British fund executives to go on trial in Cuba

Exclusive: British fund executives to go on trial in Cuba

Reuters

By Marc Frank



HAVANA (Reuters) - The two top executives of a British investment fund

in Cuba are scheduled to go on trial in Havana on Thursday, according to

sources close to the accused men, as part of an unprecedented government

crackdown on corruption involving foreign businessmen.



In the second trial of foreign executives on the Communist-run island in

a week, Amado Fakhre, a Lebanese-born British citizen and chief

executive officer of Coral Capital Group Ltd, faces various bribery

charges related mainly to the fund's import business.



Chief Operating Officer Stephen Purvis, who headed up various investment

projects, reportedly faces lesser charges, such as operating outside the

bounds of the fund's license.



Fakhre has been jailed since the company's offices were raided and

closed in October 2011. Purvis was arrested and imprisoned in March 2012.



"We are providing consular assistance to them and their families and a

consular official will attend the trial," a British diplomat said.



The trial has not been announced to the public or media.



Coral Capital was one of only a handful of small foreign investment

funds in Cuba. It was caught up in a dragnet of Cuba's international

trading sector, which was part of a broader crackdown on corruption by

President Raul Castro, who replaced ailing brother Fidel in 2008.



In September 2011 authorities shut down one of the most important

Western trading companies in Cuba, Canada-based Tokmakjian Group, after

doing the same in July to another Canadian trading firm, Tri-Star Caribbean.



The closed trial of Sarkis Yacoubian, originally from Armenia and the

owner of Tri-Star Caribbean, was held last week. An associate of

Yacoubian, Lebanese citizen Krikor Bayassalian, was a co-defendant.



They were charged with bribery, tax evasion and damaging the economy. If

the court affirms their guilt, sentencing is expected within a week or so.



"The arrests are aimed at shaking the tree to get to corrupt Cuban

officials and purchasers," a local expert on state-run companies said,

asking that his name not be used.



Dozens of Cuban officials and businessmen have reportedly been arrested,

tried and sentenced in the anti-corruption sweep.



A number of other foreigners and Cubans who worked for the three foreign

companies remain free but cannot leave the island because they are

considered witnesses in the cases.



Cuban officials and lawyers for the defendants could not be reached for

comment.



Cuba's state-run media has not yet reported the trials, nor mentioned

the arrests and crackdown on foreign trade.



A SYSTEMIC PROBLEM



"If the Cuban government intends that such penalties serve as effective

deterrents to corruption, and not as deterrents to legitimate foreign

investment, it should clarify the precise nature of the alleged

infractions and make the entire legal process more transparent," said

Richard Feinberg, a non-resident senior fellow of the Washington-based

Brookings Institution and author of a number of studies on Cuba's economy.



The arrests were unprecedented for Cuba, where foreign businessmen

suspected of corruption are usually deported, and are viewed as a

measure of President Castro's determination to clean up a vice he views

as a threat to Cuba's socialist system.



But repression alone will do little, many observers believe.



"Real change would mean not only pursuing enforcement actions but also

coming up with meaningful internal controls for Cuban officials with

discretion in procurement and the licensing of business activity," said

Jose Gabilondo, associate professor of law at Florida International

University in Miami.



"These officials are paid little and face enormous temptation to cut

corners for the sake of themselves and their families," he said.



Coral Capital, registered in the British Virgin Islands in 1999, was

best known in Cuba as the joint venture partner in Havana's upscale

Saratoga Hotel and another hotel complex on the resort key of Cayo Coco.

It had plans to build golf courses and related real estate developments

near Havana, for which it had begun raising equity capital.



The fund diversified into trade financing and importing heavy equipment

and other merchandise and this, rather than its real estate ventures,

may have led to its problems, foreign business sources said.



The company represented various international brands in Cuba, among them

Liebherr Earth Moving, Yamaha Motor Corporation and Peugeot Motorcycles,

according to its now defunct Internet site.



The site said Coral Capital had invested some $75 million in Cuba, with

more than $1 billion of projects in the works.



(Reporting by Marc Frank; Editing by Jeff Franks and Bill Trott)



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