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Fidel Castro Inc A Global Conglomerate

, Inc.: A Global Conglomerate
By Maria C. Werlau

Introduction
Since 1997, Forbes magazine has featured Fidel Castro in its annual
Billionaires’ edition as one of the richest rulers in the world.
Initially, Forbes assigned to Castro a share of Cuba’s reported GDP
(gross domestic product) for the previous year, which yielded a fortune
of approximately $150 million. Since 2003, however, it began using a
method similar to that used to estimate the fortunes of businesspeople
and other royals and rulers. Using academic sources, Forbes identified
several enterprises said to be controlled by Castro and determined their
value by comparing them to similar publicly-traded companies. This has
resulted in the more recent estimate of $500 million for Castro’s fortune.
Aside from the difficulties inherent in estimating the value of
privately-held companies lacking financial disclosure, Forbes’
calculation of Fidel Castro’s fortune is fraught with other obstacles.
Due to a severe lack of information, the number of enterprises it took
into account was very restricted in relation to the large number of
businesses said to be under Castro’s control. In addition, Forbes’
calculation of Castro’s net worth fails to take into account funds in
bank accounts all over the world, large inventories of assets inside
Cuba, and real estate holdings both in Cuba and overseas, all reported
to belong to Castro. Yet, given the serious methodological flaws of
Cuba’s GDP statistics and Forbes’ past practice of using only one year
as the basis for its calculation, the new approach provides a sounder
approximation to Castro’s wealth. Although it probably falls well short
of Castro’s actual holdings, at least its foundation is the market value
of clearly designated assets.
Not surprisingly, the Cuban government has long disputed Forbes’
inclusion of Castro in their list. It publicly responded for the first
time in 2004 by issuing a statement that “the revenues of Cuban state
companies are used exclusively for the benefit of the people, to whom
they belong.” Fidel publicly rebuked Forbes’ report and said he was
considering a lawsuit against the magazine for libel.
Because of the large, intricate, and secret nature of these business
activities, expectedly, all estimates of Castro’s worth are imprecise.
Nonetheless, even the best attempts appear to be well shy of the vast
wealth under his command. The testimonies of former regime insiders
provide telling snapshots of the enormous assets that Fidel Castro and
his brother Raúl control. Arguably, they offer damning substantiation of
their existence, regardless of their precise value at any given time
–which appears to fluctuate widely as substantial assets apparently flow
in and out constantly.
What is striking about defectors’ accounts is their consistency. This is
more impressive because they originate from independent sources
unrelated to one another who have had dissimilar access to the structure
of power and whose testimonies cover different events and stages and
have been collected over a long period. In fact, over the years, many of
these accounts have appeared in low-profile media reports in different
countries or have been published as memoirs written almost exclusively
in Spanish -far from the best-seller circuits and widely ignored by the
international mainstream media. By systematically compiling this
assortment of tales, a coherent story emerges of a vast international
conglomerate backed up by sophisticated financial dealings in world
capital markets. Fidel, Inc. consists of scores of enterprises,
sizeable hard currency holdings, and numerous real estate assets inside
and outside Cuba, all under Fidel or Raúl Castro’s personal control and
concealed from official national statistics. It enjoys a rare advantage
– the boundless exploitation and use of the resources –both capital and
human- of an entire nation, all free of oversight and taxation.
Background
Cuba is a totalitarian state controlled by Fidel Castro, who is today
the longest serving head of state. In power since 1959, he is chief of
state with the titles of President, Head of Government, First Secretary
of the Communist Party, and Commander in Chief of the Armed Forces. In
March of 2003, already after 44 years in power, he officially declared
his intent to remain in office for life. During his entire tenure, his
brother and designated successor, Raúl, has been Head of Cuba’s Armed
Forces and his principal and loyal ally. The regime they command denies
basic civil, political, and economic rights to its citizens. Those who
stand in its way are driven into exile or dealt with swiftly.
Arguably, Fidel Castro “owns” most of Cuba. As supreme ruler of one of
the world’s most tightly-held and closed economies, the level of
usurpation of a country’s resources by one person that he has managed to
carry out seems comparable in modern times only to that of present North
Korea under the Kim Jong Il and his father, the late Kim Il Sung, before
him.
For over four decades, Fidel Castro has arbitrarily controlled and had
at his sole disposal practically all of Cuba’s financial and economic
resources. According to countless first-hand reports by former regime
higher-ups, he alone and at his discretion has the last word on all
decisions affecting the political and economic destiny of the entire
Cuban nation. Most Cuba experts and scholars agree on this point.
Alcibíades Hidalgo, one of the highest-ranking defectors ever to flee
the island, explained: “It is simply impossible to undertake any
political or economic initiative in Cuba. The only option one has is to
surrender to the dictates of the regime and to the thinking of the one
and only maximum leader, who is above all the citizens.” (…) “Fidel is
accountable to no one and is able to live his own reality.”
Soon after Castro’s takeover in 1959, the state began confiscating bank
accounts –personal and commercial- land, businesses, and commercial
property, both foreign and national. In 1961, upon consolidating power,
Castro declared Cuba a Communist state, an intention he had repeatedly
denied, reneging on the promise of democracy under a rule of law. By
the late 1960s, no private media was left and almost no property
remained in private hands -all commercial and productive enterprises,
financial institutions, schools, and even the smallest of businesses had
been nationalized, their management taken over by government cadres.
Droves of Cubans fled Communism, forbidden from taking anything but a
small suitcase of authorized personal belongings and leaving behind
residences, works of art, jewelry, and all sorts of valuables, small or
large. Their homes were assigned to the nomenklatura or leased by the
state to embassies and foreigners, while their belongings were
distributed to the ruling elite and valuables sold in world markets. The
steady exodus is huge -between 1959 and 1999, 1,079,000 Cubans left for
different countries.
The Cuban is technically under socialist central planning.
Since the early 1990s there have been limited elements of
state-controlled “capitalism,” such as joint ventures operating with
foreign capital in sectors such as tourism, telecommunications, and
mining. Yet, in essence, the state controls nearly the entire formal
economy and is the sole employer and owner of nearly
all resources. Not
surprisingly, the Index of Economic Freedom lists Cuba as one of the
least free countries in the world, number 149 of 155 countries (only
North Korea, Burma, Libya, Zimbabwe, Turkmenistan, and Laos rank lower).
Ordinary Cuban citizens are banned from engaging in most independent
economic activity –including owning businesses, engaging in private
commercial, manufacturing, import and export, financial transactions, or
any sort of business enterprise, and investing in enterprises with
foreigners. The only private activity allowed ordinary Cubans is
limited to small-scale sales in farmers markets, a small number of homes
licensed to rent rooms to tourists and/or operate family restaurants,
some land cultivation in small plots belonging to quasi-independent
farmers, and limited self-employment. Currently, less than 100,000
individuals are believed to be self-employed, representing around 2% of
the workforce. Just 118 private occupations are authorized for
self-employment if allowed by two-year renewable licenses –bricklayer,
artisan, electrician, locksmith, gardener, hairdresser and the likes.
Citizens participating in the underground economy face steep fines or
prison and the routine confiscation of their goods. Yet, the informal
economy is huge, as the end of massive Soviet assistance after 1989,
thanks to the demise the end of Soviet Communism, provoked a severe
deterioration in the state’s delivery of food, social services, and
consumer goods. Topping off the staggering level of individual
dispossession, ordinary Cuban citizens are prohibited from entering
hotels, beaches, resorts, and exclusive medical and other facilities
reserved for foreigners and the ruling elite.
The subordination of the common citizen to the state in all economic
(as well as political) aspects assures that no one other than designated
top government officials can accumulate wealth. In fact, even those
within his inner circle are subject to constant monitoring by the
intelligence apparatus; despite their privileges, they must stay within
certain bounds. Only Fidel Castro enjoys true economic independence –as
he retains exclusive discretion over the nation’s resources, his
personal and political prerogatives supersede economic rationality and
planning.
Fidel Castro’s holdings
Former top government officials and insiders at the highest levels of
power who have defected or sought exile from Cuba uniformly describe
Fidel Castro’s direct personal control over the country’s finances and
the absence of separation between public property and de facto private
property under his command. His brother Raúl, head of the Armed Forces
and designated successor, is intimately linked to these practices.
A former member of the Castro brothers’ inner circle and comrade from
the Sierra Maestra struggle, Dariel Alarcón Ramírez, defected in Paris
in 1996 after holding many high-ranking government posts with the
closest access to the Fidel and Raúl. Better known as “Benigno,” his
autobiographical narration of his many years by Castro’s side provides
an incisive look into the patterns of patronage, corruption, and
absolute control over state resources by Castro and the highest members
of the ruling elite. His sobering account coincides with those of
many former higher ups of the Castro regime –some are cited throughout
this paper, others have been obtained anecdotally over the years.
The Comandante’s Reserves
What insiders commonly refer to as “the Comandante’s reserves,”
consists of an integrated system of overseas bank accounts as well as
the national reserve of fleets of automobiles and trucks, and stored
food and consumer and luxury goods for the elite. A large and complex
web of enterprises inside and outside Cuba funnels funds and goods to
these reserves and are commanded by high-ranking members of the
nomenklatura and the Armed Forces, both in active service and retired.

