Cuba arrests telephone executives in corruption sweep

Cuba arrests telephone executives in corruption sweep
Tue Aug 9, 2011 2:51pm EDT
* ETECSA executives arrested, one defected in Panama
* President Raul Castro has targeted white-collar crime
* Corruption probes put business class under microscope
By Marc Frank

HAVANA, Aug 9 (Reuters) - Cuba arrested senior executives at state-run
telephone company ETECSA in an anti-corruption sweep at one of the
communist-run country's top businesses, according to sources with
knowledge of the scandal.

Several executives at Empresa de Telecomunicaciones de Cuba SA were
arrested in July while the company's president Maimir Mesa and most of
its vice presidents have been suspended at least temporarily and sent
home, the sources said.

ETECSA, which is owned by Cuban state and military companies, is one of
the 10 largest enterprises in the country, with annual revenues well
over $500 million.

"Five or six department directors and deputy directors, and maybe a vice
president, have been arrested so far and the vice president of
logistics, who was in Panama when the investigation began, decided not
to return," one source said.

"But the investigation has just begun and many more people might be
involved," the source said, adding that a retired company vice president
was brought to Havana for questioning.

The sources said two separate investigations underway at ETECSA, one
involving its booming cellular phone business and the other into a
submarine fiber optic cable financed largely by Venezuela that links
Cuba to that country.

The $70 million cable project, designed to circumvent U.S. efforts to
deprive the island of a ground-based connection to the Internet, was
supposed to be activated in July, but has reportedly run into technical
difficulties.

The number of cellphones in use in Cuba trebled between 2008 and 2010 to
more than one million, according to the government's statistics office.
Mobile phone cards can sometimes be purchased on the black market.

CASTRO BATTLING CORRUPTION

President Raul Castro, who is locked in a battle with the state
bureaucracy as he tries to decentralize government and move Cuba in a
more market oriented direction, has made fighting white-collar crime a
top priority.

Soon after succeeding his ailing brother Fidel in 2008, Castro created
the Office of the Comptroller General and put the comptroller on the
ruling Council of State.

Hundreds of senior Cuban Communist Party officials, state managers and
employees have lost their jobs and often their freedom in the shake-up
that has followed.

It has included the breaking up of high-level organized graft in the
civil aviation, cigar and nickel industries, and at least two ministries
and one provincial government.

Cuba's state-run media does not cover corruption scandals, but at times
announces verdicts once cases are concluded.

Nevertheless, when high level officials are involved, word filters onto
the streets with various versions of the details.

According to Western diplomats Cuba does not suffer from drug-related
corruption like many of its Latin American and Caribbean neighbors, but
corruption is rife in foreign trade and offshore companies and operations.

"A big problem is there is no transparency, no open bidding when Cuba
goes to market," a Western businessman said, asking that his name not be
used.

After 20 years of economic crisis, and with the average state wage at
the equivalent of $18 a month, almost all Cubans engage in illegal
activities to survive, setting the scene for the business class to do
the same.

Top state managers make around $50 to $100 equivalent per month, barely
enough to feed their families, even as foreign consumer goods tempt them
at state-run hard currency shops. (Editing by Jeff Franks and Anthony
Boadle)

http://www.reuters.com/article/2011/08/09/cuba-telecoms-corruption-idUSN1E7780N620110809