How Castro Manipulates Foreign Investors

Tuesday, April 1, 2014
Excerpt from Reuters:

The communist government sometimes lets investment proposals die on the shelf without explanation. It has, for example, entered talks with several groups about building golf resorts only to let proposals wither after once appearing to favor them.

"The problem with the new law is that except for taxes, little has changed, which means their attitude hasn't changed," said one European diplomat who declined to be identified. "In the end, the entire law remains discretionary."

Experts say Cuba's approach to foreign business has been arbitrary. If a venture is successful, the government often wants a bigger stake. It welcomes foreign financing, but once a project is operational it wants to take charge, they say.

"Use the foreigners where it suits you. Spit them out as soon as their usefulness is over," said another European diplomat who requested anonymity.

Cuba has closed more joint ventures than it has opened since the ruling Communist Party adopted wide-ranging economic reforms in 2011, and last year the Anglo-Dutch consumer goods group Unilever ended a 15-year joint venture after failing to resolve a dispute with the government over who would have the controlling interest.

More chillingly, Cuba jailed executives in British investment and trading firm Coral Capital Group Ltd on unspecified fraud changes. They were found guilty of minor charges last June and released for time served, more than a year each.

The government was previously more likely to deport such suspects. Now it has made clear it is willing to find executives criminally liable.

French entrepreneur Michel Villand stopped doing business in Cuba after establishing a chain of bakeries called Pain de Paris, now in the hands of the government. He wrote a book entitled "My Associate Fidel" in which he said his government partners defrauded him by keeping two sets of books, then offered a ridiculously low sum for his stake.

"Starting a joint venture in Cuba for a small or medium-sized foreign business is the same as putting a noose around your neck," Villand told the Spanish news agency EFE.