The “Comandante’s reserves” are reportedly replenished through schemes
that include: 1.) the assigned percentages from tourism, remittances
from abroad, the revenues of hard currency businesses operations inside
and outside Cuba, 2.) the hard currency earnings of Cubans employed
overseas of doing business overseas but under the authority or control
of the Cuban state, 3.) the sale of Cuban state assets to foreigners,
4.) the sale abroad of Cuban art, artifacts, jewelry, antiques, and
other valuables taken when their owners leave the country, and 5.)
revenues from drug trafficking and criminal activities perpetrated by
subversive and terrorist groups with the help of Cuban agents or
coordinated by Cuba.

Cash resources are systematically diverted to bank accounts over which
Castro maintains sole discretion in Switzerland, Grand Cayman, London,
Lichtenstein, and Panama.

The Corporate Conglomerate

Corporations created both inside and outside of Cuba to do business
with and in the foreign sector are said to be a primary source of
revenues for Castro. Jesús Marzo Fernandez, who left Cuba in May 1996
after holding very high-level positions, explains: “Of unknown
ownership, these were enterprises created to generate funds outside the
planning system, as if they were the private property of certain
government officials.” Many of these businesses are involved in joint
venture arrangements or other business relationships with foreign
interests, which usually provide a front for Cuba. The companies are
not subject to audits or any type of disclosure, so it is impossible to
assess the extent of their activities and revenues. Revenues from many
of these corporations are said to go directly, often fully, to the
Comandante’s Reserves.
One can glean at the complexity of the business conglomerate from the
testimony of several defectors and former regime insiders. A civilian
holding company under Fidel’s command and a military conglomerate under
Raúl’s command effectively assure that all strategic industries are
under the Castro brothers’ control. The network includes:
I. CIMEX, / is the most powerful financial-commercial conglomerate of
the Cuban government -a huge holding company for a network of
enterprises -reported to range in number from 270 or more to just 80,
with revenues estimated at US$1 billion. CIMEX has commercial
representation in dozens of countries and operates joint ventures with
foreign enterprises. In Cuba, it owns several store chains that sell
only in hard currency, controlling 1,500 stores, gas stations,
cafeterias, video rental stores, and other venues for sales to the
public (including the Rapiditos fast food outlets and the Panamericana
chain, with sales of up to US$1 million a day). Other subsidiaries
include the airline that handles all international courier mail and the
real estate enterprise Inmobiliaria CIMEX, Havanatur, Havanautos, the
recording studio Abdala and the fashion store La Maison. CIMEX also
controls many enterprises incorporated abroad. Two merchant marine
operations, Melfi Marine and Melbrige, both under Panamanian flag, are
purportedly held by the subsidiary Transcimex, which has foreigners
acting as fronts. (For a partial list of CIMEX-controlled firms outside
of Cuba, see the Appendix.) Two of CIMEX subsidiaries are banks whose
operations are extremely secret and believed to be involved in
laundering drug monies:
o Banco Financiero Internacional (BFI)
, founded in 1984 as the first
Cuban entity operating in dollars and with total autonomy from the
formal state system. By 1999 it had sixteen branches in Cuba and an
unknown number abroad (including in the United Kingdom and Canada). Its
initial objective was the removal from the National Bank of Cuba
transactions intended to leave no trace. Its main clients are the same
firms associated with the “Comandante’s reserves,” as described herein.
Foreigners stand in for all its official business.
o Banco de Inversiones, S.A., which makes loans to the Cuban government
at high interest rates and is allegedly run by or in conjunction with an
Israeli citizen. The bank’s capital is suspected to come from the Banco
Financiero Internacional.
II. GAESA (Grupo de Administración Empresarial) is the holding company
for a number of corporations under military management and Raúl Castro’s
control. Headed by his son-in-law Major Luis Alberto Rodríguez
López-Callejas, the Chairman of the Board is Raúl’s second-in-command
and confidant, Division General Julio Casas Regueiro. “Agent Otto,” a
former intelligence officer directly involved in foreign operations,
reports that “Raúl Castro and his son-in-law have been especially
meticulous in endowing GAESA with the ability to generate and manipulate
foreign-currency, especially U.S. dollars.” GAESA is used as a vehicle
to stash away money overseas.” He adds: “The funds never make it to the
state Treasury; this operation runs parallel to the country’s economy.
The group is enormous: it invoices close to one billion dollars
annually.” The holding company owns firms dedicated to tourism and the
foreign sector such as:
o Aerogaviota, S.A., providing all air transportation to the tourism
industry and rentals to foreign businesspersons. It operates an
airplane and helicopter fleet from its headquarters at the Baracoa
Military Air Base, near , and is staffed only with military personnel.
o Almacenes Universal, S.A., operating several free trade zones.
o Almest S.A., which builds hotel facilities and other real estate for
the exclusive use of or sale to foreigners.
o Agrotex S.A., handling activities related to agriculture and cattle
–from animal breeding farms and candy factories to the manufacture of
