Author Archives: Frank Mark

Cuba crackdown sees foreign companies exit

Posted on May 24, 2012 by Arch Ritter

Financial Times, May 21, 2012 5:29 pm

Cuba crackdown sees foreign companies exit

By Marc Frank in Havana

Tighter restrictions following President Raúl Castro’s crackdown on state corruption and inefficiency is leading foreign businesses to leave Cuba, jeopardising the investment that his reform programme needs if it is to succeed.

The number of foreign joint ventures in Cuba has now fallen to no more than 240, according to government insiders, versus 258 in 2009, the last official figures available, and more joint ventures have closed than opened since the reform package was approved last April.

One of the latest companies to go is Unilever, the Anglo-Dutch consumer giant, after a 15-year joint venture expired and a dispute over the controlling interest in a new venture could not be resolved, a local manager said, asking not to be named.

At the same time, an offshore oil find that Havana had hoped would lead to increased access to international capital and less dependency on socialist ally Venezuela has so far proved fruitless after Repsol, the Spanish oil company, said late last week that the first of three test wells drilled in Cuban waters had no oil.

It was hoped that sweeping reforms adopted by the Communist party last year would open the way for significant foreign investment. But the government has instead re-examined existing agreements and stalled new projects, foreign business sources said.

Four joint ventures controlled by two Canadian trading firms are in the process of being “liquidated”. The top two executives in a British fund, Coral Capital, which says it has invested $75m in Cuba – much of it in the luxurious Saratoga hotel – are being held, although not charged with any offence, on suspicion of corrupt practices. Another target – Max Marambio, a Chilean businessman and friend of Fidel Castro – fled the country after being charged with corruption last year.

Although Mr Castro’s reform plan promised a review of cumbersome foreign investment procedures, promoters of several golf course projects report they are still waiting for approval, despite government promises to sign off in 2011, as are various companies that have been negotiating sugar ventures since 2006.

A multibillion-dollar plan to expand a refinery in central Cienfuegos and build a petrochemical complex around it, announced years ago, has also yet to materialise.

“I like to think the government is cleaning up the house before opening the front door,” Cuban economist Juan Triana told a gathering of British and Canadian businessmen last week.

One western diplomat said: “Cuba is reviewing the investment terms and some officials have said they want to fix mistakes made when the country first opened up to foreign investment in the 1990s, closing contracts that were not beneficial enough.”

Most experts and diplomats believe Mr Castro’s plans to lay off up to 1m state workers and lift the country out of its economic malaise will fail without large flows of direct investment, or a major oil find in the Gulf of Mexico.

The need for foreign partners is especially acute given the uncertain future of Cuba’s cancer-stricken ally, Venezuelan president Hugo Chávez, who provides the island with some 115,000 barrels of subsidised oil a day and faces a presidential vote in October, which he could lose.

“While it is far from clear what the future holds for Chávez and Venezuela, Cuba must be ready for it,” said John Kirk, a Latin America expert at Dalhousie University in Halifax, Canada.

“Given the continued US will to stymie any access to international lending organisations, the only source of significant capital around is still going to be foreign and private,” he added.

Of the dozen or so multinationals operating in Cuba, Telecom Italia left in 2011 while those remaining include Nestlé (bottled water), Sol Melia (hotels), Pernard-Ricard (rum), Anheuser-Busch InBev (beer), Imperial Tobacco (cigars) and Bouygues Batiment (construction).

If Havana hoped an offshore oil find would strengthen its position, it may now have to think again after Repsol said on Friday that the test well it drilled to 4,500m below the seabed was dry. Russia’s Gazprom and Malaysia’s Petronas will soon drill a second well, and Venezuela’s PDVSA is tentatively scheduled to drill a third. The US Geological Survey has estimated that Cuban waters could contain 5bn barrels of oil.

