Thursday, August 10, 2006 · Last updated 10:32 a.m. PT
Seized assets an obstacle to Cuba trade
By LAUREN VILLAGRAN
AP BUSINESS WRITER
NEW YORK — While the U.S. eyes Fidel Castro’s next move, scores of
companies and thousands of people whose possessions were confiscated by
Cuba after the 1959 revolution are waiting to negotiate payback for
their expropriated assets.
The Foreign Claims Settlement Commission certified 5,911 claims against
Cuba totaling about $1.85 billion in 1972, when the U.S. Justice
Department’s program expired. With interest, they could be worth some $7
billion today. About 30 U.S. companies hold 57 percent of the claims’
Under the program, the U.S. can negotiate for a payment on behalf of the
claimants. But four decades after the claims were first registered,
negotiations have never opened.
“The claims were so large, and the hostility so great, that there has
never really been an attempt to resolve the claims,” said Robert Muse, a
Washington-based attorney who represents two companies with large claims
against Cuba, which he declined to name.
Many of the claims have changed hands numerous times over the years, as
companies were bought and sold. Among the original list: Cuban Electric
Co.; Standard Oil Co. and Texaco Co., which now belong respectively to
Exxon Mobil Corp. and Chevron Corp.; and International Telephone &
Telegraph Corp., which is now owned by Starwood Hotels & Resorts
Starwood recently filed its own property-seizure claim against Cuba
after the settlement commission opened a second window of opportunity
for claims on properties confiscated after May 1967. The company charges
that Cuba nationalized land worth $61.2 million including interest,
according to the claim.
Resolving the claims would likely require a monumental shift in policy
by both nations. Cuba would have to decide it wants the embargo to end
and the U.S. would have to want a new relationship with Cuba, Muse said.
Jorge Pinon, a senior researcher with the University of Miami’s
Institute for Cuban and Cuban-American Studies and a former oil company
executive, said he believes some companies may not pursue outstanding
claims when the time comes.
Standard Oil and Texaco, for example, had refineries in Cuba that were
nationalized in 1960. Today those assets – which are in bad shape and
carry potential environmental liabilities – “are basically worth zero,”
Exxon Mobil and Chevron, “won’t jeopardize their long-term profitability
outlook to get into a long, dragged-out court fight,” Pinon said.
In a statement, Chevron spokesman Kent Robertson said about its property
claim: “We believe it to be enforceable if and when there is a change in
the Cuban government.”
Cuba has in the past settled property claims with countries including
Switzerland, Canada and the U.K., Muse said. But those were not nearly
the magnitude of U.S. claims.
Philip Peters, vice president of the Lexington Institute, an Arlington,
Va.-based think tank that defends free trade, cautions against property
claims becoming a central issue in U.S.-Cuba relations.
“People deserve to be compensated,” he said. “But if the U.S. makes this
the top issue, it means we run the risk of strangling progress and
putting a huge burden on the Cuban government’s budget at time when most
would want the government to move forward.”