Economy & Trade, Headlines, Latin America & the Caribbean

CUBA: Potentially Huge Corruption Scandal Rocks Tourism Industry

Dalia Acosta

HAVANA, Dec 4 2003 (IPS) - The Cuban government has kept mum so far with regards to what could be one of the biggest corruption scandals in this island nation in over a decade.

High-ranking officials at Cuba’s largest state-owned tourism organisation, Cubanacán, which manages around 40 percent of the country’s tourism industry, are implicated in the alleged embezzlement of millions of dollars.

Juan José Vega, Cuba’s representative in several joint business ventures with foreign capital, and until recently president of Cubanacán, as well as 15 senior Cubanacán officials have been put under house arrest.

The investigation is reportedly under the direct supervision of Minister of Defence, Gen. Raúl Castro, President Fidel Castro’s brother.

As is usual in Cuba, fragments of information on the scandal are passed from mouth to mouth, and no official sources are available to confirm or deny the rumours, while reporters wait for an official communique to provide information on the case.

”The rumour has been circulating for several days at the leadership level, in business circles, and in the tourism sector,” a source close to the government told IPS on condition of anonymity.

Although the details are not yet clear, several different versions agree that the case involves the diversion of funds from the tourist industry to personal bank accounts overseas.

At any rate, the officials put under house arrest may not all be involved, and the amount reportedly embezzled may not be as large as some rumours have it. ”The government is more worried about the kind of crime that was committed than about the quantity embezzled,” said the source.

According to the Cubanacán Group’s web site, it ”is a tourism and trade business holding that hosts around 40 percent of international tourists visiting Cuba. It has nine offices in different countries of Europe and the Americas, 23 joint ventures for the development of hotels and other businesses, as well as 15 companies within Cuba.”

In Cuba, Cubanacán runs 51 hotels, 52 restaurants and cafeterias, a chain store with more than 300 outlets, two marinas, 10 diving centres, nine fishing locations, a travel agency, a car rental and taxi service, a convention centre and 15 entertainment centres including nightclubs and theme clubs.

It also has an international legal practice that provides legal consulting and assistance on foreign investment, the establishment of joint ventures, international economic associations, and trading companies, the registration of foreign companies, international contracts of sale and purchase, and other areas.

More than one and a half million tourists visited Cuba between January and October this year, nearly 190,000 more than in the same period in 2002. The tourism industry is Cuba’s main source of revenue, bringing in over 1.3 billion dollars last year.

With the economic crisis that broke out at the start of the 1990s and the subsequent gradual opening of Cuba’s socialist economy to foreign capital, the government has attempted to prevent corruption by approving a code of ethics in 1996 that must be signed by all public employees, businesspeople and politicians at all levels.

According to Vice-President Carlos Lage, the government’s aim is to avoid corruption while continuing forward with the process of opening up to foreign capital and forging closer ties with a world where ”vice and corruption are not the exception.”

Official sources say the situation in Cuba is far-removed from what can be seen in other countries, and that corruption is limited and concentrated at lower and middle levels of government and business, rather than the highest levels of government.

Receiving commissions or ”gifts” for the successful negotiation of a contract, a practice that is routine in many countries, is prohibited in Cuba, and can lead to judicial sanctions.

Other anti-corruption initiatives have included the creation of the Ministry of Audits and Oversight in 2001, an increase in the number of audits carried out, and a rise in the inspections and other operations conducted by the Interior Ministry.

In 1997, a reform of Cuba’s penal code established an eight to 20-year prison sentence for those found guilty of bribery. There are also sanctions for trafficking of influences, and the misappropriation and embezzlement of public funds.

Another amendment, approved in 1999, provided for the death penalty for public officials found guilty of involvement in drug trafficking.

The most high-profile corruption case dates back to 1989, when Gen. Arnaldo Ochoa, Col. Antonio de la Guardia, Captain Jorge Martínez and Major Amado Padrón were convicted of corruption and drug trafficking and put to death.

In 2001, several cases of corruption in the Fishing Industry Ministry came to light, and then-minister Orlando Rodríguez Romay was sacked, although he was apparently not directly involved.

However, among those implicated were several members of his family, including a brother who headed a company that answered to the Ministry, who had reportedly accepted gifts and favours from a foreign associate.