 

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Mark Frank: “Cuba drags feet on foreign investment”

Posted on May 16, 2012 by Arch Ritter

* No increase in foreign investment despite reforms

* Potential new partners wait for answers

* Existing ventures under scrutiny

Camilo Cienfuegos Refinery

By Marc Frank

HAVANA, May 15 (Reuters) – Cuba’s reform plans to attract more overseas investment are off to a slow start as the government focuses more on regulating existing foreign joint ventures than encouraging new ones, businessmen and diplomats say.

In fact, Cuba has closed more joint ventures than it has opened since the ruling Communist Party adopted wide-ranging economic reforms a year ago, and remains far off highs reached in the 1990s, according to official reports.

The list of endangered or terminated joint ventures includes one big name, Unilever PLC, the Anglo-Dutch consumer giant, and a number of others that have operated in the country for 15 years or more.

Cuba’s investment reform plan announced last year spoke positively of foreign investment, promised a review of the cumbersome approval process and stated that special economic zones, joint venture golf courses, marinas and new manufacturing projects were planned.

Most experts believe large flows of direct investment will be needed for development and to create jobs if the government follows through with plans to lay off up to a million workers in an attempt to lift the country out of its economic malaise.

It will be particularly critical given the health of cancer-stricken ally Venezuelan President Hugo Chavez, who has championed close cooperation between Cuba and oil-rich Venezuela.

While the reform plan built up hopes of an opening to foreign capital, it also made clear that existing and future investments would be subject to “rigorous controls” on “regulations and procedures, as well as the commitments assumed by foreign partners.” This part of the program has been vigorously carried out, according to both business and Cuban sources, with a review of the country’s approximately 240 foreign investment projects recently concluded.

That number is a decline from the 258 projects Foreign Trade and Investment Minister Rodrigo Malmierca reported at the close of 2009 and way down from the 700 Cuba had a decade ago.

The issue in part appears to be the result of old ideological habits dying hard, said Geoff Thale, program director at the Washington Office on Latin America.

Other reforms, such as encouraging more self employment and private farming, have been easier to implement.

“From the point of view of the state, an opening to foreign investment seems like a much bigger step to take in changing the economic model than does the liberalizing of domestic agriculture or current opening to small business,” Thale said.

VENTURES CLOSE

Unilever PLC, the Anglo-Dutch consumer giant, is the latest and best known of the foreign firms to pack its bags.

The company’s 15-year, 50-50 economic association has expired and a dispute over the controlling interest in a new venture could not be resolved.

“We wanted 51 percent of the new venture and so did the Cubans. At this point we are leaving, even though some discussion is still going on,” a company manager said, requesting anonymity.

Israeli investors, operating out of the Panama-based BM Group, recently pulled out of their longstanding juice processing business after new contract negotiations broke down, according to the business sources.

Investors in Havana’s container terminal are leaving as Cuba prepares to open a new terminal at Mariel, diplomats said.

Several ventures controlled by two Canadian trading firms and British investment fund Coral Capital under investigation for alleged corrupt practices are in the process of liquidation. Th e ir offices were closed last year and their top executives arrested as part of the crackdown on corruption.

SOCIALIST INVESTMENT

Following the election in Venezuela in 1998 of president Hugo Chavez, an avowed socialist, Cuba turned away from encouraging private investment in favor of state-funded cooperation with its new oil-producing ally.

Venezuela has since become Cuba’s biggest economic partner, with some 50 joint ventures signed over the last 10 years, although many are still only on the drawing board.

Cuba depends on Venezuelan oil to meet its domestic energy needs and Chavez’s uncertain future makes it more imperative that the Cuban government pick up the pace if it wants more foreign investment, said a western diplomat.

“The Cubans may be allergic to foreign investment, but the clock is ticking, and concessions on this front are inevitable,” the diplomat said.

“Instead, they are going over existing companies with a fine-tooth comb. It is hard to understand. Perhaps they are waiting for oil to be discovered offshore,” she said.

