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CUBAN
EGALITARIANS The powerful elite in the Republic of Cuba continues to place its ill-gotten millions in banks located in Panama, Brazil, Mexico, Canada, Spain, and the United Kingdom. These senior figures derive their wealth from a range of activities that include money laundering, drug trafficking, financial crime and old-fashioned graft. A heartbeat away from PEP meltdown Most Western institutions that maintain high-profile Cubans' accounts have not concerned themselves with the fact that they are "politically exposed persons." This is because they have assumed, probably rightly, that these corrupt officials are not breaking any laws. They have assumed that Fidel Castro Ruz, Cuba's dictator, has given the officials bribe money or allowed them to embezzle funds on his own authority. Some compliance officers might conclude that they have therefore not broken any laws in securing the capital that they are now moving offshore. Castro is of advanced years, however, and a change of regime is a distinct possibility. If communism disappears from Cuba in the near future, many smug Western bankers may rue the day that they accepted Cuban flight capital. Let me explain why ... Specious litigation in the offing Anti-Castro Cuban exiles in the United States intend to pursue the communist leadership's offshore assets most vigorously if and when democracy comes to Cuba. This could involve major litigation against financial institutions that still hold substantial funds on behalf of former members of the government. The nature of such litigation is anyone's guess; it may be impossible for a democratic Cuban Government to prove that the officials broke today's Cuban law by acquiring their money. This is not, however, likely to dishearten them. In such a situation it is odds-on that they will try every specious argument that occurs to them. These arguments might hold water with judges in many jurisdictions who are under pressure from their governments to punish the communists. Even the Grand Cayman Court might bow to pressure from HM Government, which itself bows to pressure from the US Government in nearly all cases. The threat of reputational damage in today's hyper-competitive banking market may cause some institutions to wonder whether the patronage of Cuban officials is worthwhile. Below is a list of the major figures in the Cuban regime. I have ranked them according to the amounts they are believed to hold in accounts all over the world. These are, of course, only the best estimates available. Cuba is a closed society with omnipotent internal security agencies and these figures may be conservative. These government functionaries will, sooner or later, pass away. Many could die as soon as the revolution happens; many will go on the run. Many will leave their secret funds to sit quietly until disturbed by criminal investigators or reporters. Where it really counts, they have large amounts Cuba is a poor country, but it is not difficult to explain the high figures. Cuban exiles in Miami and elsewhere in the US have been sending dollars to their relatives behind the "sugarcane curtain" since 1960. The money always ends up somewhere in Cuba's "command economy." Visiting exiles take cash to their former homeland on family visits and are even allowed to wire certain amounts there legally. The Cuban relatives exchange the dollars for pesos at inflated rates that favor the government, which started taxing ten per cent of every transaction last year. They then spend the pesos on government-produced goods and services, enriching the government still further. Much of the hard currency — and pesos — that the government earns from this process goes into the pockets of corrupt officials with Castro's blessing. Now is the time Castro's death may be years ahead, but prudent compliance officers ought to make their decisions about Cuban money now. If they have no fear of the Abacha-like legal action that is bound to follow, they should make a conscious decision to rest easy. If they fear it, they should jettison their corrupt customers while they still have time to distance themselves from the assets. Now is the time for them to assess their risk. CUBAN
OFFICIALS BY ESTIMATED SIZE OF HOLDING
MORE
THAN $1 BN
1 Fidel Castro
Ruz MORE
THAN $100 M
2 Raul Castro
Ruz MORE
THAN $50 M
4 Vilma Espin
MORE
THAN $20 M
7 Herederos de Jose Abrahantes 8 Abraham Maciques 9 Alejandro Roca Iglesias 10 José Luis Padrón 11 Marcos Portal 12 Julio Casas Regueiro 13 Eusebio Leal Spengler 14 Guillermo García Frías 15 Abelardo Colomé Ibarra MORE
THAN $10 M
16 Eduardo
Bencomo Zurdo MORE
THAN $5 M
37 Panchito
Portela
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