April 24, 2008: 4:25 AM EDT
Corporate stakes in Cuba
Is the future brightening for U.S. pre-Castro claims?
By Telis Demos, writer-reporter
(Fortune Magazine) — After Fidel Castro announced that he was resigning
the presidency of Cuba on Feb. 19, shares of OfficeMax rose 12%. The
reason? It has a claim worth $2.5 billion dating back to when its
property there was seized in the wake of the 1959 revolution. Similar
claims made by nearly 6,000 companies are currently valued at $20
billion, and U.S. laws require all claims to be settled before trade can
U.S. companies are not looking for a check, however, according to
Patrick Borchers, an international-law professor at Creighton
University, who studied the issue for USAID: "[They want] assets back or
replacement assets or development rights."
While the office-supply chain, OfficeMax (OMX, Fortune 500), no. 288 on
the 500 list, was never in business in Cuba, it came to own Cuba's
national electric company through a merger with papermaker Boise
Cascade. Boise had earlier bought a Florida company with a stake in
Other claimants paint a picture of pre-Castro consumer life:
Colgate-Palmolive (CL, Fortune 500), maker of the island's most popular
toothpaste;Coca-Cola (KO, Fortune 500), whose soda machines were
ubiquitous; and GM (GM, Fortune 500), maker of the '50s-vintage cars
still being driven around the island. A predecessor of Exxon Mobil (XOM,
Fortune 500) owned an oil refinery, and Chiquita Brands (CQB, Fortune
500) bought a firm that owned fruit orchards.
One company that's been particularly interested in updating its claims
is Starwood Hotels. In 1998 the global hotel group acquired part of a
claim worth $1.4 billion when it bought a piece of the ITT conglomerate,
which had owned a radio station in Cuba. Then, in 2005, after a former
ITT manager in Cuba contacted the company, Starwood asked the Justice
Department to recognize an additional claim of $51 million worth of land
near the Havana airport and on the ocean. It was approved in 2006, but
don't book your room yet.