Thursday, February 25, 2016

Despite new Cuba relationship, U.S. fines persist against firms accused of violating embargo

Despite new Cuba relationship, U.S. fines persist against firms accused
of violating embargo

A French company was fined $614,250 for violations involving its ships
in Cuban waters
Since rapprochement with the U.S., Cuba says there have been seven such
Cuba says sanctions 'incongruous' with new relationship with U.S.


As President Barack Obama prepares to visit Cuba next month, the United
States has continued to fine companies accused of violating the U.S.
embargo against the island.

A review of the Treasury Department's enforcement actions involving Cuba
shows seven sanctions cases since Dec. 17, 2014 when the United States
and Cuba began normalizing relations. Treasury said the amount of the
fines imposed since the rapprochement began was $4,974,195 and involved
transactions predating the president's Cuba announcement.

A tally published Tuesday by the Cuban government was far higher. It
said during the same period, fines totaling $2.84 billion were imposed
on four U.S. companies and three foreign firms. It was unclear why there
was such a large discrepancy. Cuba's Foreign Ministry also said there
had been 48 fines associated with U.S. sanctions against Cuba during the
Obama administration.

The latest company to be fined is a French geoscience company, CGG
Services, which provides spare parts, services, and equipment for oil
and gas exploration as well as seismic surveys.

CGG and it affiliates agreed to pay a $614,250 fine to settle potential
liability connected with its use of U.S. spare parts, equipment, and
other U.S.-origin goods on its vessels operating in Cuban territorial
waters in 2010 and 2011. The vessels were the M/V Amadeus, M/V Veritas
Vantage, and the M/V Princess.

In addition, Treasury, which announced the fine Monday, said that
Veritas Geoservices, a Venezuelan subsidiary of CGG, appears to have
violated Cuban Assets Control regulations when it engaged in five
transactions involving processing data from seismic surveys in Cuba's
Exclusive Economic Zone, a maritime area in the Gulf of Mexico.

Cuba's Foreign Ministry said the latest fine "confirms the
extraterritoriality of the [embargo] and its deterrent effect not only
on foreign entities but also on U.S. ones, which — even in the limited
context of current regulations — might be interested in doing business
with Cuba."

Coming on the heels of Cuban Foreign Trade Minister Rodrigo Malmierca's
visit to Washington last week, the Cuban Foreign Ministry said the
latest sanction was "incongruous in the current context of relations
between the two countries and corroborates that to move forward toward
normalization of bilateral ties it is essential to lift the blockade,"
the term Cuba uses for the embargo.

Even though the Obama administration has relaxed regulations on some
Cuba trade and travel through executive authority, the new rules aren't
retroactive. "The policy of the United States is that it will continue
to enforce the embargo to the extent required by law," said Jose W.
Fernandez, a New York lawyer who is a former assistant secretary of
state for economic, energy, and business affairs.

While Treasury's Office of Foreign Assets Control said the alleged
violations are a "non-egregious case," it said CGG didn't voluntarily
disclose them. The fine was far below maximum penalties in such cases.
The company also did seem to have some awareness that it needed to take
steps to minimize the risk of OFAC violations. It removed U.S. personnel
and equipment from the Vantage before entering Cuban waters, according
to OFAC.

But the case does point up the difficulties that foreign oil companies
might experience with the embargo as they try to explore for oil in
Cuban waters. The Scarabeo 9, a state-of-the-art rig that explored for
oil in Cuban waters in 2012, was specially built so that fewer than 10
percent of its components were made by U.S. manufacturers so it wouldn't
run afoul of embargo restrictions.

Cuba's state-owned oil company, CUPET, is expected to begin a new round
of drilling in the Cuban area of the Gulf of Mexico late this year.
Earlier exploratory wells weren't commercially viable. Venezuela's PDVSA
and Angola's Sonangol are expected to drill in the Gulf at depths of
4,900 feet.

Mimi Whitefield on Twitter: @HeraldMimi

Source: Despite new Cuba relationship, U.S. fines persist against firms
accused of violating embargo | Miami Herald -

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