Other investment projects remain up in the air. A dozen golf course projects report no progress despite government promises to sign off after years of negotiations, as do companies negotiating ventures with the sugar industry since 2006.

Billion dollar plans to expand refineries and build a petrochemical complex around a refinery in central Cienfuegos, announced years ago, have yet to be signed off on.

On the other hand, in perhaps the most promising joint venture in decades, offshore oil exploration began in earnest this year with foreign partners planning at least three wells drilled by a massive, Chinese-built rig now parked 20 miles off the coast in the Gulf of Mexico.

Camilo Cienfuegos Refinery

$900 Million Brazil-financed Port Development at Mariel

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SPECIAL REPORT: “Cuba’s little capitalists are ready to rumba”

Posted on May 4, 2012 by Arch Ritter

Fri May 4, 2012 3:30pm IST

By Jeff Franks

HAVANA May 2 (Reuters) – When Ojacy Curbello and her husband opened a restaurant at their home in Havana in late December, not a single customer showed up.

It was a disheartening debut for Bollywood, the first Indian restaurant in the Cuban capital. Curbello worried that their dream of cashing in on recent reforms in this Communist-run country would collapse.

The next day customers began trickling in. As word spread, the trickle became a flood. Many nights the couple had to turn people away or serve them at the family dining table and call in extra help. Today they are planning to increase the 22-seat capacity by expanding their 1950s home and putting tables and a bar in what is now their bedroom.

“It has been amazing how quickly it has taken off,” said Curbello, still looking slightly stunned. She sat with her husband, Cedric Fernandez, a Londoner of Sri Lankan descent, in the main dining area, hung with prints of Indian figures.

Bollywood’s story is an example of how life is slowly changing in Cuba since President Raul Castro launched a string of limited economic reforms in 2010.

Continue reading Here: Mark Frank SPECIAL REPORT Cuba’s little capitalists are ready to rumba

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Cuba: En Route to Becoming a Normal Mixed-Market Economy?

Posted on April 25, 2012 by Arch Ritter

Esteban Lazo Hernandez

By Marc Frank

HAVANA (Reuters) – Cuba will move nearly 50 percent of the state’s economic activity to the “non-state” sector, a senior Communist party official said at the weekend, the latest signal the island is headed toward a mixed economy.

Cuban President Raul Castro has hammered away at the need for the state to become more efficient and get out of secondary economic activity such as farming and retail services since taking over for his ailing older brother, Fidel, in 2008.

China and Vietnam adopted similar measures in the last few decades of the 20th century as they began to shift to what is known as market socialism.

“Today, almost 95 percent of gross domestic product is produced by the state. Within four or five years between 40 percent and 45 percent will result from different forms of non-state production,” a long-time Communist party political bureau member, Esteban Lazo Hernandez, said in a speech to the Havana city government.

Lazo, who is considered by many to be the Communist party’s top ideologue, said the increased private business and the tax revenue the move would generate meant local government needed to improve its efficiency in order to cope with the shift, according to clips of his speech broadcast by state-run television on Sunday.

The Cuban Communist party approved a comprehensive plan to revamp its Soviet-style command economy in April of last year.

The 311-point document calls on authorities to support and encourage, “mixed-capital companies, cooperatives, farmers with the right to use idle land, landlords of rental properties, self-employed workers and other forms that contribute to raise the efficiency of social labor.”

The plans envision the reduction of the state workforce by at least 20 percent, or a million workers, the elimination of subsidies in favor of more narrowly targeted welfare programs and granting state-run companies more autonomy.

“The question will be to see how this ‘non-state’ production will be split between real private property and cooperatives, and how independent from the state the cooperatives really are,” a Western diplomat said.

Since Castro took office the number of self-employed, often a euphemism for small businesses, has doubled to more than 300,000, and some 200,000 people have taken advantage of a land grant program to encourage small farming.