honey and general food products.
o Antex, S.A., instrumental in setting up various types of offshore and
holding companies, imports and exports (buys and sells timber, ships,
and the like), and serving as conduit for introducing spies trained by
Military Counterintelligence into other countries. With offices in over
ten countries, including Panama, Angola, South Africa, and Namibia, it
hires foreign labor in Third World countries and lends itself to
infiltrating espionage and intelligence personnel. This company in
particular apparently moves lots of money and is said to be one of Raúl
Castro’s most important endeavors. Its staff is made up of highly
qualified and trained military personnel.
o Empresa de Servicios La Marina, which takes care of security and
maintenance for all of GAESA’s support personnel.
o Habanos, S.A., tobacco and rum distributor.
o Gaviota, S.A. operating over 30 hotels all over the island, mostly
with foreign partners (including Sol Meliá and Club Mediterranné) and
involved in other activities in the tourist industry.
o Geocuba, S.A., dedicated to the cartography business and dealing with
land concessions or leasing related to tourism and other sectors such as
mining, agriculture, and real estate.
o Sasa S.A., with automobile repair shops and gas stations throughout
the country.
o Sermar S.A., operating shipyards for all naval repairs. Under the
direction of Captain Luis Fraga Artiles, the company was launched with a
fleet of navy vessels and has its own diving team. Sermar is involved in
a very lucrative business, the search for sunken treasures in an ocean
rich with capsized Spanish ships. According to Agent Otto: “This company
is generating enormous amounts of money, for it alone has access to the
wealth of treasures under that ocean. Raúl says ‘This is mine’ and it’s
final. One cannot begin to calculate what funds go where. Explorer
Jacques Cousteau once visited Cuba with the hope of exploring some of
these ships, but was not granted permission.”
o Tecnotex S.A., importing and exporting every product needed by the
other companies in the holding. Allegedly, it serves as an ideal front
for introducing state-of-the-art, dual-purpose (civilian and military
application), technology into Cuba barred by the U.S. embargo.
o TRD Caribe, operating over 400 “Currency Recovery Stores” (Tiendas de
Recuperación de Divisas) all throughout the island, selling products
only in hard currency. Reportedly, it generates more than one hundred
million dollars per year. Because it maintains high business volume
with China and Hong Kong, it buys cheap and makes a huge margin on sales
by marking products up exorbitantly. This operation is under the
División Financiera, whose goal is to recycle and reinvest income
generated by the GAESA network.
o An enterprise of unknown name serving as a holding group to operate
all historic museums and monuments generating fees in high hard
currency. Palacio de Convenciones, which holds international events
-many of a political nature- is presumably part of this group. It has
earnings estimated at US$3 to $5 million a year, which allegedly go in
their entirety into the Comadante’s accounts.
o Another network of privately-held enterprises, that operates inside
Cuba in the peso economy.
It is unclear if the following enterprises are independent entities
separate from the CIMEX or GAESA networks, but their standing and
revenues within the entire corporate system controlled by the Castro
brothers is very important:
o Cubalse, a holding company of the Council of State under the direct
supervision of Fidel Castro. Its net earnings are estimated at US$30
million a year and all said to go into Castro’s reserve. Cubalse hires
out workers to foreign joint ventures operating in Cuba as well as to
diplomatic and other foreign representations. The proceeds of the
currency exchange from their salaries go directly into the
“Comandante’s reserves.” Part of the money generated by Cubalse is
deposited directly into Banco Financiero Internacional (BFI), the rest
is placed in Financiera de Cubalse, in Switzerland. Among Cubalse’s
subsidiaries are a store chain originally engaged in hard currency sales
for the diplomatic community -now open to anyone with hard currency,
Meridiano, S.A. and Automotriz, S.A.
o Cubanacán, a group of enterprises that lures foreign investment into
tourism and manages hotels, restaurants, and travel agencies. Like
CIMEX, it has several store chains that sell only in hard currency and
is said to control approximately US$600 million in foreign capital
-primarily in investments by Meliá, LTI International, TRIP, Delta
International, Golden Tulip International, Cosmo World, and Super Club.
40% of Cubanacan’s revenues, estimated at US$30 million, are reportedly
funneled into the Comandante’s reserves.
o Medicuba, which sells pharmaceutical products manufactured in the
country, especially vaccines, generates an unknown amount of revenue
estimated at several million dollars.
The enterprises mentioned above and in the Appendix have been
specifically named in reports by former regime insiders. Most are
classified by the Office of
Foreign Assets Control (O.F.A.C.) of the
U.S. Treasury Department as blocked entities, or “designated nationals,”
of the Cuban government. A large number of the overseas firms are
located in Panama and Spain, but others are based in many other
countries in Latin American and Europe, while some are located as far as
Japan. Aside from this list, many more enterprises controlled by the
Castro brothers are said to exist inside and outside Cuba operating in
India, South Africa, Malta and Grand Cayman. Some have been designated
by O.F.A.C.; others are yet to be identified.

