Cuban court files give glimpse of bribery claims against Tokmakjian

Cuban court files give glimpse of bribery claims against Tokmakjian
DANIEL TROTTA
HAVANA — Reuters
Published Friday, Oct. 03 2014, 8:00 AM EDT
Last updated Friday, Oct. 03 2014, 8:01 AM EDT

Dinners at fancy restaurants, week-long family vacations and a
flat-screen TV: the bribes that Cuba accused Canadian businessman Cy
Tokmakjian of giving Cuban officials were modest by corruption standards
in many developing nations.

But they have cost him dearly.

Tokmakjian, 74, was sentenced last week to 15 years in prison and
$100-million of his company's assets were seized.

A Cuban court ruled that the gifts were used to help direct lucrative
contracts to Tokmakjian's transportation company, which over 20 years
became one of the most successful foreign companies on the communist-led
island.

The 168-page sentencing document, reviewed by Reuters, portrays a
pervasive pattern of Tokmakjian wooing public officials and executives
of his joint venture partners. The document, signed by five judges of
the Cuban court, was based on their findings from a two-week trial in
June and provided the basis for punishment.

Tokmakjian, who was arrested three years ago, has denied wrongdoing and,
according to his son, refused to consider any deal that might free him
in return for admitting guilt.

His company, the privately held Concord, Ont.-based Tokmakjian Group,
says prosecutors failed to prove any of the charges in what it called a
"show trial" and that the company founder was not allowed to mount a
robust defense.

The Tokmakjian Group declined Reuters requests to address most of the
specific allegations in the court document. But it said it went to trial
equipped with witnesses to refute the allegations, audited financial
records, Cuban legal experts, and Canadian officials.

Then, the company said, it was thwarted by the court.

"Cy never got to defend himself," said Lee Hacker, vice-president of
finance and company spokesman. "Almost all of the witnesses we wanted to
call were denied appearance by the Cuban court. We did not have a trial
by any standard. Cy was not afforded the opportunity to refute what they
have accused him of."

The investigation into his company's dealings in Cuba also landed 16
other people in prison, including two Canadian employees, five Cuban
employees, and nine other Cubans who were government officials or
employees of state enterprises, some of them in joint ventures with the
Tokmakjian Group. They received prison terms ranging from 6 to 20 years.

The case has offered a peek into the Cuban government's view of
corruption. It has also strained Cuba's relations with Canada, a major
trading partner, and could deter foreigners from investing in the
Caribbean island.

Peter Kent, a member of Canada's parliament from the Toronto area,
called the verdict "outrageous" and a "very strong reminder that
international investors should beware" of Cuba.

A number of questions remain unresolved about the case. Chief among them
is whether Tokmakjian was guilty as charged or whether Cuba had another
agenda in pursuing a case against a businessman previously favored by
top Cuban officials.

Tokmakjian's company says it believes Cuba wanted to destroy the
business and take its assets.

Tokmakjian was once hailed as a model business partner who supplied
crucial transportation equipment during a severe economic crisis after
the collapse of the Soviet Union. He even received a business award from
Fidel Castro.

President Raul Castro launched a crackdown on graft after he succeeded
his older brother Fidel in 2008. Dozens of Cubans working at government
agencies and state companies, as well as several foreigners, have faced
charges of corruption or other economic crimes.

Western diplomats and foreign business people say it has been standard
practice to offer small cash bribes to get Cuban officials to open a
file or move paperwork through the system.

The court said individual gifts were just part of a wide-ranging scheme
in which Tokmakjian persuaded officials to bend or break the law in his
favor. With business flowing his way, he then took measures to cover up
his illicit dealings and evade taxes, the court said.

Tokmakjian was found guilty of bribery, damaging the Cuban economy,
illicit economic activity, currency trafficking, fraud and tax evasion.
Cuba put a number on the damage to its economy: $91-million.

The Tokmakjian Group supplied vehicles, motors, parts and construction
equipment to Cuba's government and had joint ventures with state
companies under the direction of the sugar, industry and tourism ministries.

The company did an estimated $80-million in annual business in Cuba, one
of at least 11 countries in the Americas, Europe and Asia where it has
operated.

Tokmakjian directed subordinates to pay bribes, the court said, using
gasoline and travel expense reports to account for the money. He also
allegedly made payments to foreign credit cards held by his Cuban
beneficiaries in an attempt to avoid detection.

One Cuban trade official declined to comment on the trial but said
investors should not get the wrong message. Cuba, he said, is still open
for business.

"What we have is a clear message that in Cuba there is zero tolerance
for corruption and illegality," Pedro Luis Padron, the director of U.S.
and Canada trade policy for Cuba's foreign trade and investment
ministry, told Reuters. "This is a battle every country in the world is
fighting, including Canada itself."

Tokmakjian generally aimed higher than common bureaucrats, according to
the court's sentencing document. Even so, higher level officials'
salaries are not more than $25 a month, although like other Cubans they
receive cheap housing, subsidized food and other welfare benefits.

Among those the court said received Tokmakjian's gifts was Cuba's
vice-minister of the sugar ministry, Nelson Labrada. He was the
highest-ranking of the 14 Cuban defendants and sentenced to 20 years.

According to the court document, Tokmakjian courted him in 2008, paying
for a week-long vacation in the Cuban beach resort Varadero that
included the official's wife and children. The vacations were repeated
in 2009 and 2010, costing around $1,200 each time.

Sometimes using subordinates to pay for the treats, Tokmakjian would
invite Labrada to expensive dinners and take him for a cruise on a
yacht. He bought him a plastic pool and a barbecue. When the barbecue
broke after three months, he replaced it, the court document said.

It also said Tokmakjian paid for similar vacations for Manuel Fernandez,
the vice-president of a state company financing Cuba's sugar industry.

Labrada and Fernandez have not commented publicly on the charges against
them. Fernandez's attorney said he could not immediately comment on the
case and Labrada's lawyer could not be reached.

Tokmakjian's companies generated $11.7-million in sales to the sugar
ministry from 2009 to 2011 plus another $4.7-million in sugar-related
business in 2010 and 2011.

The court said that when Labrada went on a trip to Canada, a Tokmakjian
subordinate took him shopping, buying him a 24-inch flat-screen
television. He took both sugar officials to Niagara Falls and invited
them to a casino in Toronto, buying chips for them to play with.

Each ended up winning $2,500 at the gaming tables, the court said. Now,
like Tokmakjian, they are facing long prison terms.

Source: Cuban court files give glimpse of bribery claims against
Tokmakjian - The Globe and Mail -
http://www.theglobeandmail.com/news/world/cuban-court-files-give-glimpse-of-bribery-claims-against-tokmakjian/article20907137/