Cuba targets military firm in corruption probe

Cuba targets military firm in corruption probe
By Marc Frank
HAVANA | Tue Dec 13, 2011 5:43pm EST

(Reuters) - Cuba has detained top executives of the powerful
military-run Tecnotex company, broadening a corruption investigation
that has already shuttered three foreign firms, foreign business sources
told Reuters.

Tecnotex is one of the most important trading companies on the
Communist-run island, purchasing equipment, technology, construction
materials and other goods for a myriad of military-owned firms in the
civilian sector of the economy.

Tecnotex's director Fernando Noy was among those arrested, according to
a foreign businessman who deals with the company. "They went right into
the Tecnotex office and took Noy out in handcuffs," he said. Other
sources also said Noy was detained.

The reported arrest follows that of the chief executive officers of one
British and two Canadian companies along with a number of their Cuban
employees and purchasers for state-run firms - all of whom had dealings
with Tecnotex, according to the sources. The chief executives remain in
custody.

Noy is a military officer and is well-known within Cuba's business
world. His reported arrest could not be confirmed with Cuban authorities.

However, the company told callers that Noy no longer worked for Tecnotex
and had been replaced by Belkis Mir Verdura. The firm's commercial
director has also been removed while a deputy sugar minister, arrested
in October, remains behind bars in connection with the probe.

A crackdown began when President Raul Castro succeeded his older brother
Fidel as president in 2008 and said widespread theft and corruption had
to be eliminated because it contributed to Cuba's chronic economic woes.

It coincided with reforms to strengthen Cuba's socialist system. Dozens
of Cubans have been jailed, including former government officials and
top executives of state companies.

ANTI-GRAFT FIGHT

Cuba's armed forces have been active players in the economy for years
through their holding company Grupo de Administracion Empresarial S.A.
(GAESA), which is headed by President Raul Castro's son-in-law, Colonel
Luis Alberto Rodriguez.

Western diplomats and businessmen believe GAESA's businesses, which
included Tecnotex, control as much as 40 percent of Cuba's foreign
exchange revenues.

The precise allegations against the former Tecnotex director and the
foreign company CEOs, who have yet to be charged, are not known,
diplomats said. Their arrests have not been reported in Cuba's state-run
media.

"In the face of violations of established legality there is no
alternative but to resort to the Attorney General's Office and the
courts, as we have already begun to do, in order to ensure that
offenders are held accountable, whoever they might be, because all
Cubans, without exception, are equal before the law," Castro said in an
August speech to the National Assembly.

Transparency International, considered the world's leading anti-graft
watchdog, rates Cuba 61 out of 183 countries in terms of managing the
vice, ahead of all but eight of 33 nations in Latin America and the
Caribbean.

Castro established a Comptroller General's Office in 2009 and it has
attacked high-level graft in government, food processing, civil
aviation, telecommunications and the cigar and nickel industries.

Castro has been less successful, however, in tackling problems such as
low salaries and lack of transparency, which contribute to the problem,
according to foreign diplomats and businessmen.

There is no open bidding in Cuba and business managers and their
employees who handle multimillion-dollar contracts earn the equivalent
of just a few dollars per month.

Cuban officials blame U.S. sanctions, imposed in the 1960s, for the lack
of open bidding, charging their arch-enemy with systematically scaring
off any foreign company interested in doing business with the country.

(Editing by Jack Kimball and Kieran Murray)

http://www.reuters.com/article/2011/12/13/us-cuba-corruption-idUSTRE7BC1P220111213