It may be assumed that the vast majority, if not all, of firms formed
inside Cuba to do business in or with the foreign sector is under
government control – which generally means under Fidel Castro’s control
and with the profits, or a designated percentage of them, for his direct
account. The “sociedades anónimas” (S.A.) are Cuba’s unique version of a
capitalist firm -their business activities mirror those under private
ownership in free market societies. In Cuba, however, their listed
owners are unknown, their operations and financial statements are not
subject to scrutiny, and individuals designated by the government manage
them. Many of the on-island corporations were formed in the 1990s to
take advantage of tourism, particularly looking to capture business from
the U.S.. Reports vary regarding the percentage of revenues that go
into Fidel Castro’s reserves. Aside from the fact that this matter is
kept within a small circle of high-level officials, it is hard to
imagine that any one person would come across that degree of detail
regarding the very large number of enterprises involved. Initially, only
the Ministry of the Interior managed the corporate web, later other
Ministries, such as the Ministry of Trade and the Ministry of
Transportation, were included in the scheme.

It is more difficult to identify enterprises formed overseas under the
Castro brothers’ control. Most have been incorporated under the names
of Cuban officials or foreign nationals in association with the Cuban
government. Manuel de Beunza, who ran -as its “owner”- a Cuban company
involved in all sorts of shipping activities in Montreal, reports having
opened many such companies and eighteen bank accounts under his name.
Oftentimes, he asserts, the overseas corporations are established under
the name of lawyers or other intermediaries in different countries who
receive payment for these services. For example, Havanatur, a company
with subsidiaries and offices in Cuba as well as Bahamas, , and
Argentina, was run by a Chilean. The Cuban and foreign individuals who
appear as owners and typically serve as managers are allowed a
participation in the business by way of juicy compensation packages, a
lavish lifestyle if abroad, and other privileges. This happens as long
as Castro is guaranteed a certain share and the leakage remains within
certain bounds.

A 2003 El Nuevo Herald article features the accounts of Spanish
businessmen of their dealings with Cuban managers of companies such as
Cubatur, Caracol S.A. (which controls all hotel stores in Cuba),
Esicuba, and GMS Financial Group. Their business meetings took place at
the Ministry of Foreign Relations. The Spaniards have documents
demonstrating that in September 1998 they created a front company in
Panama, the GFA Financial Group. This entity was to request loans from
the Credicorp Bank of Panama to channel funds to Caracol, S.A. in
violation of the U.S. embargo. Fintur, the Cuban financial entity for
all state tourism companies, would collateralize the loans. The
brainchild of the operation on the Cuban side was Humberto Pérez
González, the President of Fintur. The deal called for the Spaniards to
receive monetary compensation while the Cuban managers were to obtain
material gain only “under the table.” But, the operation was
unexpectedly called off on December 3, 1998, when Colombian authorities
confiscated a huge shipment of 6,219 kilos of cocaine hidden in a
container destined for the crafts’ manufacturing plant AEI Unión de
Plástico, a mixed enterprise between Cuba and the same two Spanish
businessmen. The Spaniards, accused of drug trafficking by Colombia,
blame the Cuban government for the drug shipment.

Spain appears to host a large number of Cuban enterprises. In fact, a
considerable number of sons and daughters of the highest-ranking members
of the Cuban government and military are overseas, particularly in
Spain, running businesses and traveling back to the island regularly.
Some live in Cuba, but travel abroad frequently for business or tourism.
This corroborates reports by former Cuban intelligence agent “Otto,”
who was stationed at the Cuban Embassy in Madrid, where he defected. He
asserts that Spain is the nerve center of Cuba’s European operations for
obvious reasons- similar , language, and idiosyncrasy. Yet, he
says, this also responds to the friendly ties Cuban agents enjoy with
certain high ranking members of the Spanish military as well as to their
successful infiltration of Spanish intelligence services. Agent Otto
explains that some of the one hundred Cuban intelligence and
counter-intelligence agents in Spain are not really diplomats, but
rather act as representatives of Cuban companies.

