The risk of doing business

The risk of doing business
Aug 13th 2013, 12:11 by Economist.com

WE HAVE received the following letter from Stephen Purvis, a British
businessman who was detained in Cuba for 15 months:

Dear Editor,
I enjoyed reading about my misfortunes in the Economist, albeit many
months after publication and in the company of fellow inmates in the
Cuban high security prison, La Condesa. I would ask you to correct the
impression that you give in the May 9th 2012 edition and subsequent
articles that I was accused and detained for corruption.During my 8
month interrogation in the Vila Marista I was accused of many things,
starting with revelations of state secrets, but never of corruption.
After a further 7 months held with a host of convicted serious criminals
and a handful of confused businessmen, most of whom were in a parallel
predicament to mine, I was finally charged and sentenced for
participating in various supposed breaches of financial regulations. The
fact that the Central bank had specifically approved the transactions in
question for 12 years, and that by their sentencing the court has in
effect potentially criminalised every foreign business investing or
trading in Cuba was considered irrelevant by the judges. I am thankful
however that the judges finally determined that my sentence should not
only have with a conditional release date a few days before the trial
thus conveniently justifying my 15 months in prison, but, bizarrely was
to be non-custodial. So my Kafkaesque experience at the sharp end of
Cuban justice ended as abruptly as it began.I spent time with a number
of foreign businessmen arrested during 2011 and 2012 from a variety of
countries, although representatives from Brazil, Venezuela and China
were conspicuous in the absence. Very few of my fellow sufferers have
been reported in the press and there are many more in the system than is
widely known. As they are all still either waiting for charges, trial or
sentencing they will certainly not be talking to the press. Whilst a few
of them are being charged with corruption many are not and the
accusations range from sabotage, damage to the economy, tax avoidance
and illegal economic activity. It is absolutely clear that the war
against corruption may be a convenient political banner to hide behind
and one that foreign governments and press will support. But the reasons
for actively and aggressively pursuing foreign business are far more
complicated. Why for example is the representative of Ericsson in jail
for exactly the same activities as their Chinese competitor who is not?
Why for example was one senior European engineer invited back to discuss
a potential new project only to be arrested for paying technical workers
five years ago when he was a temporary resident in Cuba? You interpret
the economic liberalisation evident at street level as an indication of
a desire for fundamental change. It is true that these reforms are
welcomed, especially the dramatic increase in remittance flows that have
injected fresh hard currency into the bottom strata of a perennially
cash strapped economy. But until the law relating to foreign investment
and commerce is revised and the security service changes its modus
operandi for enforcing these laws, Cuba will remain extremely risky for
non-bilateral foreign business and foreign executives should be under no
illusion about the great personal risks they run if they chose to do
business there. As businessmen emerge from their awful experience and
tell their individual stories perhaps the real reasons for this
concerted attack against business's and individuals that have
historically been friends of Cuba will become a bit clearer. In the
meantime your intrepid reporters could usefully investigate the
individuals and cliques who are benefitting from the market
reorganisation and newly nationalised assets resulting from this " war
on corruption".Yours faithfully, Stephen Purvis

Source: "Foreign investment in Cuba: The risk of doing business | The
Economist" -
http://www.economist.com/blogs/americasview/2013/08/foreign-investment-cuba