Published Thursday, May 11, 2000, in the Miami Herald
Cuba suspends real-estate investments from abroad
By Juan O. Tamayo . jtamayo@herald.com
The Cuban government has temporarily halted foreign investments in real estate, casting a shadow over a program once touted by the communist government as evidence of its shift toward a more capitalist economy.
Havana did not explain its decision, but foreign investors in Cuba speculated that it was brought on by the avalanche of projects waiting to be approved, or by a government decision that it no longer needs foreign capital as desperately as in the past.
In addition, some government agencies seem to be surprised at the high profits made by investors in the first property development -- profits of 20 to 30 percent in less than one year -- and eager to step in and pocket any profits for themselves, the investors said.
The freeze announced last week by the Foreign Investment Ministry halted about 30 proposals currently under consideration by the government for new condominium and townhouse developments, said Stephen Marshall, a British real-estate agent based in Havana.
Sixteen other developments already under construction, totaling about 2,000 units and financed mostly by European firms, will go ahead as planned, Marshall said in a telephone interview from Cuba.
Interest in building luxury residences for foreign diplomats and business people living in Havana, as well as vacation homes for visitors, soared after Cuba approved a foreign investment law in 1995 that allowed foreigners to own property for the first time in nearly four decades.
Havana, a city of four million residents, has seen its housing decay significantly since President Fidel Castro seized power in 1959. The government charges foreigners huge rents for old homes and apartments, most of them seized from Cubans who fled abroad in the 1960s.
Castro, who also nationalized most foreign-owned properties in the early 1960s, portrayed the 1995 law as proof of his government's move to embrace the concepts of private property and foreign investment.
Cuba-watchers believe the freeze is part of a campaign to reconsider foreign investment policies and deals approved haphazardly to keep the government afloat after the end of Soviet subsidies in 1991.
``Cuba seems to constantly reevaluate previous commercial policies to make certain they are consistent with current commercial needs. There seem to be an increasing number of changes these days, said John Kavulich, president of the New York-based U.S.-Cuba Trade and Economic Council.
Added one Venezuelan investor in Cuba: ``The Cubans basically believe they can be more selective with foreign investors because they are not as desperate . . . and that foreigners will always be there to invest.
TOO MANY PROPOSALS
Marshall, the real-estate agent who also runs a tourism company in Havana, said he believes the Cubans took the decision because they were ``simply inundated with too many proposals, and many developers were getting upset at the delays.
``Sixteen projects in such a short time, after being essentially without foreign investments in real estate for decades, is an awful lot of real-estate work to undertake, he said.
The ministry notified him Tuesday that because of the freeze, a team of officials is now available to consider his 8-month-old proposal to build a new golf course in western Havana, Marshall said.
Government-run firms have also been buying up several units under construction, Marshall added, after seeing some investors in the only condominium completed so far, the Montecarlo Palace condominiums in Havana, sell their units at profits of up to 30 percent.
Cuba attracted a great deal of interest from multinational firms as well as fly-by-night business people when it opened its doors to foreign capital in 1992, and it claims to have received more than $2.5 billion in investments since then.
But since the crisis peaked -- Havana claims its economy grew by 6.2 percent last year -- the Castro government has been trying to weed out projects and investors it no longer considers absolutely necessary.
A `REPOSITIONING'
``There's a general repositioning, that they will no longer accept some of the things they were forced to accept in the past, and will break some signed deals if they think they can get away with it, said a European lawyer involved in several deals in Havana.
The British-run Caribbean Financial Co. was denied a permit to operate an office in Havana in January even though it has made about 160 loans totaling $60 million since 1996, mostly to Cuban tourism enterprises, from its unofficial office in the Cuban capital.
Vice President Carlos Lage has been criticizing the three free-trade zones established in Havana since 1995 as generating considerable profits for foreign investors but few benefits for Cuba. The zones now hold 294 companies but employ only 800 workers.
The Canadian firm Sherritt International has yet to invest an estimated $300 million of the $472 million it raised in 1996 through a bond sale advertised as aimed at stepping up the firm's investments in Cuba.
Copyright 2000 Miami Herald
Prison ends Mariel success
By Carol Rosenberg. crosenberg@herald.com
The Mariel success story of Milton and Nilda Serret, whose Cuba Paquetes business was for nearly a generation a key conduit between Miami exiles and their families in Cuba, came to an end Wednesday in federal court.