An important issue meriting further exploration emerges from reports
that Cuba uses overseas companies fronting for Castro as collateral for
hard currency loans obtained overseas by different entities of the Cuban
state. This would provide a plausible explanation to the seeming
foolishness of foreign creditors’ huge short-term loans to Cuba in
recent years. Given Cuba’s longstanding default and moratorium on
external debt repayments, its obvious lack of creditworthiness , and
the wretched state of its economy, the continued extension of credits to
Cuba is otherwise perplexing.
Hard Currency Bank Accounts
Many former regime insiders claim having direct knowledge of overseas
bank accounts controlled by the Castro brothers. Agent Otto, for
example, confirms that Fidel Castro has his own foreign bank account
network and that million of dollars of Cubalse and CIMEX revenues are
regularly deposited into those accounts. Fidel Castro, he reports, has
his own special bank accounts with Banco Fiananciero Internacional
(BFI). The accounts belong to the Council of State, which is to say,
Fidel Castro. Otto claims that several million dollars of Cubalse’s
income is always deposited in those accounts -the same goes for income
generated by the Cimex Corporation.
The matter of overseas bank accounts seems to go back a long time.
General Rafael del Pino describes a meeting in the late 1960’s with
Raúl Castro, Cuba’s Head of the Armed Forces, when del Pino was in
charge of Cubana de Aviación, Cuba’s national airline. Raúl instructed
him to open a bank account in Zurich, Switzerland, to deposit all the
funds received from foreign airlines in fees for air passage over Cuba.
The accounts were opened in the name of Vilma Espín, Raúl’s wife, and
Rodolfo Fernández, the right hand man of Celia Sánchez, Fidel’s longtime
friend and confidant. Del Pino reproduced in his biography a hand
written note to him from Raúl Castro, dated May 9, 1968, referring to
“the Swiss matter.”
To funnel monies to the foreign banks, complex evasion operations a
re
undertaken to deliver cash through courier routes that, at least in the
past, went through Moscow. One route is reported to have ended in
accounts at Cantonal Bank in Geneva. Otto also reports that at the time
of his defection a few years ago the Banco Financiero Internacional
(BFI), a subsidiary of Promotora S.A. of Panama, was a key part of this
system. Reportedly, the Office of the Secretary of Cuba’s Council of
State opened an office in Zurich under the name Financiera de Cubalse
(Cubalse’s Financial Institution), an entity that works with an office
of Cantonal Bank in Geneva. In addition, large amounts of moneys are
“transferred” from BFI to Financiera de Cubalse.
Fidel’s Hard Currency Fund. Since the 1990’s Fidel Castro is said to
have a fund called “Fondo de Divisas del Comandante en Jefe,” to which
15% of all hard currency revenues generated by Cubans overseas
–trainers, artists, professionals, technicians, etc.- is deposited via a
state agency or corporation called CubaTécnica. Cubans sent on
internationalist missions abroad –doctors and other professionals sent
to Third World countries- for which Cuba charges the receiving country
in hard currency, are paid in local currency and guaranteed very basic,
often substandard, living conditions. In 2003 Cuba’s Foreign Minister
reported that nearly 3,000 doctors worked in rural areas in 21 countries
-13 in Africa and 8 in Latin America. Based on this data, just for
doctors, approximately US$8 million would be going into Castro’s
reserves. The location of the accounts in which these funds are
deposited is unknown, but it appears they are part of the overall
network of “the Comandante’s Reserves.”
A story consistently repeated by several former high-ranking Cuban
government officials is that in the 1980s Fidel Castro received
suitcases full of hard currency as “gifts” for his birthday each August
13th -a practice that may continue, but has not been corroborated in
recent years. The amounts varied from year to year. After his defection
in 1987, Major Florentino Aspillaga Lombard, a former high-ranking
MININT (Ministry of the Interior) official, reported that each year,
MININT agents stationed abroad would bestow on Fidel for his birthday
with millions of dollars obtained from illicit businesses. The monies,
he said, were deposited in Swiss bank accounts and were used to support
favored guerilla movements internationally or bribe world leaders. In
1985, he says, Castro received 3.7million Cuban pesos and in 1986, he
received US$4.2 million. Jesús Fernández reports that he witnessed at
a birthday party for Castro in the 1980s when a prominent government
official gave Castro a suitcase with US$10 million. Large amounts of
cash are delivered to Castro at other times. Manuel de Beunza, who
managed Cuban businesses in Canada, reports having on one occasion
personally delivered US$2 million to Fidel through his most trusted
Assistant, “Chomy,” José Miyar Barruecos.
Castro allegedly makes loans from his overseas “reserves” to the
national economy to cover hard currency shortfalls at an interest of ten
percent, regardless of the length of the loan. In the 1980’s, Jesús
Marzo Fernández was aware of transactions to cover oil imports as well
as two specific transactions –for US$20 million and US$30 million
respectively- to import foodstuffs, mostly cereals. This, of course,
represents a steady source of income to replenish Fidel’s reserves.
Real Estate

After 46 years in power many government insiders, foreign visitors, and
average Cubans –former staff, acquaintances of children of the elite,
etc.- have reported of multiple residences and recreational facilities
in Cuba set aside for Fidel Castro and his family for their personal
use. Fidel’s daughter, Alina, mentions several “Protocol Houses” used
for dignitaries and friends of Castro, information that is confirmed in
accounts by other defectors. The long list includes several yachts and
anywhere from 25 to 37 homes all over the island –many are said to be
used only occasionally for short rest periods during travels throughout
the island or to entertain guests. These include a number of
recreational residences at beaches and in the countryside, ranches,
hunting grounds, specialized fishing and cattle reserves, a shrimp
breeding facility, and luxurious underground bunkers outfitted with the
latest technology. Some have their own electric generation and water
plants, sophisticated communications’ command facilities, and enjoy
amenities such as pools, tennis courts, runways, marinas, and even golf
courses.

Among the overseas properties Castro is said to own are a castle in
Austria, and large ranches in Galicia, Spain, Monterrey, Mexico, and
near New Delhi, India. According to a former insider who had access to
the information in the 1980s, those four properties were at the time
considered the preferred safe havens in case Castro had to leave Cuba,
as the leaders of those countries could be relied on to offer Castro
personal protection. Reportedly, properties have been also purchased in
France, Sweden, Switzerland, Finland, Italy, Bahamas, Tanzania, and
Egypt, and properties in Ecuador are said to be under the control of
Raúl and his wife’s family. Different mechanisms are used to disguise
the ownership –designating trustworthy people or foreign companies or
individuals receiving compensation. Because the sources for this
information have had access to the data at a given time period, it is
impossible to ascertain which properties might presently be held by Castro.

