By Marc Frank, Reuters, October 17, 2011
A British
investment fund has become the latest company swept up in an investigation by
Cuban authorities of corrupt practices among the Communist island's state
businesses and their foreign partners.
Police closed the
Havana offices of the Coral Capital Group Ltd last week and arrested chief
executive Amado Fakhre, a Lebanese-born British citizen, sources close to the
company said.
The offices were
sealed and cordoned off with police crime scene tape during the weekend.
Andrew Butchers,
the fund's finance director, told Reuters from Coral Capital's London office
that the company had no comment now but would release a statement soon.
A month ago,
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 top executives
of both companies and a number of their Cuban employees and business partners
were arrested.
A vice minister for
sugar, Nelson Labrada, was arrested in late September for signing off on
purchases from the Canadian companies, a source close to his family said.
Just as in the
Canadian cases, the precise allegations against Coral Capital are not known and
have not been reported in Cuba's state-run media but they are evidence that the
government's corruption sweep is widening.
Coral Capital,
registered in the British Virgin Islands in 1999, is 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, and expected to sign a final agreement
with the Cuban government by 2012.
The fund
diversified into trade financing and importing heavy equipment and other
merchandise in recent years and this, rather than its real estate ventures, may
have led to its problems, foreign business sources said.
The company
represents various international brands in Cuba, among them Liebherr Earth
Moving, Yamaha Motor Corporation and Peugeot Motorcycles, according to its
Internet site. The site says Coral Capital has invested some $75 million (48
million pounds) in Cuba, with more than $1 billion of projects in the works.
ANTI-CORRUPTION
CAMPAIGN
Cuban President
Raul Castro has made fighting corruption a top priority since taking over from
his ailing elder brother Fidel in 2008, attacking high-level graft in food
processing, civil aviation and the cigar and nickel industries.
Investigation into
shipping and the communications sector are also under way.
"In a country
where small-scale but widespread corruption is the rule, if the government is
to be seen to be serious about rooting out the scourge, it must show it is
doing so at the very top and doing so in a dramatic way," said Hal Klepak,
a Canadian military historian and author of two recent books on the Cuban
military and Raul Castro.
"I do not see
it as bad at all for foreign business in Cuba, probably just the opposite in
the mid- to long-term," he said. "But there is also little doubt that
it does make many jittery when the problem is such a generalized one."
Raul Castro, a
general who led Cuba's Defence Ministry for 49 years, has cracked down on
corruption in tandem with efforts to revive the sagging Cuban economy through
more market-oriented policies. He has been less active in tackling problems
such as low salaries and lack of transparency.
There is no open
bidding in Cuba and officials and their employees who handle
multimillion-dollar contracts earn the equivalent of just a few dollars per
month.
Castro has moved military
officers into key political positions, ministries and export-import businesses
and in 2009 established the Comptroller General's Office with a mission to
attack corruption and a seat on the Council of State.
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