Handcuffed after hastily handing off his car keys to his accountant, Milton Serret, 48, was led away to a 20-month federal prison sentence for tax fraud.
His wife, Nilda, 43, was given eight months to organize the family's affairs -- notably, care for the couple's 12- and 6-year-old daughters -- before herself surrendering for a one-year prison sentence.
``America has been very good to the Serrets,'' said U.S. District Judge Federico Moreno.
Indeed, it had. Arriving during the Mariel boatlift, the Serrets opened a string of storefront package delivery services from Little Havana to Hialeah that for a time dominated the so-called envios market, delivering money and merchandise to families in Cuba from their relatives in Miami.
They built a huge fortune from the business that thousands of Cuban exiles used for years to ferry cash, medicine, clothes, canned hams and other goods to family still on the
island. They bought and sold six- and seven-figure homes, including one in Miami Beach that sold for $1.4 million in 1999.
Because they were one of the few visible connections to Cuba, the shops were occasionally the scene of protest. Just last week, in the wake of the federal raid to return Elian Gonzalez to his father, organizers called a protest at the branch on Southwest Eighth Street to advocate withholding
remittances to Cuba.
The Serrets' downfall began in 1995, when U.S. tax agents visited their home to interview them. In February, the couple pleaded guilty to fraudulently using their business to pay for hundreds of thousands of dollars in personal expenses, including expensive cars and luxurious condominiums.
``I don't want to be separated from the girls,'' said Nilda Serret, weeping in her pre-sentencing plea after offering a spirited argument for recently buying a $435,000 house:
Nilda Serret said she will be able to refinance it to pay off tax liabilities to the Internal Revenue Service, which her attorney said could reach $1 million.
The couple's case provided a glimpse into a world of wheeling and dealing in a business across the Florida Straits that apparently began before the Serrets arrived in the United States from Cuba in 1980.
In one memorandum to the government, the couple said not all of their wealth was earned here. Milton Serret had ``available cash resources in excess of $250,000'' when he left Communist Cuba in 1980 -- a time when dollars and pesos were officially trading at 1 to 1.
In an interview with agents of the Internal Revenue Service, according to a report by Special Agent Olga Acevedo, the Serrets said they built their business in part by operating a dollar exchange and by selling $20 American blue jeans for $150 apiece in Cuba.
Defense lawyer William Tunkey told the judge Wednesday that there had been a misunderstanding in the interview -- that those profits were made in black marketeering in Cuba before the couple came to the United States, not after.
Cuba Paquetes opened in 1985 and got Treasury Department licensing in 1988.
Wednesday, Treasury spokeswoman Maria Ibañez refused to say whether the Serrets had surrendered that license or had a revocation because of the February admission of guilt. She cited privacy protections.
Ibañez also refused to say whether the Department was aware that an agency other than Cuba Paquetes had assumed its business.
But Wednesday, the former Cuba Paquetes storefronts on Calle Ocho and NW 7th Street in Little Havana had new signs proclaiming the businesses' new name -- Caribbean Travel, Visajes (sic) y Envios A Cuba. And a manager at the Hialeah headquarters identified the new owner as John Cabañas,
another well known cross-Straits entrepreneur.
A woman answering the phone at Cabañas' office said he was out of the country and unavailable for comment.
Tunkey told the judge Wednesday that the Serrets no longer owned and operated the firm.
Just days ago, he told the court, the Serrets sold the business to ``a going concern with identical licensing.'' On direct questioning by the judge, Milton Serret said the sale price was $750,000 although he would be paid out over time -- $4,375 a month plus $4,400 a month as a consultant.
Serret said it was not yet negotiated whether he would receive the consulting fee while sitting in jail.
Wednesday, Nilda Serret also revealed that she and her husband of 21 years were now legally separated and that she had filed for divorce. By agreement, she said, she was keeping the couple's $435,000 home and getting from her husband $2,000 a month in child support, $500 a month in alimony and
$3,000 a month ``from what he owed me in the property we divided.''
Attorneys Tunkey and Philip Weinstein, who represented both Serrets, sought a delay in Milton Serret's prison term to give him time to settle affairs. The judge refused, saying he had been given time since the February guilty plea.
