Panama Papers show Cuba used offshore firms to thwart embargo

Panama Papers show Cuba used offshore firms to thwart embargo

At least 25 companies in tax havens had Cuban links
A brother of Raul Castro's son-in-law appears in the leaked documents
Cuba was at the heart of a deal to export Russian oil that involves a
Lebanese company
NORA GÁMEZ TORRES
ngameztorres@elnuevoherald.com

The Cuban government used the Panama law firm involved in the Panama
Papers to create a string of companies in offshore financial havens that
allowed it to sidestep the U.S. embargo in its commercial operations.

El Nuevo Herald identified at least 25 companies registered in the
British Virgin Islands, Panama and the Bahamas and linked to Cuba.

The documents found in the Panama Papers are dated as far back as the
early 1990s, when the Cuban economy crashed following the end of
Moscow's massive subsidies to the island. But Cuba kept its links with
some of the firms until very recently.

Listed as a director of one of the companies is a brother of Gen. Luis
Alberto Rodríguez López-Calleja — husband of Cuban ruler Raul Castro's
daughter and powerful head of the Cuban armed forces' business
conglomerate, GAESA.

The Panama Papers, documents leaked to the International Consortium of
Investigative Journalists and shared with the McClatchy Washington
Bureau, Miami Herald and El Nuevo Herald, among others, contain hundreds
of thousands of pages from the files of Mossack Fonseca, a Panama law
firm with offices in 33 other countries.

The documents reveal previously unknown details about the Cuban
government's economic maneuvers abroad and the foreign companies that do
business with Havana as some of the firms tried to hide Cuba's hand in
business deals to skirt the U.S. embargo.

Russia-Lebanon-Havana connection

One of the more intriguing schemes mentioned in the documents puts Cuba
at the heart of a deal to sell Russian oil to Latin America through a
company registered in Panama by the Bassatne family. The family controls
BB Energy, a conglomerate founded in Lebanon in 1937 that buys and sells
16 million metric tons of crude and derivatives each year. One Bloomberg
report showed BB Energy had $10 billion in revenues in 2012.

The Bassatne family incorporated BB Naft Trading S.A. in Panama, with
Jürgen Mossack as a director. The company, which has offices in Havana
and other countries, was created "to handle, among other things, its
relationship with oil-exporting Latin American countries and with Cuba,"
Mossack Fonseca lawyer Rigoberto Coronado wrote in an email.

BB Naft does not appear, however, among the subsidiaries listed on BB
Energy's Web site. They include BB Energy Trading Ltd., BB Energy
Management S.A., BB Energy Holdings NV., BB Energy B.V., BB Energy
(Asia) Pte. Ltd., BB Energy (Gulf) DMCC and BB Holding S.A.L.

BB Naft did business with Cuba between 1992 and 2001, trading oil for
sugar "for $300 million, with credit facilities at low interest rate,"
Coronado wrote. He added that in 1996 "there was agreement on a
triangular Russia/Cuba/Naft Trading S.A. deal to deliver Russian fuel to
other markets for a number of tens of millions of US$."

One of the markets may have been Ecuador. A letter sent in 1998 by a
Mossack Fonseca employee to the international trade office at state-run
Petroecuador referred to documents sent by BB Naft "required to register
the company." A 2005 fax also points to an initial contact with the
Venezuelan government's Petroleos de Venezuela (PDVSA).

The relationship between the BB Energy Group and Petroecuador appears to
have lasted until recent days. Petroecuador contracted BB Energy (Asia)
Pte. Ltd., in February of this year to import 2,880,000 barrels of
diesel fuel. In 2015, BB Energy won Ecuadoran contracts for more than
three million barrels of naphtha, a petroleum distillate.

The Russian oil scheme appears to have been affected by the agreement
between Cuba and Venezuela to exchange oil for medical services, and BB
Naft expanded its work in Cuba in 2007 to include "the sale of spare
parts and batteries for autos and trucks, work boots, farm machinery,
hardware for USD 5.3 million."

Records of a meeting in Dubai in March of 2011 reflect a decision to
significantly reduce the capital of BB Naft, held by BB Energy Holdings
NV., from $8 million to $1.050 million. Riad Bassatne and his son Wael
remained owners of the remaining shares. Instructions for the change
were sent by Iulia Ispas, legal adviser to BB Energy Trading Ltd.

Emails exchanged by Mossack Fonseca lawyers also point to company
operations in Syria and Iraq.

