Amid Economic Reforms, Cuba Goes after Corruption

Paul Haven (AP) writes about Cuba’s ongoing struggle against corruption:

Green-clad security agents swoop down on an upscale business complex to shutter the offices of a Canadian car dealership. Top executives at Cuba’s famed cigar monopoly find themselves behind bars. A former government minister trades his seat in power for a jail cell and a 15-year term. President Raul Castro is matching his free market economic changes with a zealous battle against entrenched corruption on this Communist-run island, much of it involving Cuban officials at major state-run companies and ministries as well as the foreigners they do business with.

Cuba says the crusade is essential to save the socialist system. Others wonder at the timing of a crackdown that has sent a chill through the small foreign business community, just when the cash-strapped economy needs international financing to push the reforms along.

Cuba has battled corruption before, even executing a former revolutionary war hero on drug trafficking charges in 1989. But past arrests have been largely limited to Cubans. Analysts say the current crackdown seems different, with Canadian, French, Czech, Chilean and English citizens jailed or sentenced for their alleged roles, and scores of small South American and European companies kicked out of the country. The sale of Korean cars and car parts slowed this year as two top distributors, both Canadian, became ensnared. Meanwhile products like Chilean wine, juice and tomato paste temporarily disappeared from supermarket shelves, replaced after a few months by other brands.

One thing is clear. The rules of doing business in Cuba have changed dramatically under Raul.

“This is not a campaign, what is happening in the fight against corruption,” Attorney General Dario Delgado told journalists this month. “This is permanent. This is systemic. There is a will on the part of the state … that corruption cannot be permitted.”

While the nonprofit Transparency International says Cuba ranks better than average worldwide in a measure of corruption and is third best in Latin America and the Caribbean, graft here can be more corrosive because the state controls nearly the entire economy.

Companies wanting to do business with Cuba must present their cases directly to midlevel government officials who may make about $20 a month. There is no open bidding for contracts and decisions go unexplained, which businessmen say opens the possibility of graft. A South American importer with a decade of experience selling food products to Cuba before he was expelled for alleged corruption in 2009 said the payoffs can take many forms: from the gift of a bit of gas money, a free meal or a computer pen drive for a relatively junior “international purchaser,” to free trips abroad, computers, flat-screen TVs or large deposits of cash in foreign bank accounts for senior officials.

“The forms of persuasion — let’s call it that — are nearly infinite,” he said, adding that the system is so pervasive that “a businessman must always have a wad of cash to stuff the pocket of a guayabera,” the loose-fitting traditional Cuban dress shirt.

[. . .] Several foreign businessman applaud the crackdown, saying it is important to level the playing field for honest companies, but even they refused to speak on the record. Their sentiment was echoed by Omar Everleny Perez, lead economist at Havana University’s Center for Cuban Economic Studies, who has argued that the government must encourage foreign investment to keep the reforms from foundering. Still, he said eradicating graft is vital even if it discourages some investment. “If you are going to undertake a profound change in the Cuban economy,” he said. “You must take this problem on with great force.”

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One thought on “Amid Economic Reforms, Cuba Goes after Corruption

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