Monday, October 17, 2011

Cuba probes British fund, arrests top executive

Cuba probes British fund, arrests top executive
By Marc Frank

HAVANA | Mon Oct 17, 2011 5:49pm BST

(Reuters) - 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

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

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.


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

"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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