One lawyer for BB Naft, Noureddine Kabalan, asked Mossack Fonseca in
April of 2008 to create a power of attorney so that "the empowered
person can be authorized to sign on behalf of the company in Syria and
Iraq for specific transactions."

A Reuters news agency report shows that the mother company, BB Energy,
was still sending petroleum to Syria in 2011. Global Policy Forum, a
non-government agency that monitors the work of the United Nations, also
included BB Energy in a list of beneficiaries of the so-called "oil
bribes" distributed by Saddam Hussein to recruit international support
for weakening U.N. and other economic sanctions against Iraq.

BB Naft was listed in the Cuban registry of foreign companies operating
on the island as of April of this year, with Riad Bassatne as director.
Its Havana address is Centro De Negocios Miramar, 5ta Ave. E/ 76 Y 78,
Ofic. 310. Edif. Santiago De Cuba. Miramar Playa.

BB Energy registered a company in Texas, BB Energy USA LLC., in 2014.
Its official address is the same as that of BB Energy Trading: 140
Brompton Rd., London, SW3 1HY, United Kingdom.

Peter Quinter, an expert on U.S. embargo laws and former head of the
International Law section of the Florida Bar Association, said the U.S.
trade embargo on Cuba generally bars a company with a U.S. presence from
doing business with Cuba directly or indirectly — through an offshore
branch, for example. Such deals, however, may be authorized by the
Treasury Department's Office of Foreign Assets Control or the Commerce
Department's Bureau of Industry and Security.

BB Naft shareholder Wael Bassatne told El Nuevo Herald that his company
did not violate the U.S. embargo because it is not registered and does
no business in the United States.

"All the other commercial activities were not affected by any sanctions
because these regulations do not exist as such," he wrote in an email,
adding that "Mexico, Canada and the European Union have laws prohibiting
their citizens and companies from obeying U.S. sanctions" on Cuba.

Many of the Mossack Fonseca emails and documents show the relationship
between BB Naft and the BB Energy group through the years.

In 2003, for example, BB Naft agreed to guarantee and meet the
obligations of a loan obtained by BB Energy (Asia) Pte Ltd. from the
Standard Chartered Bank of Singapore. The instructions to the BB Naft
shareholders were dated and signed in Beirut, but the agreement for the
guarantee was signed by lawyers and verified by the office of the BNP
Paribas bank in Marrousi, Greece.

In another document, the lawyer Kabalan instructed Mossack Fonseca in
2005 to issue new shares for BB Naft because the originals had been sold
to BB Energy Holdings N.V., a Curacao-based company publicly listed as
part of the BB Energy group. The new certificates, for 800 shares, were
to be issued in the names of 10 members of the Bassatne family,
including 160 shares for Riad Bassatne.

The Web page of the Cuba-Lebanon Businessmen's Council lists a Riad
Bassatne as a member of its board of directors and describes him as
"president of BB Naft Trading and member of the board of directors of BB
Energy."

Wael Bassatne nevertheless insisted that "there are no commercial or
financial relations between BB Naft Trading S.A. and the BB Energy
Group." He added that BB Naft's activities in Cuba included "the sale of
spare parts and agricultural machinery."

The company opened an office in Cuba, he explained, because he has been
"a resident of Havana like his wife and three children, all of them born
in Cuba" and Cuban citizens.

Secret Cuban companies

Other leaked Mossack Fonseca documents show the interwoven complex of
offshore companies created by the Cuban government to import and export
goods and invest funds abroad with the assistance of the Panamanian law
firm.

Starting in the early 1990s, Cuba's Ministry of Foreign Trade, through
the Compañía Panamericana S.A, used Mossack Fonseca to create a string
of disguised companies in Panama, the Bahamas and the British Virgin
Islands that bought and sold medicines, cigars and food.

Panamericana's former director, José L. Fernández de Cossío Domínguez,
is listed in the leaked documents as a director of Miramar Investment
Corporation Ltd, Euro Foods Ltd, Racuza S.A, Caribbean Sugar Trader,
Mercaria Trading S.A. and Sabradell S.A. Fernández more recently served
as Cuba's ambassador to Japan and economic attaché at the embassy in Paris.

The news website Diario de Cuba has identified the director of foreign
investments at the Foreign Trade Ministry, Déborah Rivas Saavedra, as
another of the directors of Racuza, Miramar Investment Corporation Ltd
and Caribbean Sugar Trader.

