US property claims in Cuba: The next hurdle for normalized relations
In order to lift the embargo, Americans whose property was seized in the
Cuban revolution must somehow be compensated
July 1, 2015 5:00AM ET
by Marisa Taylor @marisahtaylor
When Carolyn Chester Lamb was growing up in Mount Dora, Florida in the
1960s, her parents often talked about Cuba, the island they had grown to
love after her father was deployed there in 1933 as Havana bureau chief
for The Associated Press.
Edmund Chester reported on the political turmoil of 1930s Cuba, later
becoming executive director of the AP’s radio broadcasts aired
throughout Latin America. After a stint in New York City as director of
news for CBS television and radio in the 1940s, Chester returned to
Havana in 1952 to open a public relations agency, with then-President
Fulgencio Batista as prominent client.
Chester loved the island and its people so much, Lamb says, that he and
his wife bought an 80-acre farm on Isle of Pines off Cuba’s southern
coast. They also acquired $250,000-worth of Cuban Telephone Co. stock.
Fidel Castro’s Cuban Revolution ransacked those investments. After
Castro ousted Batista on Jan. 1, 1959, his regime seized private
property across the country and nationalized the country’s oil, sugar
and other industries, including all foreign-owned properties, which at
that point made up an estimated 75 percent of the nation’s arable land.
Chester’s family, Lamb says, was left without its nest egg. Her father
died when she was 15 years old after a series of strokes, which she
believes were brought on from the stress of losing his livelihood, worth
“He was a man of honor and was cheated out of his place in history,”
said Lamb on June 18 in front of the House Subcommittee on the Western
Hemisphere. (PDF) The legislators had gathered to discuss the future of
U.S. property claims in Cuba as relations between the two countries thaw
after more than half a century of animosity. And with Wednesday’s
announcement that Cuba and the U.S. will reopen their embassies,
Americans such as Lamb wonder if they’ll finally be compensated for
Lamb, a single mother, says she makes less than $30,000 a year at her
job as an event coordinator in Omaha, Nebraska. “I live in a $60,000
home,” she said. “I drive a 16-year-old car. So any money to me is money.”
And she has made it her mission to spread the word about what has
happened to her family and other certified U.S. claimants who lost their
Starting in 1964, an independent arm of the Justice Department called
the Foreign Claims Settlement Commission (FCSC) registered a total of
5,913 certified American claims — some from families, others from
corporations — of lost property in Cuba, to the tune of $1.9 billion.
With an annual 6 percent interest rate set by the FCSC, they are worth
about $7 billion today.
In fact, in 1960 President Dwight Eisenhower imposed the U.S. economic
embargo of Cuba, now stretching into its sixth decade, expressly because
of Cuba’s seizure of U.S.-owned factories and businesses there. The 1996
Helms-Burton Act codified the embargo into law, stipulating that certain
conditions be met before the restrictions are lifted, including the
settlement of Americans’ property claims.
‘Ambigious at best’
After Wednesday’s embassy announcement, and with attention shifting to
the embargo itself, how U.S. compensation for lost property will be
addressed becomes a primary concern for stakeholder and experts alike.
“Most of the time, you aren’t going to get everything back,”
said Patrick Borchers, a professor at the Creighton University School of
Law in reference to these types of property claims.
Borchers was a principal investigator on a 2007 study commissioned by
the U.S. Agency for International Development (USAID) (PDF) examining
how the outstanding U.S. claims might be resolved.
Earlier, he had traveled to Cuba and selected four certified claims at
random to determine what had become of them. What he and his team found
was ambiguous at best, he said. One claim was listed as a business
located on a certain corner, but when they got there, it was impossible
to tell which corner. Another described a “wharf-front property,” he
says. But what he found was more akin to a junkyard. “There were just
heaps of rusted old machinery and you couldn’t tell where anything
began,” he said.
His team estimated that Cuba has the hard currency to pay a few pennies
on the dollar for all U.S. claims. “The amount that Cuba can
realistically afford to pay is so low that we had to propose some kind
of alternative to money that they frankly just don’t have,” Borchers said.
