The cleanup continues

Corruption in Cuba

The cleanup continues
May 6th 2011, 21:14 by The Economist online

CUBA'S recent crackdown on corruption has just claimed its most
prominent victim. On May 5th Granma, the state newspaper, announced that
a court had given a 20-year sentence in absentia to Max Marambio, a
Chilean businessman and sometime close friend of Fidel Castro. Mr
Marambio made a fortune through a stake in Rio Zaza, which has long held
a near-monopoly selling fruit juice and long-life milk on the island.
The report did not spell out the specifics of the conviction, but said
said that Mr Marambio and Alejandro Roca Iglesias, the former food
minister, had caused "considerable damage to the nation's economy" and
"impaired the ethical behaviour of various officials and subordinate
workers".

Mr Marambio was once the chief bodyguard for Salvador Allende, Chile's
socialist president. He accepted Fidel Castro's invitation to take
refuge in Cuba after Allende was toppled and died in a 1973 coup. The
two men got on. In the 1990s he reinvented himself as a businessman, and
was one of the first individuals allowed to form a joint enterprise with
the Cuban government.

In 2006 Mr Castro fell ill and handed the country's day-to-day
leadership to his brother Raúl. Two years later Raúl formally became
president, and promptly began attacking Cuba's endemic corruption. In
2009 he started sending officials to inspect the books at the country's
state companies. Soon several executives—all of whom supposedly earn a
state salary of around $20 a month—were jailed or placed under house
arrest. Rogelio Acevedo, who fought alongside the Castro brothers in the
1959 revolution and was thought to be incorruptible, was sacked as head
of the aviation regulator following allegations that he had leased the
state airline's planes off the books, and that millions of dollars in
cash were found at his home. Pedro Álvarez, who for many years headed
the government agency that buys food from the United States, fled the
island before an investigation against him was completed, and is
currently believed to be living in Florida. The former CEO of the
national cigar producer and several of its senior executives are in prison.

Despite Mr Marambio's ties to the elder Mr Castro, his turn was bound to
come. The government accused Rio Zaza of bribing staff and ministry
officials, taking a lax attitude towards theft and overcharging the
Cuban government for payments to its suppliers—some owned by Mr
Marambio. He has not been seen on the island since 2009, and refused to
comply with the government's order for him to return last year, telling
a Chilean radio station that "there's a new government in power made up
of people with few ethics and scruples" and that he was "being
persecuted by a bunch of thugs". He did not send a lawyer to represent
him at the trial. The Cuban authorities instead provided him with one of
their own, making the verdict a foregone conclusion.

For the president, an even harder task than rooting out corruption may
be replacing the crooked officials he ousts. So far, Mr Castro has
mainly drawn on his former colleagues in the Cuban army. GAE.SA, a
holding company that functions as the military's business arm, has been
a prime beneficiary, and is now thought to control around 40% of the
country's economy. Its president, Luis Alberto Rodríguez
López-Calleja—who is also Raúl Castro's son-in-law—was appointed to the
Communist Party's Central Committee at the recent party congress.
Whereas Fidel Castro would occasionally trust somewhat maverick
businessmen, General Raúl Castro is sticking to what he knows.

http://www.economist.com/blogs/americasview/2011/05/corruption_cuba