Drug Trafficking, Criminal Activities and Money Laundering

The involvement of high-ranking Cuban government officials in
international drug trafficking under the orders or with the knowledge
and acquiescence of the Castro brothers has been long known. Consistent
reports abound from former regime insiders, members of Colombian and
Mexican drug cartels, from intelligence officials of the former Soviet
Union and its satellites, and from journalists, governments, and even
world leaders –including the Presidents of the United States and
Colombia. In fact, four high-ranking Cuban officials have been indicted
in the United States on drug charges. In addition, there are plentiful
reports of the links between Fidel Castro and Robert Vesco in money
laundering and drug trafficking activities. Vesco, a fugitive from U.S.
justice, lived in luxury and with the protection of the Cuban leader
since 1980, but fell in disgrace in 1995 and was sentenced to thirteen
years in prison, which he is serving on the island.

Juan Antonio Rodríguez Mernier, a former Cuban Intelligence Mayor who
obtained political asylum in the United States in 1987, has written
about the drug trafficking and criminal activities with
terrorist-guerrilla networks of Cuba’s intelligence apparatus. He
claims that in the 1970s the de la Guardia brothers, heavily into
international terrorist, subversive, and criminal activities, convinced
then Interior Minister Abrahantes to persuade Fidel of the benefits of
cooperating with international drug traffickers. Fidel’s approval was
won with the argument that it would not only weaken the United States,
but also bring in funds for international subversive activities and hard
currency for Cuba. Rodríguez Mernier relates that drug traf
ficking
became a substantial source of hard currency revenue for Fidel Castro.
Major Florentino Aspillaga explains that millions of dollars in cash
delivered by Cuban intelligence agents to Castro were to be deposited in
his Swiss bank accounts “in order to finance liberation movements.”

Cuban Air Force Brigadier General Rafael del Pino, the highest-ranking
defector from Cuba’s Armed Forces, describes how during his command
small planes carrying drugs were systematically and in large numbers
given free reign of Cuban airspace. Del Pino also provides details on
how Cuban radar and air-traffic control installations make it impossible
for such missions to fly undetected. For his part, former Cuban
Intelligence Major Florentino Aspillaga also confirms the long-term
personal involvement of the Castro brothers in the drug trade. Just
like the others, he explains that it would be impossible for these
operations to be carried out without the personal approval of Fidel.

Cuba has been a sort of clearinghouse for international terrorist and
subversive activities, for which Castro seems to have considerable
funding discretion. Subversive groups from Latin America and the Middle
East have routinely delivered funds for Castro’s reserves with the
proceeds of bank robberies, kidnappings, robberies, contraband, and
other criminal activities that Cuba has planned, coordinated or in which
Cuba had some participation. These, together with operations to
eliminate opponents overseas by way of assassination, were carried out
under the command of twins Antonio and Patricio de la Guardia, first by
the MC Department and, subsequently, by the M-Z departments of the
latter CIMEX.

Norberto Fuentes, the Revolution’s former author and a member of the
Castro brother’s inner circle, has provided a wealth of information on
drug, money laundering, robberies perpetrated by Cuban agents or
coordinated by Cuba with full knowledge and direction from Fidel Castro.
He gives ample detail on the criminal activities of terrorist groups
that have netted Cuba millions of dollars to sustain the Castro regime
and finance international terrorism, subversion, and “liberation
movements.” According to Fuentes, an operation conducted with the
Democratic Front for the Liberation of Palestine resulted in a booty of
one billion dollar from bank robberies in Lebanon during the 1975-76
civil war there. Cuban agents Alfredo Sugve del Rosario and Filiberto
Catiñeiras (known as “Felo”) headed the small Cuban team that
transported the treasure to Cuba –gold bars, jewelry, gems, and museum
pieces. The fortune was dispatched in diplomatic pouches, each carried
by two Cuban agents during 28 successive days via air
Beirut-Moscow-Havana. Castro personally greeted Sugve and Catiñeiras
upon their arrival on the last flight of the transfer, declaring them
“heroes.” Fuentes reports that the treasure was displayed in eleven
tables set up inside vaults, where Castro took members of the Political
Bureau for viewings. The whereabouts of the treasure are unknown.

Jorge Masetti’s compelling autobiography describes his participation in
drug trafficking, counterfeiting, kidnappings, bank robberies, and other
criminal and terrorist operations in Latin America on Cuba’s behalf
under Manuel Piñeiro and the Americas Department. Among many accounts,
Masetti describes Cuba’s role in a Puerto Rican terrorist group’s bank
robbery in Connecticut and the delivery of the booty to Cuba.
Likewise, former Interior Ministry Colonel Filiberto Catiñeiras, “Felo,”
was involved in the transfer to Cuba of US$46 million of ransom obtained
by the Argentine terrorist group Montoneros for the release of two
brothers of a very wealthy family, Juan and Jorge Born. He reports that
Cuban agents were ordereded to launder the ransom, which was later
deposited in banks of the former Czechoslovakia. He also tells of
having taken “Pepe” (Mario) Firmenich, leader of the Montoneros, to meet
Yasser Arafat in Lebanon.

Castro’s efforts to diffuse mounting evidence of his involvement in
drug trafficking is said to be behind what is known as “the Ochoa
affair.” By many accounts, the 1989 internal purge was unleashed by the
Castro brothers on high-ranking members of the regime to conveniently
use them as scapegoats at a time when the U.S. had irrefutable evidence
of Cuba’s role in the drug trade. Decorated Cuban General Arnaldo Ochoa,
the de la Guardia brothers, Interior Minister Abrahantes, and many top
government officials at the Interior Ministry and Armed Forces where
executed or imprisoned for alleged drug trafficking and embezzlement of
state funds. Reportedly, Castro had found an expedient way to deflect
responsibility because Ochoa, who was very popular, and the others had
become too cocky and empowered and were grumbling for perestroika and
glasnost following the reforms in the former Soviet Union. Yet,
defectors consistently report that Fidel and Raul were the ones
directing the drug trade. Ileana de la Guardia testified before the
U.S. Congress in 1999 that her father -Tony de la Guardia, who was
executed- had told her that Fidel Castro had several bank accounts to
which proceeds of drug trafficking operations were sent.