Small state retail services – from barber shops and beauty parlors to taxis and tiny cafeterias – have already been leased to employees. But local economists said a major shift to the “non-state” sector, like the one outlined by Lazo over the weekend, meant larger chunks of the state’s economic activity would be peeled off.

“Such a shift means not just tiny mom-and-pop operations and small businesses such as restaurants and hostels, but mid-sized companies operating as cooperatives and individually owned,” said a local economist who asked his name not be used.

Skeptics question how quickly Cuba’s centrally planned economy can manage such a radical transformation. “I think a shift of this magnitude in such a short time period would be highly unlikely for Cuba,” said William Messina, agricultural economist with the Food and Resource Economics Department at the University of Florida.

“Even though Raul is trying to implement a number of changes that could move the country in this direction, the bureaucratic resistance that there appears to be (at least within agriculture) will certainly slow the process,” he added.

(Editing by David Adams and Leslie Adler)

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Association for the Study of the Cuban Economy, 2011 Conference Proceedings

Posted on February 2, 2012 by Arch Ritter

ASCE, the Association for the Study of the Cuban Economy has just published the Proceedings of its 2011 Conference. The Proceeding include a wealth of information and analyses. All articles for 2011 and indeed all the Conference proceedings for the last 21 years are freely available on the ASCE Web Site

Below is the Table of Contents for the 2011 Proceedings with all articles hyper-linked to the original ASCE source.

Preface

Conference Program

Table of Contents

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Marc Frank: US Frets at Cuba Oil Exploration

Posted on January 18, 2012 by Arch Ritter

Financial Times, January 18, 2012

By Marc Frank in Havana

A huge oil drilling platform will sink deepwater wells off Cuba next week in a move that has caused angst in the US at the prospect of significant oil discoveries that could alter Cuba’s economic future and Havana’s relations with Washington.

Cuba’s largely unexplored share of the Gulf of Mexico is thought to contain billions of barrels of oil and gas equivalent and has already drawn more foreign investment than any other sector of the economy.

“The discovery of even modest amounts of oil would be significant for Cuba,” said Ricardo Torres Perez, deputy director of Havana University’s Center for the Study of the Cuban Economy.

“Cuba would become less energy dependent and might eventually become an energy exporter; new credit and foreign investment would materialize, along with refining and service jobs.”

A significant discovery would almost certainly buy time for President Raúl Castro, as he works to reform the Soviet-style economy. In addition to environmental worries – as the drilling would unfold about 70 miles from Florida’s coast – this possibility has prompted vehement criticism from some US conservatives.

Ileana Ros-Lehtinen, who chairs the House foreign relations committee, has sought to introduce legislation that would place sanctions on participating foreign companies.

“A state sponsor of terrorism is poised to achieve a tremendous economic boon by entering the oil business and endangering US waters to boot,” the Republican congresswoman said this month.

“It is deeply disappointing that the Obama administration appears content to just watch that happen,” she added. Adding extra piquancy to the controversy is its timing: the Republican party’s Florida primary election take place on January 31.

The $750m platform is owned by Italian oil giant Eni’s offshore unit Saipem and assembled in China using less than 10 per cent of US technology to accommodate sanctions that also bar US companies from participating. It is contracted for at least six months.

A first consortium grouping Spain’s Repsol, Norway’s Norsk Hydro and India’s ONGC Videsh will drill two wells. A second consortium, made up of Malaysia’s Petronas and Russia’s Gazprom, will drill subsequent wells.

Despite the sanctions, Washington has engaged both with these foreign companies and the Cuban government after the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling recommended such co-operation to protect “fisheries, coastal tourism and other valuable US natural resources”.

US officials inspected the rig in Trinidad and Tobago this month before it left for Cuban waters, and in December held talks with Cuba, Mexico and the Bahamas in Nassau on emergency planning in the gulf. A second round of talks is scheduled for February.

Experts are divided on whether significant oil discoveries would spur or slow Cuban economic reforms.

