Monday, March 27, 2006

Squeeze on cancer of graft leaves Cubans hurting

Squeeze on ‘cancer’ of graft leaves Cubans hurting
By Marc Frank in Havana
Published: March 26 2006 23:32 | Last updated: March 26 2006 23:32

Business at the family restaurant in La Lisa, an outlying district of
Havana, is visibly down these days. The five tables in the home’s
beautiful garden used to be filled with Cuban families and couples, as
there are few tourists or foreigners in the area. Asked if the now
mainly empty tables were due to the Bush administration’s recent limits
on family travel and remittances, the owner said no – “Bush hurt, but
this is Fidel and Raul”.

Relatively flush with cash from the export of medical and other
services, mainly to Venezuela, and with the inevitable end of their
decades-long rule now in sight, the Castro brothers have decided to do
something about the state bureaucracy’s penchant for embezzling funds
and diverting resources to the black market, and the pilfering by
workers that goes on in many workplaces.

While the food is cheap in La Lisa – no more than $5 (€4.10, £2.80) a
meal, including a soft drink or beer – that is 125 Cuban pesos at the
current government exchange rate, and few Cubans make more than 400
pesos a month, unless they steal.

“The deadly cancer [corruption] has metastasised from our knees up to
here [pointing to his chest],” Raul Castro, defence minister and head of
the Communist party’s Commission Against Corruption and Illegalities,
told national leaders and administrators in a recent closed-door speech,
a video tape of which is being shown to select cadre.

Mr Castro, who at 74 is constitutionally in line to succeed his brother
Fidel, 79, if he retires or becomes incapacitated, says in the video
that 6,000 cadre and 2,000 retired members working in pairs are
monitoring the more than 90 per cent state-controlled economy, and that
they have discovered “the situation is far worse than we imagined”.

He cites the case of the wholesale food company of east Havana: despite
14 visits by trade ministry officials, 21 inspections and an audit of
the company, it took a pair of old party members to discover 2,000
tonnes of products were missing.

An army of young Cubans mobilised by President Castro late last year to
stamp out theft and graft found a similar situation when they took over
the country’s fuel distribution system – half of it was being stolen.

“We have invited the population to participate in a big battle . . .
against all thefts of any kind,” the president said.

Out of 159 countries surveyed for corruption in 2005, Transparency
International rated Cuba 59th, well behind Chile (21) and Uruguay (35),
but just ahead of Mexico and Brazil, and much better than Argentina (98).

Cuba has been trying for several years to tackle its corruption problem,
but the current campaign, which began with the establishment of the
Commission against Corruption and Illegalities three years ago, is the
most serious in decades, observers say.

“The top leadership appears squeaky clean, but below there is a chaos
that has proved very hard to dent,” a Havana-based foreign banker says.

In 1997, the National Auditing Office reported that only five of 264
audits of national companies turned up good book-keeping, with 51
satisfactory, 101 poor and 107 bad. The report said 51 per cent of 2,959
audits by other entities rated book-keeping as poor to bad.

In 1998, the government created a National Payments Commission to
resolve the issue of unpaid debts between state-run companies, a
smokescreen for embezzlement. The companies owed each other more than
4bn pesos and millions of dollars.

Cuban authorities purged the tourism industry more than two years ago,
appointing as minister a protégé of Raul Castro, centralising all
economic activity, imposing strict controls on the use of foreign
exchange and stripping company managers of perks.

The measures coincided with a retreat from market-oriented reforms of
the 1990s and began as the country started to pull out of the economic
crisis that followed the demise of the Soviet Union.

“Cuba is not a nation of thieves, but many Cubans commit small-scale
economic crimes out of need,” Phil Peters, a Cuba expert at the
Washington Institute, a conservative US think-tank, says.

“Until there is broad-based, sustained economic growth that bridges the
income gap between workers who have hard currency and those who do not,
incentives for theft of state resources will persist. At its root, the
problem involves economic policy, not law enforcement,” Mr Peters says.

Meanwhile, pressure from above and below has resulted in hundreds of
bureaucrats being fired, with some kicked out of the Communist party as

Fewer people are eager to fill these posts as illegal revenue streams
dry up and they risk being held responsible for the thieving of
subordinates, government sources said.

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