The leaked documents also show that Guillermo Faustino Rodríguez
López-Calleja, brother of Gen. Luis Alberto Rodríguez López-Calleja, was
appointed in 1999 as a director of Pescatlan S.A., a company
incorporated by Mossack Fonseca in the British Virgin Islands in 1991
with an initial capital of $50,000. A letter sent to the Panamanian law
firm in 1997 requested assistance organizing "a fishing operation in the
Turks and Caicos Islands with Cuban-flagged fishing boats."

The Mossack Fonseca documents nevertheless refer to Pescatlan as a Cuban
company and do not identify the true owners of the company. Its
ownership was in the form of anonymous bearer shares — the owners are
whoever has those shares.

There have been unconfirmed reports that Luis Alberto Rodriguez
Lopez-Calleja divorced Deborah Castro Espin in recent years, but he
remains in charge of Grupo de Administración Empresarial S.A., (GAESA)
and the government's signature port of Mariel development project. The
Cuban military is estimated to control at least 60 percent of the
island's economy.

Guillermo Faustino Rodríguez López-Calleja also appears as the
representative of seven foreign companies registered in Cuba: Acemex
Management Company Limited; Caroil Transport Marine Limited; Nautilus
Shipping Overseas Corp.; Northsouth Maritime Company Limited; Gulf Lake
Enterprises Ltd.; Acando Shipping Co. Ltd.; and Gilmar Project Finance
Establishment. They have addresses in the Miramar and Old Havana
neighborhoods of the Cuban capital.

The Panama Papers also show that Labiofam S.A., the marketing branch of
Grupo Empresarial Labiofam, a Cuban government company that produces
vaccines, medicines and other products for the control of carriers of
diseases, owns shares in BioAsia Ltd. That company was founded with an
investment of 10 million euros from Vietnam, southern Asia and the
United Kingdom and lists Mossack Fonseca as its registered agent.

Labiofam S.A. bought all the shares of BioAsia Ltd. in 2009. Longtime
Labiofam director José Antonio Fraga Castro, a nephew of Fidel and Raúl
Castro, retired in 2014 amid the so-called "revolutionary perfumes"
scandal, sparked when the company sought to sell perfumes inspired by
Cuban revolutionary hero Ernesto "Che" Guevara and former Venezuelan
President Hugo Chávez.

Little is known inside the island about the Cuban government's companies
abroad, but Havana economist Omar Everleny wrote in the early 2000s that
there were "more than 100 entities with the participation of Cuban
capital, founded as mixed [state-private] companies or as branches of
companies based on the island" operating abroad in areas such as
"construction, agriculture, food, medicine, mining, finance and science."

Everleny, recently fired from the University of Havana's Center for the
Study of the Cuban Economy, noted the paradox that a country that "lacks
the capital for its own development has invested in other countries."
The motive, he speculated, is the U.S. embargo "that forced the
establishment of a network of companies around the world to warehouse
and market products from the sea, among them lobsters and shrimp."

Today the export of products from the fishing industry is carried out
through those companies," he said, adding that Cuban officials also
created "an international network of companies to warehouse and sell the
famous Cuban cigars."

One knowledgeable source who asked to remains anonymous said the Cuban
government also has registered companies, ships and airplanes in Panama
and other countries to get around the embargo and avoid court-ordered
seizures to settle its many debts abroad. Those front companies, the
source added, also help Cuba carry out foreign trade transactions in
U.S. dollars, forbidden by the embargo until President Barack Obama
lifted the restriction earlier this year.

"Every time something was purchased in dollars, it could not be done
because the Cuban checks in dollars were automatically canceled because
the dollars belong to the U.S. Federal Reserve," the source said. "So
the seller had to be told that payment would be in euros from a bank in
Spain, for example, and Cuba lost on the currency exchange."

Companies registered abroad are "legally not Cuban," according to the
source, and could be used for dollar-denominated transactions.

The leaked documents confirm the existence of these types of foreign
companies, with at least partial Cuban government capital. Much of the
Mossack Fonseca correspondence on those companies involves updates of
company registries and boards of directors, payment of fees and requests
for letters of financial status required to open bank accounts or sign
contracts. Mossack Fonseca was listed as the registered agent for most
of the companies,

Swiss lawyer Albert-Louis Dupont-Willemin appears as a director of
several of the Cuban companies, among them Miramar Investment
Corporation Ltd. and Pescatlan S.A. The Panama Papers show
Dupont-Willemin as a director of a total of 49 offshore companies in the
British Virgin Islands, five in Panama and two each in the Bahamas and
Seychelles islands.