“With or without oil, the Cuban economy sorely needs an environment in which businesses and individuals feel confident to invest,” said Arturo Lopez-Levy, a Cuban academic at the University of Denver.

But most agree the prospect has brought Havana and Washington closer as they look to safeguard their mutual economic and environmental interests.

“The meeting between US and Cuban officials on environmental co-operation … is an example of new bridges of communication, which if it wasn’t for oil and gas development would not have happened,” said Jorge Piñón, former president of Amoco Corporate Development Company Latin America and now a research fellow at Florida International University.

Just as “ping-pong diplomacy brought the US and China together, oil might very well bring Cuba and the US together”.

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Mark Frank: “Cuba lifts ban on trade in property”

Posted on November 4, 2011 by Arch Ritter

From the Financial Post, November 3, 2011

Havana’s Pre-Reform Housing Market Place on Paseo del Prado (for “Permutas” Plus…  ); Photo by Arch Ritter, 2009

Cuba has formally lifted a five-decade ban on residents buying and selling property as the communist government of President Raúl Castro makes its most significant move yet to liberalise the island’s Soviet-era economy.

For the first time since the 1959 revolution, Cubans will be able to sell property to other Cuban residents without government approval. The changes, already approved by the National Assembly in August but now formalised, come into effect on November 10.

The easing of restrictions on property ownership is likely to reshape Cuban cities, spur real estate development and speed renovation of Cuba’s picturesque but dilapidated housing stock. It is also expected to reconfigure Cuban conceptions of class as some homeowners cash in their properties and areas of Havana are gentrified.

“I hope the new law gets rid of so much paperwork, bureaucracy and other problems that simply lead to corruption. If you can now move without months and years of effort and paying people off, we will be content,” said Maritza, a 35-year-old food service worker.

Previously, any Cuban who wanted to swap their home for another had to penetrate thick layers of bureaucracy. Houses were also confiscated by the state if a Cuban moved abroad. Now by contrast, the new rules state that the purchase, sale, donation and trading of houses will be recognised even in cases of “divorce, death or permanent departure from the country”.

The measure is the latest and most dramatic signal that the authorities are serious about implementing reforms adopted this year. Last month, the government ended another ban, also dating from 1959, on the sale of cars. State companies have been given more autonomy, state payrolls and subsidies have been trimmed, and retail services liberalised.

Analysts say that home sales could free up capital needed to jump-start small businesses. Cubans living abroad, especially in the United States, who remit some $1bn a year to the island, have proved instrumental in financing and supplying thousands of small businesses since the sector was liberalised last year. They are now expected to invest in housing through their relatives, pumping millions of dollars into the local economy and helping to renovate the crumbling housing stock.

“This change is another example of the failure of ‘big bang’ models to predict the evolution of the Cuban economy,” said Jose Gabilondo, associate professor of law at Florida International University, said. “Changes in the rules of the game are already under way.”

However, the new housing law dashes hopes that the local real estate market might open up to large domestic or foreign investment as it continues to prohibit foreigners from owning property unless they are permanent residents. A special exception is expected in the next few months for golf course and other tourist developments currently under negotiation with various foreign companies.

Every property transaction will require a notary, with payment through a state bank, and both the seller and buyer paying a 4 per cent tax.

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Mark Frank: “Cuba to grant much larger plots to farmers”

Posted on October 20, 2011 by Arch Ritter

By Marc Frank;  Wed Oct 19, 2011

HAVANA (Reuters) – Cuba will greatly expand the amount of land granted to private farmers, an agriculture official said on Wednesday, as the Communist-run country struggles to boost productivity in the sector.

Under new regulations expected to be approved this year, productive farmers will be eligible for temporary land grants covering as much as 165 acres (67 hectares), up from the current maximum of 33 acres (13 hectares) mandated in a 2008 decree, said William Hernandez Morales, the top agricultural official in the eastern province of Santiago de Cuba.

