Denver, said
the company provided post-sale software training to an employee of
Repsol, a Spanish oil and gas company. The U.S. government claims Repsol
was involved in, or trying to become involved in, an oil-and-gas project
in Cuba.

"It's a couple of steps removed from doing business with Cuba directly,"
Foreman said. "They never had a contract with anybody from Cuba, they
never sold their software to anybody associated with Cuba. They
certainly didn't have anything to do with the Cuban government. And they
had already sold the software to Repsol before this training exercise
came up; the software wasn't being purchased expressly for use on a
Cuban project."

In 2000, a few months after purchasing Platte River software, Repsol
asked the Boulder company to provide additional training to a Repsol
employee. That employee arrived with some seismic data that he wanted to
use as a tool for learning more about the software.

"It was recognized that it was seismic information that probably related
to the western Caribbean," Foreman said. "People who were knowledgeable
about it might have looked at it and recognized that it had something to
do with Cuban waters, or areas close to Cuban waters."

Platte River isn't in trouble for selling the software to Repsol, but
for going ahead with the training session, Foreman said.

"I don't know if [Repsol has] ever used the software to help them ...
develop an actual oilfield or to do exploration in Cuba," Foreman said.

If convicted, Platte River could be fined up to $1 million. But on July
16, one day after pleading not guilty in U.S. District Court in Denver,
both parties filed court documents saying that a disposition had been
reached, and a change-of-plea hearing was scheduled for Oct. 3.

Foreman wouldn't discuss how Platte River will plead in October. But a
change-of-plea hearing typically gives a defendant a chance to plead
guilty to negotiated charges.

Meanwhile, RMO Inc. was fined $941 for "initiating a funds transfer
involving travel to Cuba" in June 2005, according to the U.S. Department
of Treasury's Office of Foreign Assets Control (OFAC).

The fine, originally $1,711, was reduced because it was the company's
first offense, the employee responsible was fired and a compliance
program was instituted for employees, according to OFAC.

Company officials couldn't be reached for comment; Rocky Mountain
Orthodontics was closed from Aug. 25 through Sept. 1 for the Democratic
National Convention and Labor Day holidays, according to a recorded
phone message.

Doug Jackson, president and CEO of Project C.U.R.E., a Centennial-based
volunteer organization that delivers medical supplies to developing
countries, traveled to Cuba several months ago. Project C.U.R.E.
recently shipped three large cargo containers full of medical supplies
to three Cuban hospitals, and is working on getting approvals to ship
three more.

"We operate under a license [exemption from the embargo], so it's a
non-issue for us," Jackson said.

But even the aid organization must tread carefully. For instance, "We
can't ship eye surgery kits, because Castro has used eye surgery as a
method of gaining favor with other countries," Jackson said.

http://denver.bizjournals.com/denver/stories/2008/09/01/story7.html?b=1220241600^1692164