In one email exchange in 2011 involving a British company representing
ALIMPORT — the Cuban state agency that handles food and agricultural
imports, valued at nearly $2 billion in 2014 — that wanted to open an
account with the BBVA bank, a bank employee in Great Britain asked why
documents related to Miramar Investment Corporation Ltd had been
notarized in Switzerland.

An accountant for the British company All Worlds Food Ltd, Jose Da
Silva, answered: "I do not know the reasons why the documents were
certified by a Swiss notary. I understand Mr. Dupont-Willemin is a Swiss
lawyer and I believe it is for the documents to be more transparent and
trustworthy. It is assumed that companies will have more trust in
documents certified in Switzerland than in Cuba."

The Swiss lawyer did not respond to El Nuevo Herald requests for
comments on this story.

Hiding behind offshore companies

The Cuban government also hid its control of offshore companies by
creating still other limited liability companies whose sole objective
was to appear in registries as owners of the offshore companies — and
disguise Cuba's hand in them.

That's the case of Racuza S.A., incorporated in the British Virgin
Islands. It held all the shares of Euro Foods Ltd., which was registered
in the Bahamas and in turn represented ALIMPORT.

And the case of Sabradell S.A., headed by Panamericana director José L.
Fernández de Cossío Domínguez for a time and dissolved in 2008.
Sabradell was the sole owner of Resimevis Ltd, a Mossack Fonseca client
since 1995 dedicated "to general commerce of medical products and
equipment."

What's more, a 2015 email indicated that the sole purpose of Curtdale
Investments Ltd., registered in the British Virgin Islands, was to hold
the shares of Ardpoint Company Inc., which in turn owned Altabana S.L.
and Promotora de Cigarros S.L., two companies registered in Spain and
involved in the sale of Cuban cigars

One of the directors of both Curtdale and Ardpoint starting in 2011 was
Hernán Aguilar Parra, executive director of Grupo Empresarial de Tabaco
de Cuba, known as TABACUBA, the government's tobacco monopoly. Aguilar
also has served as a deputy in the legislative National Assembly.

At times, however, the shield of anonymity over Cuban companies is not
very effective. A convoluted email by a Cuban lawyer for Tecnica
Hidraulica, registered in the British Virgin Islands (BVI), showed all
its shares were held by Cuba's Técnica Hidráulica, S.A. The difference:
The name of the BVI firm has no Spanish accents, the Cuban company's
name does. The BVI company was dissolved in 2015.

The efforts to hide the Cuban government's hand in the offshore
companies means that its officials, lawyers and other employees used as
stand-ins could eventually become the effective beneficiaries of the
shares in those companies

A lawyer for Panamericana, Katiuska Peñado Moreno, and a former
commercial attaché at the Cuban embassy in London, Alejandro Gutiérrez
Madrigal, are listed as the beneficiaries of shares in Miramar
Investment Corporation Ltd. worth $50,000.

The long list of companies linked to the Cuban government or active in
Cuba also includes Sanford Management Financial Ltd.; Commercial Mercadu
S.A. (linked to Panamericana); Amadis Compañía Naviera S.A.; Seagull and
Seafoods, S.A.; Mavis Group S.A.; Octagon Industria Ltd; Travelnet; and
Venus Associates Inc., among others.

The Cuban Embassy in Washington did not answer a comment request for
this story.

COMPANIES WITH CUBAN CAPITAL OR ACTIVITIES ON THE ISLAND
BB Naft Trading S.A.

Miramar Investment Corporation Ltd,

Eurofoods Ltd

Racuza S.A.

Caribbean Sugar Trader

Mercaria Trading S.A.

Sabradell S.A.

Pescatlan S.A.

BioAsia Ltd

Resimevis Ltd

Curtdale Investments Ltd

Ardpoint Company Inc

Tecnica Hidraulica S.A.

Sanford Management Financial Ltd,

Commercial Mercadu S.A.

Amadis Compañía Naviera S.A.

Seagull and Seafoods S.A.

Mavis Group S.A.

Octagon Industria Ltd

Travelnet

Venus Associates Inc.

Acepex Management S.A.

M.I.S. Technologies S.A.

Vima World Ltd

Billingsley Global Corp

Source: Panama Papers show Cuba used offshore firms to thwart embargo |
In Cuba Today - http://www.incubatoday.com/news/article82214612.html