“Those persons or lease holders that have really shown they can produce will be able to increase their land to five caballerias,” he said on state-run radio. A caballeria is an old land measure still used in Cuba equivalent to 33 acres (13 hectares).

The state owns more than 70 percent of the arable land on the Caribbean island, of which some 50 percent lies fallow and the remainder produces less than the private sector.

A local agricultural expert said private farmers produce 57 percent of the food on only 24 percent of the land.

President Raul Castro has made increasing food production a top priority since taking over from his brother Fidel Castro in 2008, but with poor results.

In one of his key reforms, the government has turned over 4 million acres (1.6 million hectares) of land to 143,000 farmers and would-be farmers since October 2008, but farmers have complained that the small size of the plots and other restrictions hampered production.

They said bigger plots and a recent measure that makes it easier to employ laborers were positive steps.

“This is special. They should redistribute all the fallow land that’s been overrun with brush,” Roberto Hernandez, a farmer who leased 33 acres in 2009, said in a telephone interview.

“Now the land produces nothing, when it should be producing root vegetables, beans, rice or what have you,” he added.

Central Camaguey farmer Jorge Echemendia agreed.

“This is what they have to do without waiting any longer. I don’t know how they do it, but when the state gives the land to the people they manage to clean it up, even if with their fingernails, and put it into production.”

Castro has also decentralized decision-making, increased prices paid for produce, opened stores where secondary farm supplies such as clothing and tools are sold and promised farmers more freedom to grow and sell their crops.

Agriculture output increased 6.1 percent through June, compared with the same period in 2010, a year that saw a 2.5 percent decline despite the reforms.

Food production remains below 2005 levels and food prices at farmers markets have increased 7.8 percent this year, according to the government. (Editing by Jeff Franks and Mohammad Zargham)

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Cuba closes once powerful sugar ministry

Posted on September 30, 2011 by Arch Ritter

Marc Frank, Reuters
External Link: http://www.reuters.com/article/2011/09/29/food-cuba-sugar-idUSS1E78S0AG20110929

An Aerial View of What is Left of the Australia Sugar Mill, 2011

HAVANA, Sept 29 (Reuters) – Cuba is closing its once powerful Sugar Ministry in favor of a state holding company charged with pulling the sector out of a long decline, official media announced on Thursday.

A government communique said the decision was made at a  meeting of the Council of Ministers on Saturday. “The Council of Ministers, after an analysis of the sector, decided to close the Sugar Ministry as today it carries out no state functions,” it said.

President Raul Castro was quoted as stating the ministry would be replaced by holding company. Castro said 13 provincial companies   would belong to the new holding company with 61 mills, of which  five would close.

Plans to create the new sugar corporation and revitalize the industry by, among other things, allowing foreign investment and closing inefficient sugar mills were first reported by Reuters more than a year ago. The ministry’s demise is the last chapter in the dramatic decline of the sugar industry in a Caribbean island country where sugar was once king but now accounts for around 5 percent of foreign exchange earnings.

Cuba’s fall from once being the world’s biggest sugar exporter, producing 8 million tonnes of raw sugar annually, began with the  collapse of former benefactor the Soviet Union in 1991. Since then, the sector has declined relentlessly to 1.2 million tonnes. The country plans to produce 1.45 million tonnes during the harvest that gets underway in December.

Former Economy Minister Marino Murillo, recently promoted to lead economic reform efforts, said last year plans called for the industry to gradually increase production to around 2.5 million tonnes by 2015. Cuba itself consumes a minimum 600,000 tonnes of sugar annually and has a 400,000 tonne toll agreement with China.

In a painful 2002 downsizing of what was once the island’s flagship
sector, Cuba shut down and dismantled 71 of 156 mills, all 71 built well before the revolution, and relegated 60 percent of sugar plantation land to other uses.

