U.S., Cuba to meet on claims

U.S., Cuba to meet on claims

Claims over U.S. corporate and personal property taken by Cuba a
bitterly divisive topic
Initial meeting will be held in Havana Tuesday
Cuba also has counter-claims against U.S.
BY MIMI WHITEFIELD
mwhitefield@miamiherald.com

What would have seemed impossible at this time last year — engagement
with Cuba on claims for property of U.S. citizens and corporations that
was confiscated after the 1959 Cuban Revolution — becomes a reality
Tuesday when the United States and Cuba meet for talks on the issue in
Havana.

To be negotiated are more than $1.9 billion in claims for utilities,
sugar mills, ranches, corporate holdings and personal property that were
certified, most decades ago, by the U.S. Foreign Claims Settlement
Commission, a Justice Department agency that adjudicates claims against
foreign governments. In today's dollars those claims would be worth
around $8 billion.

The Cuban government also has counter-claims. It is seeking reparations
for the adverse effects on its economy caused by the U.S. embargo as
well as for what it calls human damages, resulting from the Bay of Pigs
Invasion (176 deaths and more than 300 Cubans wounded), the 1976
terrorist shoot-down of a Cubana de Aviación plane that killed all 73
aboard, including 57 Cubans, and deadly CIA incursions on the island.

Cuba currently estimates accumulated damages for a half-century of U.S.
hostility at $833.75 billion.

"The meeting is the first step in what we expect to be a long and
complex process, but the United States views the resolution of
outstanding claims as a top priority for normalization," the U.S. State
Department said in a media note. "This initial meeting will allow the
two sides to exchange information on a wide variety of claims."

They include claims of U.S. nationals that were certified by the Foreign
Claims Settlement Commission, claims related to unsatisfied U.S. court
judgments against Cuba, claims of the U.S. government, and Cuban
government claims related to the embargo, according to the State Department.

The U.S. delegation will be led by Mary McLeod, acting legal adviser for
the Department of State.

Since the December 17 announcement by President Barack Obama and Cuban
leader Raúl Castro that the two countries would work toward normalizing
relations, the United States and Cuba have reestablished diplomatic
ties, opened embassies and begun working through a number of thorny
issues that separate them. But claims is the most difficult topic to date.

"The announcement by President Obama started the ball rolling and I knew
addressing the claims would be the natural progression. It's a great
thing and long overdue," said Mauricio Tamargo, chairman of the Foreign
Claims Settlement Commission from 2002 until 2010 and now with the
Washington-based Poblete Tamargo law firm.

"The counter claims are part of the process and they don't surprise me.
It's something both teams will have to work out," said Tamargo. "The
Cubans aren't going to be easy customers here. They are looking for any
type of bargaining chip or advantage they can find. I expect these will
be tough negotiations.

"Some of the counter claims are pie in the sky and they don't hold up
under international law," he said. "Damages arising from an embargo are
not recognized under international law. The United States is allowed to
have any type of trade restrictions on any government it wants and to
protect its own citizens."

But in terms of the loss of life claims, Tamargo said, "depending on the
facts surrounding each of those claims, they may have a better chance of
validity."

All told, there are 5,913 claims, and the top 100 claims represent 90
percent of the value of all claims.

Some claims are tiny, $25 worth of stock in a confiscated company, for
example. But a dozen claimants have losses certified at more than $50
million each. There are 899 corporate claims worth $1.677 billion and
6,015 claims valued at $229.2 million.

The Cuban Electric Co. with a certified loss of $267.6 million, has by
far the largest claim. Among the other large claimants are North
American Sugar Industries, MOA Bay Mining Co., ITT, Exxon, Starwood
Hotels & Resorts Worldwide, Texaco and The Coca-Cola Co.

Because many of the original personal claimants have died, their claims
have passed to heirs. Some may not even be aware they have inherited
claims and must be found, Tamargo said. He has suggested that the
Foreign Claims Settlement Commission be reauthorized to recertify claims
under the names of the new owners.

"I believe this should be done right now to save time once a settlement
occurs," he said.

Not included are claims by Cubans who became U.S. citizens after they
lost their properties.

But the State Department note seemed to indicate that judgments stemming
from civil suits, primarily filed by Floridians who claimed they
suffered as a result of Cuba's actions, would be discussed. Judgments in
these cases now total billions of dollars.

"As a matter of principle, Cuba never defended itself in these cases. A
good bit of them, or perhaps all of them, were settled by default
judgments," said George Harper, a Miami lawyer.

Harper argued three claims before the Foreign Claims Settlement
Commission in 1972 stemming from his family's loss of a cattle ranch,
homes and other property. In today's dollars, figuring 6 percent
interest from the day of taking, those claims would be worth $6.7
million, he said.

"The commission was very meticulous in valuing the claims," he said.
Because his mother and maternal grandmother were Cuban and his father
and grandfather American, Harper said, the commission cut those two
claims in half because it was only adjudicating claims of U.S. citizens.

"We had a right to impose the embargo," he said. "They did not have the
right to take over our properties without compensation."

During a news conference held in August on the day the United States
raised the flag and formally opened its embassy, Cuban Foreign Minister
Bruno Rodríguez said that "Cuban laws have foreseen the compensation to
owners whose properties were nationalized in the 1960s."

All owners were compensated, he noted, with the exception of American
claimants. The possibility of paying them compensation, Rodríguez said,
would "necessarily be part of a mutual process of negotiations — taking
into account the compensation" that Cuba is seeking for economic and
human damages.

Tamargo said he didn't believe the settlement agreements with some
European countries and Canada would be acceptable to American claimants.
"They were pennies on the dollar," he said.

Even though the Cuban economy is far from vibrant, Tamargo said Cuba
does have enough money to pay the claims.

"Cuba does have the revenue stream now. In addition to that, it is most
likely the embargo will be lifted as part of any settlement agreement.
Lifting it would increase Cuba's revenue stream tremendously. It would
probably quadruple it," he said.

Settling the claims also would eliminate the reason the United States
phased in the embargo during the early 1960s.

Other remedies for settling the claims might include a drawn-out payment
plan, bonds or investment vouchers. But he added, "Most of the claimants
don't have the ability to take advantage of such an investment opportunity."

Tamargo said that whatever agreement is reached by the two sides, it
would have to be a fair agreement because it will have to be ratified by
Congress. It will be something of a chain reaction. "Congress won't lift
the embargo if they don't see it [a claims settlement agreement] as a
fair deal," he said.

And if Cuba wants Americans to eventually invest in the island, there
would need to be safeguards in the agreement to protect future U.S.
investors, said Tamargo.

"That's the first question clients interested in Cuba ask: 'If I do
invest, what's to keep them from confiscating property the same as they
did 50 years ago?' It's clearly an impediment to investment," Harper said.

Source: U.S., Cuba to meet on claims | Miami Herald -
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