312. Cuba: Struggle Against Corruption Continues

Max Marambio (Left) with Fidel Castro

The Economist, May 6, 2011

Cuba’s recent crackdown on corruption has just claimed its most prominent victim. On May 5th Granma, the state newspaper, announced that a court had given a 20-year sentence in absentia to Max Marambio, a Chilean businessman and sometime close friend of Fidel Castro. Mr Marambio made a fortune through a stake in Rio Zaza, which has long held a near-monopoly selling fruit juice and long-life milk on the island. The report did not spell out the specifics of the conviction, but said said that Mr Marambio and Alejandro Roca Iglesias, the former food minister, had caused “considerable damage to the nation’s economy” and “impaired the ethical behaviour of various officials and subordinate workers”.

Mr Marambio was once the chief bodyguard for Salvador Allende, Chile’s socialist president. He accepted Fidel Castro’s invitation to take refuge in Cuba after Allende was toppled and died in a 1973 coup. The two men got on. In the 1990s he reinvented himself as a businessman, and was one of the first individuals allowed to form a joint enterprise with the Cuban government.

In 2006 Mr Castro fell ill and handed the country’s day-to-day leadership to his brother Raúl. Two years later Raúl formally became president, and promptly began attacking Cuba’s endemic corruption. In 2009 he started sending officials to inspect the books at the country’s state companies. Soon several executives—all of whom supposedly earn a state salary of around $20 a month—were jailed or placed under house arrest. Rogelio Acevedo, who fought alongside the Castro brothers in the 1959 revolution and was thought to be incorruptible, was sacked as head of the aviation regulator following allegations that he had leased the state airline’s planes off the books, and that millions of dollars in cash were found at his home. Pedro Álvarez, who for many years headed the government agency that buys food from the United States, fled the island before an investigation against him was completed, and is currently believed to be living in Florida. The former CEO of the national cigar producer and several of its senior executives are in prison.

Despite Mr Marambio’s ties to the elder Mr Castro, his turn was bound to come. The government accused Rio Zaza of bribing staff and ministry officials, taking a lax attitude towards theft and overcharging the Cuban government for payments to its suppliers—some owned by Mr Marambio. He has not been seen on the island since 2009, and refused to comply with the government’s order for him to return last year, telling a Chilean radio station that “there's a new government in power made up of people with few ethics and scruples” and that he was “being persecuted by a bunch of thugs". He did not send a lawyer to represent him at the trial. The Cuban authorities instead provided him with one of their own, making the verdict a foregone conclusion.

For the president, an even harder task than rooting out corruption may be replacing the crooked officials he ousts. So far, Mr Castro has mainly drawn on his former colleagues in the Cuban army. GAE.SA, a holding company that functions as the military’s business arm, has been a prime beneficiary, and is now thought to control around 40% of the country’s economy. Its president, Luis Alberto Rodríguez López-Calleja—who is also Raúl Castro’s son-in-law—was appointed to the Communist Party's Central Committee at the recent party congress. Whereas Fidel Castro would occasionally trust somewhat maverick businessmen, General Raúl Castro is sticking to what he knows