Category: News & Media

In an article by Agenda Week, a publication of The Financial Times, details the corporate compliance side of U.S. certified property claims against Cuba. Several experts outline possible strategies for companies seeking compensation for confiscated assets as well as what companies that engage in the Cuba marketplce should consider when reviewing compliance risk issues that involve properties in Cuba subject to a claim.

... Companies such as Exxon Mobil and Chiquita Brands International are currently waiting to hear if the government of Cuba will repay them for assets confiscated by Fidel Castro during the expropriation of American property beginning in 1959. 

… PobleteTamargo attorney, Jason Poblete, notes that any discussion on settlement of claims requires authorization from the US government. He also stresses that though physical property will not be given back, US companies or citizens cannot sell a claim. Though many companies have expressed interest in seeking an alternative means of reparation, such as preferential treatment in joint ventures, Poblete points out that some US companies may not be interested in future Cuban ventures and want only to be paid back. 

… For companies looking at commerce with Cuba, boards must ensure that they are not dealing with previously confiscated assets or will find themselves trafficking in stolen property. Poblete says that due diligence for any company planning to expand into Cuba includes contacting the State Department to determine whether the Cuban business has claims against it. Poblete also advises that corporate representatives regularly check to see whether foreign entities are trafficking in U.S. companies’ assets. A transaction might be actionable in foreign investors’ home countries or in the United States.

… Nevertheless, trade and commerce will not open up between the US and Cuba until claims are settled. Poblete says that the process of settlement may frustrate companies as negotiations between the two countries are held in secret, and the government is not obligated to release a transcript. However, Poblete says it’s promising that discussions are under way.

… “But for the embargo to be eased, this has to be settled,” he says. “Access to the U.S. market is a privilege, not a right. If you want U.S. investors to do business in Cuba, you need to take care of these old claims. You also need a mechanism that protects property rights. What good is it to go to there if you don’t have a mechanism to resolve your claim?”

The full article can be found here. (Subscription required)

Following last week’s multiple announcements in US-Cuba Policy, the Daily Business Review released an article discussing the seemingly unilateral concessions. Not only were commercial flights reinstated between the United States and Cuba, an American company has been granted approval for opening a tractor assembly plant on the island, and the President has confirmed an upcoming visit to Castro’s Island. These sudden changes have left many questioning what the United States is getting in return for the loosening of the embargo.

Mauricio Tamargo, attorney at PobleteTamargo, spoke with the Daily Business Review regarding these concerns. “These concessions to the Cuban government are of great concern and I believe have an adverse affect on the prospect of a settlement of the certified claims because Cuba wants trade and commerce normalized with the U.S.,” said Tamargo. Once trade is normalized, “Cuba will have no incentive to pay the certified claimants.”

Tamargo, the former chairman of the U.S. Foreign Claims Settlement Commission, supports charging a 10 percent tax on all transactions with Cuba “as the cost of doing business with stolen property” to pay claimants whose property is being used by the government, state businesses, foreign embassies, factories, and air and seaports.

Currently, the 5,913 certified claims have yet to be paid. “Congress has repeatedly reaffirmed its position that these claims must be paid before it would lift the embargo,” Tamargo said.

On February 11, the House Judiciary held a subcommittee hearing to discuss resolution of these claims as well as other matters surrounding Cuba’s debts to Americans. For information on the hearing, please see “Resolving Issues With Confiscated Property in Cuba, Havana Club Rum and Other Property“

The entire article in Daily Business Review can be found here.

On February 11, 2016, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet held a hearing titled “Resolving Issues With Confiscated Property in Cuba, Havana Club Rum and Other Property” in which pending claims against the government of Cuba were discussed. Witnesses included US government officials, victims of property confiscation and trafficking in Cuba, as well as PobleteTamargo partner, Mauricio Tamargo.

The following list of witnesses includes links to submitted testimony.

Witness Panel 1

Honorable Kurt Tong

Principal Deputy Assistant Secretary, Bureau of Economic and Business Affairs (Department of State)

Ms. Mary Denison

Commissioner for Trademarks, US Patent and Trademark Office

Witness Panel 2

Mr. Rick Wilson

Senior Vice President, Bacardi-Martini, Inc.

Mr. William A. Reinsch

President, National Foreign Trade Council

Mr. Mauricio J. Tamargo

PobleteTamargo LLP, Former Chairman, Foreign Claims Settlement Commission

Ms. Lilliam Escasena

Cuban Property Claimaint, Miami, FL

 

In a recent interview with Radio Martí, Mauricio Tamargo further discusses ways in which the Cuban government could finance debt with US companies in order to pay American certified claims.

Tamargo explains, “If we lift the embargo, Cuba will make lots of money with their business and will sell many of their products here in the United States, and if they can finance the debt.”

The Cuban government could use the proceeds from exports to pay the $7 billion outstanding claims. Tamargo compares similar deals with Vietnam and Russia that were successful. Solving such financial discrepancies are key in establishing business relations internationally which is generally the main motivator in reaching an agreement.

Experts have considered the possibility that the two countries reach an agreement on debt investment, giving American entrepreneurs the amount as an investment in certain Cuban companies.

Tamargo does note that given the state of the Cuban economy, such alternative means of financing should not be ruled out.

The original article (in spanish) can also be found here.

In an article published by the Pittsburgh Post-Gazette, Mauricio Tamargo discusses the ability of the Cuban government to make payment on US certified claims.

Between 1965 and 1972, the US Foreign Claims Settlement Commission (“FCSC”) certified claims against Cuba now worth more than $7 billion, including interest. During bilateral talks in Havana last month, State Department officials raised the issue stating that “the resolution of outstanding US claims remains a priority for the US government.”

Former chairman of the settlement commission, and attorney at Poblete Tamargo, LLP, Mauricio Tamargo, discussed the difficult challenges that may unfold. “It will be a problem for the Treasury Department, which will be in charge of figuring out who is teh rightful holder of each claim,” he states.

Tamargo explains that American law is clear, Cuba must make restitution before the trade embargo can end, a condition of the Helms-Burton act from 1996.

“Cuba does not get a free ride. If you wish to do commerce with the United States, you must respect the property rights of its citizens,” Tamargo says.

Tamargo goes on to say, “Cuba clearly has the money, even if it didn’d, it could easily finance [$7 billion] because once the trade embargo gets lifted Cuba will make a lot of money.”

Cuba continues to assert that they suffered greatly from the embargo estimating damarges as high as $180 billion, a figure that Tamargo explains is a posturing tactic by the Cuban government to minimize and gain some sort of negotiating tool.

Critics who feel that Cuba is not financially capable of paying the claims in full have proposed alternative options to total payment of the American claims stating that Cuba is not likely to accept the valuations made by the FCSC.

Regardless, it will end up to Congress, not the Obama administration, to make decisions on lifting the embargo.

For more information on Cuba’s ability to Pay US Certified Claims, read Tamargo’s article “Can Cuba Afford to Pay?”.

The original article published by the Post-Gazette can be found here.