The couple barely interacted during the proceedings. When U.S. marshals, for example, told Serret he could leave behind his personal belongings, he did not look at his wife.
Instead, he handed his cellular telephone, gold chain and other items, including his car keys, to his tax man, who was brought to court as a forensic certified public accountant.
The government's original 1999 case alleged much wider fraud, covering nine counts over three years. Wednesday's sentence, agreed under a plea bargain, was on a single count each alleging that the Serrets cheated the government out of more than $350,000 in taxes in 1994.
The maximum sentence could have been five years in prison and $100,000 fines.
Moreno, for his part, said that although the couple was not charged with black market activity, allegations that the Serrets had engaged in such activities with Cuba ``troubled me.''
He also did not agree to the couple's request to serve their sentences consecutively, to allow one parent freedom to raise their daughters.
Moreno ordered Nilda Serret to surrender for her one-year term on Jan. 2, pay $30,000 in fines and work out with her husband how they would pay $315,000 in joint restitution.
The judge said the delay in her sentence gave the mother time to make arrangements for the care of her children. ``Obviously, the innocent people in this mess are the children and perhaps the grandmother. But that's what family is all about,'' he said.
Nine fund Havana architecture studies
By Marika Lynch. mlynch@herald.com
For six years, nine friends traveled the world together: Moscow, Prague, Cartagena. But their thoughts wandered back to Havana.
It happened again and again. As the travel club cruised off Turkey, where they marveled at the ancient ruins and buildings restored to their original grandeur, the South Florida women were inspired to launch a similar project to help the crumbling buildings in their native Cuba.
Today, the group now called the San Cristobal de La Habana Foundation will take its first step in that venture and inaugurate a University of Miami scholarship for master's level architecture students who want to study historic preservation in Cuba. The full, one-year scholarship has one
requirement: that the student write a thesis centered on Havana's El Vedado, a leafy suburb just west of historic Old Havana, where many of the foundation members' families once lived.
The first recipient, Natalia Miyar, a 24-year-old Cuban American who grew up between Mexico City and Miami and majored in architectural history at Brown University, will receive the honor today at a 4:30 p.m. ceremony at UM.
``It started with a small hope, a hope of reconstructing something in Havana that needs so much to be done, Dolores Delgado, a Coral Gables resident who came from Cuba in 1960, said of the scholarship.
Politics and a hatred for Cuban President Fidel Castro have kept the group from investing directly in a restoration project on the island. The scholarship was the next best thing, the group members said.
``There are beautiful buildings that it would be very sad to see go to waste, added Margarita Salazar, who knows the subject personally. Her own grandmother's compound in El Vedado, a wooden home around a garden at the intersection of Calzada and Fourth Street, was torn down after the revolution
and replaced with a stone monolith.
``They tore it down and made a horrible building -- a square apartment house that doesn't have anything to do with anything. Right in the middle of pretty houses, they have this modern thing, she said.
Salazar and Delgado, along with board members Tina Fanjul and Beatriz Orlansky, invested the money the travel club members set aside with each trip. Most of the foundation's members left the island in the early 1960s, right after Castro took power, and haven't returned since.
They may never go back, they realized, as Castro's reign moves through its 41st year. They wanted to instill an interest in Cuba in students.
``Who is going to take care of things in Cuba? The younger generation. Maybe we won't even get to go back, Salazar said. ``We wanted to prepare the younger generation to love the country of their ancestors.
Concentrating on El Vedado was a savvy choice, said Jorge Hernandez, an architect and UM professor.
Most studies of the Cuban capital concentrate on Old Havana, the 180-block area that encompasses the colonial city. Since being named a world heritage site by the United Nations' cultural arm in 1982, foreign aid has poured into the area to restore the buildings that date back to the 16th
Century, making it a prime spot for picture-taking tourists.
El Vedado, meanwhile, a once-affluent neighborhood developed in the first part of the 20th Century and home to the Havana Libre hotel and the University of Havana, has been overlooked, Hernandez said.
``Vedado reflects a high point in the arts and culture, but does not share the protection or the degree of study that the colonial city does, Hernandez said. ``It's a good way of using the resources of the foundation . . . to paint a full picture of Havana, not just duplicate areas that are
significant.
Copyright 2000 Miami Herald |