Cuba May Use Middlemen for Flights to U.S.

Cuba May Use Middlemen for Flights to U.S.
By Lenore T. Adkins

Jan. 4 — The Cuban government is considering different ways to bypass
the potential expropriation of its aircraft, which the U.S. could
impound on American soil as payment for billions of dollars in unpaid
U.S. terrorism judgments against Cuba, a State Department official told
Bloomberg BNA.

Meanwhile, several Miami attorneys who won multi-million dollar
terrorism judgments for their clients against Cuba are watching how a
civil aviation arrangement plays out between the U.S. and Cuba, in case
there's an opportunity to collect.

The Cuban government has shown interest in a code-share agreement with
U.S. airlines so that American, not Cuban, planes land in the U.S., the
State Department official said. The official spoke on the condition of
anonymity under State Department ground rules for reporters.

Another option the Cubans are weighing is leasing airplanes from the
U.S. or a third country to fly routes between Cuba and the U.S. All of
the choices would give Cuba an opportunity to use more modern aircraft
while protecting their own from seizure. The Cuban government owns the
airlines based on the communist island, so if its airplanes land in the
U.S., they may be confiscated for the balance of about $2 billion in
unpaid judgments.

"The Cuban government is very well aware of that risk," the State
Department official told Bloomberg BNA.

The U.S. announced an informal civil aviation arrangement with Cuba in
December to govern regularly scheduled flights and charter service
between the two countries in the absence of a formal agreement. Both
sides are expected to sign off on the arrangement in early 2016 (243
ITD, 12/18/15).

As the Cuban government figures out how to enter the U.S. market, Cuban
air service to the U.S. is not scheduled for departure anytime soon, the
State Department official said. Airlines interested in flying routes on
Cuba's behalf to the U.S. would have to secure licenses from the U.S.
Commerce and Treasury departments, as well as authorization from the
U.S. Department of Transportation, the State Department official said.

"We told the Cubans we were prepared to give positive consideration to
such license applications," the official told Bloomberg BNA.

Scheduled service from the U.S. to Cuba in American aircraft is expected
to commence in the first half of 2016, after the Department of
Transportation divvies up the Havana slots to U.S. airlines. Currently,
there would be a maximum of 20 slots available.

"This is a completely new destination and origin, or at least it's new
for this generation of Americans," Transportation Secretary Anthony Foxx
told reporters. "And so we're going to work through it as quickly as we
can."

Behavior Going Back to 1959

Frozen Cuban assets in the U.S. have satisfied some of the judgment
awards, but most of the balance remains uncollected while creditors
sweep the U.S. for Cuban assets. A federal antiterrorism law lets the
families of state-sponsored terrorism victims seek damages in U.S.
courts. Total compensatory damages for the 11 judgments exceed $2.1
billion, while punitive damages account for nearly $1.8 billion. Foreign
governments are not required to pay punitive damages, Alfonso Perez, an
attorney who in 2006 helped secured a $400 million judgment against Cuba
for clients, said.

U.S. state and federal courts imposed the judgments against the Cuban
government when it was labeled a state sponsor of international
terrorism. The State Department placed Cuba on the terrorism blacklist
in 1982, and, following a review, Secretary of State John Kerry scrubbed
Cuba from the list last May.

Eight judgments seek compensation for executions, torture and other
behavior that occurred prior to Cuba's inclusion on the terrorism list.
For example, Perez was one of the attorneys who represented the family
of Robert Fuller, a U.S. plantation owner in Cuba. Fuller was tortured
and executed in 1960. Other judgments are tied to the torture and
execution of political dissidents and other U.S. citizens.

The U.S. discussed the judgments and other claims in a preliminary
meeting with the Cuban government in December 2015. Both sides will
reconvene for the next round of talks in the first quarter of 2016. In
addition to the roughly $2 billion in judgments the U.S. is seeking, it
also wants Cuba to compensate U.S. citizens for 5,913 certified claims
over property and assets the Cuban government seized shortly after Fidel
Castro took power. Without interest, the certified claims total $1.9
billion. Cuban officials have countered that the U.S. owes Cuba more
than $100 billion in reparations for human and economic damages they say
the country suffered under the U.S. embargo.

'Ear to the Ground.'

Attorney Arturo Hernandez represented Ana Margarita Martinez, a Miami
woman who in 2001 won a $27.1 million judgment against the Cuban
government, because her husband at the time, Juan Pablo Roque, was a
Cuban double agent who once worked for the FBI. She recovered $198,000
in exchange for waiving her right to collect $20 million in punitive
damages. With 6 percent interest in the remaining $7.1 million,
Hernandez said the Cuban government actually owes his client $14 million.

"I do believe that there are going to be, I think, opportunities
presented in the future to be able to collect on these judgments based
either on seizing Cuban property in the United States, whether that be
funds or whether that be airlines, because we are a judgment creditor of
the government of Cuba," Hernandez told Bloomberg BNA Dec. 21. "We
certainly have our ear to the ground with respect to these issues."

Attorney Jorge Borron won a $253 million judgment for the family of
Rafael del Pino Siero in 2008. Del Pino was an ex-friend of Castro who
was imprisoned in Cuba shortly after Castro took over. Borron alleged
that the Cuban government in the late 1970s tortured and hanged del Pino
in his cell.

Airplanes aren't Cuba's only assets, but Borron, who has yet to collect
on the judgment, is frustrated the Cuban government is looking for ways
to protect their aircraft from the judgments. He said he is disappointed
that the U.S. appears to be "bending over backwards" to help Cuba.

"That's going to create a lot of backlash with many, many individuals
objecting to this," Borron said.

Perez isn't surprised the Cuban government is trying to protect its
assets. He said the larger issue is the absence of a process to resolve
the judgments.

"I think the country, the Congress, the White House, who has shown
tremendous leadership in this area, should really push to have a
mechanism for resolving these claims," Perez told Bloomberg BNA.

With assistance from Stephanie Beasley.

To contact the reporter on this story: Lenore T. Adkins in Washington
ladkins@bna.com

To contact the editor responsible for this story: Jerome Ashton
jashton@bna.com

Source: Cuba May Use Middlemen for Flights to U.S. | Bloomberg BNA -
http://www.bna.com/cuba-may-middlemen-n57982065754/