Money-laundering comes up repeatedly in the accounts of former regime
insiders. Jesús Marzo Fernández sustains that the business enterprises
under Castro’s control, aside from providing him revenues, also serve to
launder drug money. Rodríguez Mernier relates how former Panamanian
strongman, Manuel Noriega, would meet with Castro to discuss
money-laundering solutions for drug monies. Manuel de Beunza claims
that monies obtained by Cuba from drug trafficking were laundered
through Swiss banks by way of delivering old U.S. dollar bills in
exchange for credits to bank accounts held by Cuba. Former agent Otto
claims that there were people in the Intelligence Department of the
Interior Ministry specifically responsible for delivering money in cash
overseas. Cuban Intelligence, he asserts, “uses its own diplomatic
currier system for this and other deliveries. The curriers don’t even
know what is in the suitcases –they are sealed.”
The money-laundering question was recently fueled by a May 2004 US $100
million fine imposed on UBS -Union of Banques Suisses Investment Bank-
of Switzerland by the New York Federal Reserve. The fine was announced
in conjunction with the Swiss Federal Banking Commission and was imposed
for violating the terms of an agreement to act as repository of U.S.
banknotes, as per the Extended Custodial Inventory Program (ECIP)).
This program allowed foreign and U.S.-owned banks that contracted with
the New York Federal Reserve Bank to be repositories of large
inventories of new U.S. bank notes in order to remove old bills in
circulation. UBS had been caught buying and selling U.S. dollars to
countries under U.S. sanctions – Iran, Libya, Yugoslavia, and Cuba- and
filing fraudulent reports to conceal this activity. The transactions
with Cuba, totaling US$3.9 billion over a period of seven years, were by
the largest by far. In essence, UBS had knowingly been accepting old
dollar bills from Cuba and, instead of exchanging them for new bills, as
required, had been crediting accounts held by Cuba or unnamed sources
from Cuba and filing phony reports.
Importantly, UBS has refused to
publicly reveal in whose name where the accounts controlled by Cuba,
alleging “client confidentiality.” This is strange, as the obvious
holders of such accounts would be official entities of the Cuban
government -the Cuban Central Bank the most logical one.
A respected economist and expert in Cuban affairs, Ernesto Betancourt,
states that “Cuba cannot justify 600 or 700 million dollars annually in
cash through tourism income. The tourists – Canadians, Europeans and
Latin Americans- buy their travel packages with credit cards at travel
agencies.” As a result, the largest portion of this income cannot be
cash. Remittances from abroad would also be insufficient to explain the
large volume of cash. That money is usually sent via wire transfers,
not paper money, and only a portion of remittances are carried into Cuba
as cash in violation of U.S. embargo limits. In addition, total
remittances are estimated between US$450 million and $800 million
annually and are mostly absorbed into the economy by way of the Tiendas
de Recuperación de Divisas, state-owned stores that sell goods only in
dollars. A large percentage of the recovered dollars would be used to
purchase imports and would be reflected in official Balance of Payment
accounts.
In October 2004 the Financial Action Task Force, an intergovernmental,
policy-making body whose purpose is to combat money laundering and
financing of terrorism, passed a new measure, Special Recommendation IX,
that further tightened already important and binding regulations to stop
cross-border movements of currency and monetary instruments related to
terrorist financing and money laundering and to confiscate such funds.
The Resolution also called for enhanced information sharing between
countries on the movement of illicit cash. Just one day later, Cuba’s
Central Bank issued Resolution No. 80 to end the free circulation of
dollars on the island. As of November 8, 2004, the convertible Cuban
peso, the Cuban currency that circulates internally and trades at par
with the dollar, was to be used for domestic operations and euros and
other hard currency were to replace the dollar in foreign exchange
operations. All entities in Cuba accepting payment in dollars would only
accept the convertible peso and a ten percent surcharge would be levied
on the purchase of convertible pesos using U.S. dollars (surcharge that
would not be imposed on the purchase of convertible pesos with other
currencies).
As per the Cuban government resolution, the move came in response to
new measures dictated by the U.S. government “directed at systematically
hindering the flow of Cuba’s external finances, which would provoke
grave damage and serious risks for our country. As part of this policy,
the Bush administration has intensified pressure and threats on foreign
banks to prevent the island from making deposits abroad…” The Cuban
regime’s reaction seemed extreme. Both Castro and Cuba’s Central Bank
President denied accusations of money laundering as “colossal lies” that
are “part of the U.S. imperialist campaign against Cuba.” Castro
declared that the measures were the response to the “acts of banditry of
the empire” and vented with particular anger in long public ratings on
Cuban TV.

What does the Comandante do with his reserves?

Fidel rules over one of the poorest countries in the world, yet he
could well be, as a Cuba scholar suggests, the most powerful world
leader in terms of the discretion and lack of oversight over his
financial decisions. He can do what not even the political leaders of
wealthy and powerful countries or the CEO’s of the world’s richest
companies are able to. On his sole command, he can give away houses,
cars, and luxury goods to the Cuban ruling elite, donate hospitals,
airports, manufacturing plants, sugar mills, vaccines, and humanitarian
assistance to other countries, provide scholarships to thousands of
students from around the world to study in Cuba, or offer medical
treatment -all expenses paid- to people from all over the world. He is
able to do all this without audits or accountability, regardless of any
budgetary or fiscal considerations, beyond the constraints of any laws,
and mostly outside the realm of national accounts.

Historical examples abound of Cuba’s financing and support of
international terrorism, subversion, and liberation movements.
Propaganda and public relations, including bribing world leaders, has
long been a priority for Castro –one that helps explain the regime’s
disproportionate international influence. Historically, a huge amount
of resources has been spent on swaying international public opinion to
further Castro’s political goals and cultivating the support of
influential international figures in all fields.