More than 200,000 of the industry’s 400,000 workers were moved to other employment and many rural sugar towns were left stagnating, their closed mills marking the skyline. More mills have closed since then. Only 1.7 million acres (700,000 hectares) of the more than 5 million acres (2 million hectares) once controlled by Cuba’s sugar ministry are currently dedicated to sugar cane.

Repairs Inside the Australia Sugar Mill, November 1994

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Cuba’s Anti-Corruption Drive: Second Canadian Trading Company Shut Down

Posted on September 17, 2011 by Arch Ritter

By Marc Frank | Reuters –
HAVANA (Reuters) – Cuba has shut down one of the most important western trading companies in the country as an investigation into alleged corrupt import-export practices broadened to a second Canadian firm, foreign business sources said on Friday.

State security agents on Friday watched who entered the building in Havana’s Miramar Trade Center where Ontario-based Tokmakjian Group, one of the top Canadian companies doing business on the communist-run island has its offices. The company offices of the fourth floor were sealed with a notice that it had been closed by Cuban State Security. “We received notice on Monday from the foreign ministry and the Council of State, which is the procedure in such cases, to stop all dealings with the Tokmakjian Group,” said an employee of a Cuban company that does business with the firm. Like other people who spoke to Reuters about the clampdown on the company, she asked that her name not be used.

Miramar Trade Center

Tokmakjian Group is estimated to do around $80 million in business annually with the Caribbean island, mainly selling transportation, mining and onstruction equipment. The company is the exclusive Cuba distributor of Hyundai, among other brands, and a partner in two joint ventures replacing the motors of Soviet-era transportation equipment. Company officials were not immediately available for comment.

Cuban authorities shut down Canadian firm Tri-Star Caribbean on July 15 and arrested company president Sarkis Yacoubian. The company, considered a competitor of Tokmakjian Group, did around $30 million in business with Cuba. “Apparently Tri-Star Caribbean was just the beginning. They brought in more than 50 state purchasers for questioning, arrested some of them and broadened the investigation from there,” a western businessman said. “As far as I know up to now just Canadian firms are involved, but you can bet every state importer and foreign trading company in the country is on edge,” he said.

Cuban President Raul Castro has made fighting corruption a top priority since taking over for his ailing brother Fidel in 2008, and in the past year a number of Cuban officials and foreign businessmen have been charged in graft cases.

Tri-Star Caribbean did business with around half of the 35 Cuban state companies authorized to import, from tourism, transportation and construction to the nickel and oil industries, communications and public health. The whereabouts of the man who founded the family business, Cy Tokmakjian, of Armenian heritage, born in Syria and educated in Canada, was not clear on Friday.He was last seen by Reuters a week ago, the day after his offices were sealed, but another western businessman said he had been detained by Cuban authorities. “They picked up Cy on Saturday and I heard his wife and at least one of his kids flew ion to see what they could do,” he said.

Cuba’s state-run media rarely reports on corruption related investigations until they are concluded and those charged are sentenced.
Tokmakjian, a former mechanic, is a self-made millionaire with interests in Canada and other countries besides Cuba, where he is a well known figure. He made his first deal with the Caribbean island in 1988.

President Castro, a general who headed Cuba’s Defense Ministry for 49 years, has cracked down on corruption as part of his efforts to revive the country’s sagging economy, but to date has done little to change the conditions that foster it, such as low salaries and lack of transparency. There is no open bidding in Cuba’s import-export sector and state purchasers who handle multimillion-dollar contracts earn anywhere from $50 to $100 per month.

Castro has moved military officers into key political positions, ministries and export-import businesses and in 2009 stablished the Comptroller General’s Office with a seat on the Council of State. A source close to the Tri-Star Caribbean case said the Comptroller General’s Office had been brought into the investigation, indicating it most likely was targeting high level officials.

Castro’s crackdown has resulted in the breaking up of high-level organized graft in the civil aviation, cigar and nickel industries, at least two ministries and one provincial government. An investigation into the communications sector and another into shipping are also under way.

Cy Tokmakjian

Cy Tokmakjian

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