Borchers proposed that the claims be sorted into tiers, and that Cuba
could pay off the smaller, individual ones in lump sums, as it has done
for Canada, France, Spain and Switzerland. The larger ones, owned by
corporations such as Exxon Mobile Corp., and Coca-Cola Co., could
perhaps be settled through opening development zones in Cuba and
offering these companies the rights or tax forgiveness, while employing
Cubans so as to benefit both countries, he suggested. For example,
Starwood Hotels and Resorts, Borchers said, has inherited a $50 million
claim through its acquisition of International Telephone and Telegraph
Corp., and it might prefer, say, beachfront property and the development
rights “rather than rusted old telephone lines.”
This kind of arrangement is exactly what Timothy Ashby, a London-based
attorney who served as deputy assistant Secretary of Commerce for the
Western Hemisphere in the late 1980s, attempted to do on his own. He
says that during his stint with the Commerce Department, Cuban officials
first broached the U.S. property issue with him.
“They wanted to settle the claims,” he said.
In 2006, Ashby formed a corporation and raised funds to buy nine of the
U.S. claims in Cuba from their original owners as proof of concept, and
then attempted to broker private settlements directly with the Cuban
government. The idea, he said, was to swap those claims with government
assets and allow the claimants to develop them in joint ventures that
would employ ordinary Cubans.
But in 2009 he was blocked by the George W. Bush administration, which
said it was illegal for him to make the swaps without a license. He
tried again when President Barack Obama came into office, and was
“When the deal was shut down, I was furious,” Ashby said, adding that he
knows he was within his legal rights. “For policy reasons, they just
wouldn’t listen to us. It’s a sad situation because we could have
settled the claims. We probably could have moved the normalization
process ahead by two years.”
Some U.S. claimants like Lamb, however, are having none of it. When
Ashby’s group approached her to buy her family’s claim at what she said
was a steep discount, she got angry. She finds it suspicious that they
wanted to pay her a fraction of what her property was worth, yet turn
around and make presentations to investors that Cuba is a future
“I’ve sunk my life into this, and I’ve realized people have been trying
to screw me over on this,” Lamb said. “Had everybody just concentrated
on paying the claims, then we wouldn’t be going through this.”
Her Alexandria, Virginia-based attorney, Mauricio Tamargo, who is the
former head of the FCSC, agrees.
In his testimony to the House of Representatives Subcommittee on the
Western Hemisphere on June 18, he said the U.S. should not lift the
embargo until U.S. claimants are paid in full.
“Cuba keeps crying poverty, saying it has no money,” Tamargo said. “That
is just not true … . It is just that Cuba’s leadership have other plans
for their revenue.”
A recipe for chaos
Nicolás J. Gutiérrez, a Miami-based consultant who helped the U.S.
government draft the Helms-Burton Act, feels that if the U.S. doesn’t
resolve the claims, Americans could start suing fellow citizens who are,
say, stopping at ports or airports that were seized from them. “It’s
going to be a recipe for legal chaos,” said Gutiérrez.
He has spent the last 25 years helping Cuban-Americans — those who fled
the Castro regime but were not yet U.S. citizens when they left Cuba —
to compile the paperwork on their own property claims. These claimants
have not been permitted to register those losses through the FCSC.
“They’re not fanciful or made up,” says Borchers, who estimates the
Cuban-American property claims are worth four times those of the
American ones. “People have got deeds to houses they left behind.”
Cuba, however, views them as exiles, and international law doesn’t
recognize their right of recovery.
But Gutiérrez, who is also president of the National Association of
Sugar Mill Owners of Cuba, which represents the owners of sugar mills
expropriated without compensation, has created an informal registry of
more than 500 Cuban-American claimants to be ready if and when the
That includes his own family, which owned several properties in the
Cienfuegoes area: two sugar mills, 15 cattle ranches, a coffee mill and
plantation, and other commercial properties, all of which were appraised
at about $35 million in 1950, he says.
“Serious investment is not going to go into Cuba unless and until Cuba
rectifies the takings of Cuban-Americans and other Cubans in Cuba,”
Gutiérrez said. “Who’s going to trust that their investment was treated
any better than ours was back then?”
However the property claims issue is resolved, Borchers, for his part,
says it could be a drawn-out process.
“I think we’ll get there with Cuba, but we need to get there in a way
that really makes things better for ordinary Cubans,” he said.
“Unfortunately, that’s not like flipping a light switch. It’s not like
rolling the clock back to Jan. 1st, 1959 and saying everybody gets a
Source: How To Resolve American Property Claims In Cuba? | Al Jazeera