Offshore Islands
Page 39
It took three days work and a lot of patience in George Town for John Ennis to worm out the information on the Ciscap promoters. Working the net from his hotel room, with his satellite telephone link to Paris, he gradually pieced together the arcane structure.
The BCN side seemed to be relatively transparent as well as their involvement with their Irish and European partners, though at the meeting in Jamaica, Castlemain had seemed to be a little cagey with his information, which was understandable from a banker. He had suggested that Ennis contact the project head, Tony Arrowsmith, directly for greater details. However at that moment it was the Cuban side that was of interest to Ennis.
To start with he had discovered, without to much difficulty, that Sierra Maestra Breweries & Distilleries owned a company called Caribtrade SA, a Panamanian registered company, which was in reality a Cuban sociedade anonimas. A rather curious arrangement, on the one hand it was a semi-autonomous state agency for foreign trade, and on the other was a private venture backed by powerful Cuban government figures.
Where he had more difficulty, was in the unravelling of the different activities of Caribtrade SA. It had tentacular operations through a variety of different subsidiaries; there was Caribtour, a hotel and travel organisation which brought 500,000 tourists to Cuba every year. Caribtour had branches in several major European capitals.
Then there was a subsidiary called Caribsugar, which was specialised in refining, importing and exporting sugar. Caribsugar in turn owned several trading companies, each specialised in the export of different products; seafood such as lobsters, and meat products which came from the herds of cattle he had seen grazing across the Cuban countryside, but he had rarely seen on his plate in Cuba except in the most exclusive and expensive restaurants, finally there was a company exporting cigars and rum.
He found that the Caribtrade group even owned a small merchant fleet, composed of low tonnage ships of less than 5,000 tons, registered in Panama, which could certainly move goods in and out of Cuba, circumventing all the bureaucratic procedures by going through their own private ports.
At the small local Chamber of Commerce, in George Town, which was unsurprisingly well equipped for an offshore business and banking centre, Ennis consulted the business guides, not only of the local companies but also those of other such offshore banking havens.
By cross checking information and names he discovered that certain directors of Caribtrade were partners in a firm called ‘Caribconsultoria y Juridica Internacional’, specialised in legal matters, which without doubt worked to overcome the legal problems that a group like Caribtrade would confront in its multiple activities across the Caribbean. This firm worked closely with ‘Bancarib y Financiero’, a bank in which Caribtrade was part owner, which also traded in international stock and commodities and was registered in the Caymans.
The bank operated a subsidiary company which appeared to be set-up to handle joint-ventures and investments from foreign companies called ‘Caribinvest y Consultores SA’. One of their clients was Cubanotel specialised in hotel development which provided support and advisory services for investors.
Through a couple of calls to the offices of the Miami Herald, he was put in contact with a reliable Miami Cuban association, from whom he learnt that these business organisations had powerful men behind them in the SCEC, the State Committee for Economic collaboration. Further the same men manipulated decisions taken in all the key Cuban ministries such as Ministry of the Interior, Foreign Trade, Tourism, Sugar, Economy and Planning, even the Executive Committee of the Council of Ministers.
It was very evident that tourism had become the largest industry on the island; it had kept the Cuban economy afloat with the hard currency it earned and was the only potential growth sector. When the economy finally opened up, the country would no doubt be invaded by retirees from New York to Chicago, who would arrive in droves to take advantage of the sunshine and the low cost of living and property.
Certain names appeared to crop up several times in the different organisations, one of which was that of Carlos Ortega. Ennis had remarked Ortega’s name, since the articles of incorporation of the companies showed that he was Chilean, born in Santiago de Chile, which seemed a little strange for Cuban businesses. His role gradually became clearer when Ennis turned up his links with Russia. He discovered that Ortega had amongst other things, the role of a kind of Tsar, empowered to negotiate and collect debts from the Americas, owed to Russia, dating back to Soviet times.
He then checked newspaper data bases, where reports showed that Ortega was mixed in a number of affairs which were suspected of being linked to the Russian Mafiya. That was not too difficult when dealing with Russia, since it was estimated by some specialists, that the Mafiya controlled an astonishing fifty to eighty percent of the Russian economy.
In the past Cuba had been a Soviet surrogate. The debt of Cuba to the Soviet Union in 1990 was estimated by various sources at between ten and thirty billion dollars, a sum which was disputed by Cuba since it depended on the exchange rate that was used between the dollar and the rouble. Ortega was paid a commission, like a tax farmer, on all that he recovered, whether it be in money, goods or services.
As Cuba had almost no hard currency, he set up barter deals in commodities, with Russia importing nearly two million tons of sugar, equal to fifty percent of Cuba’s sugar exports, and Cuba imported two million tons of Russian oil. The terms were no longer preferential, like in the good old days, though prices were fixed so as to offset certain parts of the debt.
Ennis made his own approximate calculations, using the prices quoted in The Financial Times of the previous day, the price of ‘brown’ unrefined sugar ‘11’ was at 6.4 cents a pound and white sugar 200 dollars a ton for 50 ton lots. His calculation showed that the present annual production of 3.6 million tons of non-refined sugar, at a little over six cents a pound, made around 500 million dollars. Refined sugar would be over double the price.
A lot of money, he thought, it was no wonder the Russian Mafiya was interested.
Checking out the role of sugar in the Cuban economy, he learned that it was what could be called a mono-culture, one of the mainstays of the economy. Back in 1970 the plan had called for an annual production of ten million tons, a target, which was not reached. In the 1980’s four fifths of exports from Cuba were sugar and almost seventy percent of the sugar went to Soviet Union.
With the end of the Soviet Union the Cuban economy collapsed, contracting by between thirty to fifty percent over a five year period. As a result a ‘Special Period in Peacetime’, that is to say a program of extreme austerity, was declared in 1990 by the Cuban government.
The most important moment in the year in Cuba was, and still is, the zafra, that is the sugar harvest. The sugar production plan was fixed at government level by an organisation called, Junte centrale de la planification.
The success of the zafra depended on fertilisers, pesticides, petroleum and machine parts, which Cuba could no longer afford to buy, with the result that the economy spiralled down into a black hole and sugar production fell to under four million tons, a mere fraction of its past levels, compounded by world prices being at the lowest ever level ever.
Chapter 40
Playa Esmeralda