By Marc Frank in Havana
Published: May 20 2011 13:43 | Last updated: May 20 2011 13:43
One morning this month the nearly half a million inhabitants of Sancti
Spiritus, a leafy province in central Cuba, woke up to find their local
government had fallen.
Rather than some kind of US-inspired coup, however, the removal and
subsequent arrest of five senior provincial officials was part of the
increasing drive by Raúl Castro, president, against white-collar
corruption – or white "Guayabera" crime as it is called after the
distinctive Cuban dress shirt.
The crackdown, launched two years ago, has already cost hundreds of
senior Cuban Communist party officials, state managers and employees
their jobs and sometimes their freedom, as Mr Castro has struggled to
shake-up the country's entrenched bureaucracy and move the country
towards a less centralised and more market-driven economy.
Although such campaigns are not new, the intensity of the current drive
is unprecedented, as are the number of high level targets and breadth of
their illicit activities, Communist party and government insiders said
As well as Sancti Spiritus's wayward officials, Havana's mayor resigned
last month after most of the capital's top food administrators were
swept away in another probe.
Last year, in the all-important nickel industry, which exports some $2bn
annually, managers from mines and processing plants up to deputy
ministers of basic industry were arrested after "diverting resources"
and padding export weights, according to industry sources. Yadira García
Vera, the minister, was eventually fired.
The drive began in earnest in 2009 when Mr Castro, 84, opened the
Comptroller General's Office, saying it would "contribute to the purging
of administrative and criminal responsibility, both the direct
perpetrators of crimes and the secondary ones . . . [who] do not
immediately confront and report them."
The move is designed to try and allow state-owned companies to operate
more profitably, as Mr Castro wants them to, while also preventing the
kind of corruption that marked Russia's and China's own moves to the market.
"The creation of the Comptroller General in 2009 was a significant step
in the first phase of Cuba's reform," said Arturo López-Levy, a former
analyst at Cuba's interior ministry and now a Cuba expert at the
University of Denver in the United States.
"East Asia demonstrated the wisdom of creating an anti-corruption agency
early in the economic transition from a command economy."
Cuba is fertile ground for corruption. After 20 years of economic
crisis, and with state wages worth around $20 a month – a level that the
government admits does not cover necessities – almost all Cubans engage
in illegal activities to survive.
At the same time, the government is loosening regulations on small
private business even as it cuts subsidies and lays off government
workers, thereby requiring more sacrifice from state employees and
"Raúl Castro has clearly gone to extraordinary lengths to make it clear
that corruption – particularly at the higher levels – will not be
tolerated, signalling he means business and higher-ups must sacrifice
too," said John Kirk, a Latin America expert at Dalhousie University in
Cuba does not suffer from drug-related corruption like many of its
neighbours, said western diplomats and foreign security personnel who
work closely with Havana on interdiction.
Rather, according to foreign investors, the biggest problems they face
when forming domestic joint ventures are the long delays starting and
then operating a Cuban business – in part due to draconian regulations
designed to prevent white-collar crime.
That is not the case in the external sector, where foreign trade and
off-shore activities make corruption easier.
"The huge disparities between peso salaries, worth just a few dollars a
month, and the influx of strong currencies, even in very small amounts,
create extremely strong incentives to become corrupted," said one
western manager, who requested anonymity.
Cuban cigars have become the most emblematic case. Distributors in
Canada and Mexico had long complained that millions of valuable "puros"
– high quality cigars – were somehow making their way to other Caribbean
islands and then being smuggled into their franchised territories.
But it was not until last year that the Cohiba-puffing Manuel García,
the long-time vice-president of Habanos S.A., a joint venture with
London-listed Imperial Tobacco and the exclusive distributor of the
island's famous cigars, was arrested along with a number of other
executives and staff.
"Turns out we were complaining to the very people who had set up the
sophisticated operation, complete with shell companies and paths to
avoid import duties," one foreign distributor said.