Huge sums are also involved in Castro’s personal security and travels
inside Cuba, although specifics regarding how this is funded are lacking
from defectors and remain unclear by looking at Cuba’s financial
statistics. The cost of his foreign travels is enormous. Castro’s
former bodyguard reported that 200 bodyguards and a medical team
accompany Castro on his trips abroad. / Likewise, there seems to be
no limit to the resources available to Fidel Castro, whether for his pet
projects or his personal security and enjoyment. Although top members
of the nomenklatura enjoy privileges unavailable to the population, the
lifestyle of Fidel and Raul’s families and their access to all sorts of
goods and services inaccessible to the Cuban population is unrivaled.
Yet, they together with the highest members of the government elite have
strict orders to avoid appearing ostentatious and to stay out of the
limelight. Rampant excess by former insiders such as former Minister
of the Interior Jose Abrahantes and the de la Guardia brothers, was
widely reported in the seventies and eighties, and was tied to
activities at the MC Department and the initial CIMEX. But, after they
were purged, the most outlandish practices at the top of the power
ladder have apparently been greatly curtailed.

Keeping things under control
The business conglomerates are all managed by the Castro brothers,
within their family or by their most trusted people. CIMEX’s President,
for example, is Eduardo Bencomo Zurdos, a doctor who took care of Fidel
Castro for years and is considered a very loyal personal friend.
Generally, only high-ranking military and intelligence officers are put
in charge of business operations. CIMEX officers are recruited from the
Armed Forces or the Ministry of the Interior and the Communist Youth
Union and must be recommended by at least three individuals considered
by the government as deserving of the highest degree of trust. This
not only bolsters the Castro brothers discretion over operation and
funds, but also guarantees regime survival by providing its most
dependable soldiers access to the lucrative aspects of it capitalistic
forays and alleviating problems of morale and conflict within the
military and cementing loyalty. It also guarantees a source of funding
for its Armed Forces after the end of Soviet assistance. In words of one
analyst, “the regime has assured their loyalty, institutional economic
self-sufficiency and a direct link between their economic wellbeing and
the survival of the Revolution.”
Clos
ing the circle, to guarantee Fidel Castro’s personal command over
all decisions in the country, is the “Equipo de Coordinación y Apoyo al
Comandande en Jefe,” designated by the C.I.A. as the “Coordination and
Support Staff”, or “GCA.” The GCA is a parallel structure of government
composed of six carefully chosen individuals charged with implementing
and executing Fidel Castro’s wishes and directives. It skirts the
institutional structures of government and overrides all other
decisions, including those of government ministers. According to Carlos
Cajaraville, a former intelligence officer: “The group was the direct
thread between the different economic sectors and the Comandante.”
To keep things in check, Cuba has a gigantic internal repressive
apparatus that is said to cost hundreds of millions of dollars. The
police state at Castro’s command has perfected a highly sophisticated
and effective machinery of repression to monitor and control all
citizens, foreign visitors, and businesspeople, as well as even the
highest members of the ruling elite. This has been amply described by
former regime higher ups, including General Rafael del Pino. Raúl
Castro’s son-in-law Major Luis Alberto Rodriguez Lopez Callejas, who is
head of GAESA, also heads the MINFAR’s (Armed Forces Ministry) Section
V, the unit in charge of the Armed Forces’ economic activity, as well as
Department VI, located on the fourth floor of the Armed Forces Ministry.
This division monitors and controls all GAESA operations, including
policing, spying, taping and recording all GAESA personnel activities.
Cubans posing as business owners and managers for the Cuban enterprises
abroad are kept under close surveillance by intelligence officers
deployed as diplomats or in other capacities. Manuel Beunza, for
example, describes a lingering fear of overstepping boundaries that
would affect his family with him in Canada or those left behind in Cuba.
Although a degree of personal enrichment and bleeding from state
enterprises seems to be part of the arrangement for those at the highest
levels of power, purges for corruption are common when government
officials become “too greedy” or keep large transactions under wraps.
Some coincide with reports of disaffection or criticism of the regime or
of Castro synchronized with an urgent need to cover up drug trafficking
operations when international authorities uncover unimpeachable Cuban
involvement. The 1989 purge of the Ministry of the Interior and Armed
Forces under the command of General Ochoa is the better known incident.
Nevertheless, there have been many others. In 1982, Chilean Max
Marambio, until then heading some of CIMEX’s illegal businesses such as
drug trafficking, was removed for corruption. Antonio de la Guardia and
Jose Luis Padrón were fired from their high-level CIMEX jobs in 1985
when they were discovered to have used US$60 million that was to be in
deposit in a Swiss bank for other unauthorized business transactions.
In 2003, several senior officials of the tourism enterprise Cubanacán,
including its President Juan Jose Vega, were demoted, accused of
corruption, and placed under house arrest. Millions of dollars were said
to be missing. A dozen CIMEX executives, including the head of foreign
business management of MINCEX and the Cuban manager of the Spanish firm
Provimar S.A., were also reportedly demoted and prosecuted during the
purge. A source within CIMEX leaked details of the scandal and stated:
“Now they are after the scapegoats to protect the fat cats of the
nomenklatura and the foreign businessmen. The purge in the tourism and
foreign sector continued during 2004, with 26 individuals arrested in
alone for corruption, including the general managers of the
Gran Antillana and La Vajilla stores and the warehouse manager of the
latter.
Conclusion
To keep Fidel, Inc. running efficiently, profitably, and successfully it
is critical -as in all capitalist ventures- to have a clear vision, to
implement a coherent strategy, to offer products that sell thanks to
winning marketing techniques, and to maintain effective operational
systems and management controls. Fidel Inc. is gigantic enterprise
posed to remain extraordinarily successful as long as those fundamentals
remain in place.

http://lanic.utexas.edu/project/asce/pdfs/volume15/pdfs/werlau.pdf

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