Hugo Cancio: Cuba’s American business connection?
By David Adams
MIAMI/HAVANA (Reuters) – Hugo Cancio believes he’s the new face of
American-style entrepreneurship in Cuba.
The Cuban-born Miami resident made his mark in music, promoting Cuban
and other Latino acts. His company’s stock is public and a handful of
investors say they’re betting on him.
Cancio, 50, also publishes magazines in Havana. Telecom companies are
partnering with him. U.S. cable networks, private equity funds and law
firms ask for Cancio’s take on the thaw in relations between the United
States and Cuba announced by President Obama in December.
He even got to hang out recently with American TV comedian and talk show
host Conan O’Brien, who was in Havana taping an upcoming show.
Antonio Zamora, a Miami lawyer aiming to do business in Cuba, said
Cancio “is way ahead of the game” in terms of Havana connections.
But there are risks. His company, Fuego Enterprises Inc FUGI.PK may
trade through over-the-counter pink sheets, but it hasn’t reported
results for six years. The last time: in early 2009 it reported a loss
and sharply declining revenues.
He’s also been in and out with the Cuban authorities and had a legal
scrum with the music company founded by the Beatles.
“Hugo is the best Cuba play we have and also the most speculative,” said
Cancio’s largest investor, Thomas Herzfeld, the Miami Beach founder of
the Herzfeld Caribbean Basin Fund, a Cuba-focused mutual fund. “It’s not
one I could recommend. The financials aren’t there. But it is one I want
That some investors are willing to bet on Cancio, despite past problems
reflects how few American businessmen have lines into Cuba government
entities. Cancio’s credibility with the Cubans, associates said, stems
in part from his outspoken opposition to the U.S. embargo imposed since
1962, as well as his deep Cuban roots.
Cancio’s level of access to Cuban is impressive for an American, his
advocates said, in Havana and Cuba’s diplomatic missions in Washington
and New York.
“He stuck his head neck out in Miami and that’s why Cubans respect him,”
said Ralph Patino, 57, a Cuban-American lawyer and Obama fund-raiser.
Cuba does not typically comment on business ventures in its country, but
officials privately acknowledged that Cancio enjoys a high level of trust.
Cancio was born into the music business.
His father, Miguel, was founder of Los Zafiros, a popular 1960s group in
Cuba, though it’s American-influenced Doo-wop sound was censored.
Cancio was expelled from school for telling a joke about Fidel Castro.
His single mother, fearing that young Hugo’s future wasn’t rosy as a
result, fled to Miami with the family in the 1980 Mariel boatlift, an
exodus of 120,000 people.
In Miami he worked in a car dealership as a high school student to help
the family. In the early 1990s he heard Cuba was opening up to exile
family visits and launched a travel business.
He finally made his first trip back to Havana in 1994. There, he met
Fidel Castro at a function for exiles. Cancio used the opportunity to,
among other things, get in the music business, producing a movie about
his father’s band.
LOVE AND HATE
Passionate about his homeland, Cancio has had a rocky relationship with
the Cuban government and other exiles in Miami. In the 90s’, as he
emerged as an important figure in the Cuban-American community, Cancio
was a advocate for ending the U.S. embargo against Cuba and was accused
of being a communist as a result.
But Cancio was hard to pigeon-hole. In 2003, he was banned from Cuba for
a year after denouncing a crackdown on political dissidents.
Cancio stayed away for five years. During that time, he formed Fuego in
an attempt to cash in on a U.S. boom in Hispanic music.
His business struggled. The last time Fuego officially reported
financial results it disclosed that in the nine months ended Feb. 2009,
its revenues were just $17,477, down 93 percent from the year-earlier
period. It lost $113,917.
In the previous year ended May 2008, the company’s auditor, Moore &
Associates, said there was “substantial doubt” about Fuego’s ability to
survive. The year before there had been a similar comment from auditor,
Fuego said in the 2008 annual filing that it had a deficit in working
capital, it was delinquent filing tax returns and was past due on the
majority of its accounts payable.
Cancio said Fuego was a young company hit hard by the recession. “We
switched gears and decided to move away from the music business and
focus instead on quietly positioning ourselves in Cuba,” he said.
Canncio, who is identified as the company’s president, treasurer,
secretary and director, was also sued by Apple Corps Ltd in 2008 after
he acquired recordings of the Beatles. Apple’s lawyers charged that the
1962 live tracks were recorded without the band’s permission; the case
was settled out of court.
After Obama was elected in 2008, and launched a new opening with Cuba,
Cancio gave his homeland another try.
He was welcomed back, in large part due to his opposition to the embargo
and his efforts at reconciliation between Havana and Miami. He promoted
a U.S. tour for Cuban singer Silvio Rodriguez, including a sold-out show
at Carnegie Hall in 2010. A concert with another Cuban star, Pablo
Milanes, went off without a hitch in Miami despite protests.
“I realized at the time,” said Cancio, “the time was right for both sides.”
In 2012, sensing a shift in policy, he launched two glossy lifestyle
publications in Havana called OnCuba and ArtCuba and a website. A third
publication, focusing on the emerging real estate market, is due out in
His business Fuego has evolved in other ways. It owns MAScell a Miami
prepaid phone card firm that operates in Cuba – and has exclusivity
deals with two other telecoms looking to do business in Cuba. Blackstone
another Miami prepaid phone card firm with around $500 million in annual
revenues, is one of those seeking Cancio’s help.
“It’s hard to know what opportunities are available or what Cuba wants,”
said Blackstone CEO, Luis Arias. “But Hugo is on the ground and he knows
In 2011, Fuego reported in a press release unaudited revenues of $2
million largely due to the concert successes. It did not say if it was
profitable. There have been no updates since, though Cancio said he
expects the company to return to profitability this year.
Fuego’s shares are very thinly traded but they did sharply rise on the
news of the U.S.-Havana deal, climbing to a high of $1.13 from just 10
cents within a couple of days. They have since dropped back to 93 cents
at the close on Feb. 18.
Fuego said last December it planned to become, in the next several
weeks, fully compliant with SEC reporting requirements. It has yet to do so.
Meanwhile, Cancio is taking the long view about the US-Cuba
relationship. He believes it will take years before Cuban officials and
the U.S. work out the kinks to make investing safe for business.
“It’s going to be gradual, he said, “and Cuba will probably pick and
choose who they do business with.”
(Reporting by David Adams. Editors: Hank Gilman and Martin Howell)
Source: Hugo Cancio: Cuba’s American business connection? – Yahoo News –