Decree may affect foreign companies caught up in corruption trials

Decree may affect foreign companies caught up in corruption trials



CUBA STANDARD — Saying it wants to avoid confiscated properties sitting

idle for extended periods of time, the Cuban government published a

decree regulating seizure of personal assets in cases of "illegal

enrichment and drug-related events, corruption, or other unlawful conduct."



Amid a slew of anti-corruption investigations and trials, Decree No.

313/2013 impacts both Cubans and foreigners caught up in the

anti-corruption campaign. The decree, published in the Gaceta Oficial

Aug. 21 and effective Oct. 1, describes procedures to be followed with

assets seized in judicial trials and administrative confiscations.



More than answering questions about what happens to the assets of

foreign companies that have been caught up in less-than-transparent

corruption trials, the publication of the decree raises more questions.



The new regulations talk about "personal goods" and do not mention

corporate assets. Even so, the examples listed in the decree cover a

broad range, from cash to securities and other financial instruments, to

emergency power generators and high-tension cables. They only cover

"movable assets"; however, since there is no outright real estate

ownership by foreigners and foreign companies in Cuba, many of these

companies' assets may be considered "movable."



At least four foreign companies in Cuba — Alimentos Río Zaza, Coral

Capital Group, Tokmakjian Group and Tri-Star Caribbean — have been

subject to corruption investigations and shut down while company

executives were in prison or abroad.



The Cuban government has not announced how it proceeds with the assets

of these companies. Nor has it publicly described the exact nature of

the allegations, causing speculation among foreign businesspeople.



"Your intrepid reporters could usefully investigate the individuals and

cliques who are benefitting from the market reorganization and newly

nationalized assets resulting from this 'war on corruption'," wrote

Stephen Purvis, former chief operating officer of Coral Capital, in a

recent letter to Britain's Economist magazine. Purvis returned to his

native Britain this summer after 15 months at the infamous Villa Marista

prison in Havana, including eight months of interrogations over alleged

acts of corruption. A Cuban court, according to Purvis, finally

convicted and sentenced him on minor issues, such as "breaches of

financial regulations."



In his letter, Purvis suggests that Canadian and European businesspeople

are being harassed by the Cuban government, while their Chinese,

Brazilian and Venezuelan competitors aren't. The Cuban government has

established strategic economic partnerships with China, Brazil and

Venezuela.



In the case of Coral Capital, a Chinese consortium reportedly took over

a golf course project East of Havana that had been planned by the

British group; no public announcement has been made. Coral Capital also

was the foreign joint venture partner in the Saratoga hotel in Old

Havana; Cuba Standard was unable to obtain information as to the current

ownership of that hotel.



The new rules establish that, depending on the type of assets, the

Central Bank of Cuba, and the ministries of Interior, Energy and Mines,

Communications, Health, Agriculture and Domestic Trade will manage the

"deposit, storage and disposal" of these assets. All assets that are not

returned to their owners become state property.



In 2010, Max Marambio, the Chilean citizen who co-owned Alimentos Río

Zaza with the Cuban government, filed legal proceedings against Cuba

before the international court of arbitration of the Paris-based

International Chamber of Commerce (ICC). Marambio, who in 2011 was

convicted of fraud and sentenced in absence by a Cuban court to 20 years

of prison, asked for $143 million in lost profits and $10 million for

"moral damage."



Independent of the criminal proceedings against Marambio by Cuban

courts, in 2012 the arbitration court declared the joint venture between

Marambio and Cuban state company Coralsa dissolved and ordered its

liquidation. In July this year, it found that Coralsa owed him $18

million for "lack of good faith" in the dissolution of Río Zaza.



The court consisted of one judge suggested by Marambio, a Cuban judge,

and a third agreed upon by both parties.



Source: "Decree may affect foreign companies caught up in corruption

trials « Cuba Standard, your best source for Cuban business news" -

http://www.cubastandard.com/2013/08/23/decree-may-affect-foreign-companies-caught-up-in-corruption-trials/