- The Washington Times - Wednesday, August 9, 2006

United Fruit Co. lost thousands of acres of land when Fidel Castro’s government in 1960 seized its Cuban operations.

The company first tried to win back the property by providing ships to support Mr. Castro’s ouster. Cuba’s armed forces rebuffed the 1961 Bay of Pigs invasion.

United Fruit, along with thousands of other companies and people that lost property, then asked for compensation.

A U.S. commission in 1972 certified 5,911 such claims worth $1.85 billion. Those claims, accruing 6 percent interest and now valued between $7 billion and $8 billion, would have to be settled by a post-Castro government to ease trade and investment between the island nation and the U.S.

“The claims cannot be ignored,” said Robert Muse, a Washington lawyer who represents some of the largest corporate claimants against Cuba’s 1960 expropriations. “The claims have to be resolved, or they will stymie renewed trade and investment with Cuba.”

U.S. companies and people that once owned property in Cuba may be closer to getting it back or receiving compensation. Fidel Castro last week temporarily transferred power to his brother, Raul, for medical reasons. That has boosted speculation that Cuba may be nearing a post-Castro, post-communist era and an end to the U.S. embargo against the island.

But it also would require Cuba’s new government to settle old debts.

United Fruit and its subsidiaries claimed millions of dollars in losses. The Foreign Claims Settlement Commission, an independent agency within the Justice Department, certified a total payment due of $87.4 million, plus interest.

“There has always been a hope that, post-Castro, this claim would translate into something of value, and Chiquita’s position has consistently been that we expect the claim to be honored,” said Michael Mitchell, spokesman for Chiquita Brands International, the Cincinnati company that subsumed United Fruit.

Chiquita’s claim is one of the easier ones to untangle. Many of the U.S. companies that operated in Cuba have since been bought, sold, split up or shut down, while the Cuba claim lives on as an asset.

“These are commodities. The corporations are constantly being merged into others,” said Mauricio Tamargo, chairman of the settlement commission.

OfficeMax, the Itasca, Ill., office-supply retailer, inherited the largest corporate claim against Cuba from Boise Cascade, the one-time paper company. That claim, with interest worth just under $1 billion, is from the Cuban Electric Co., once a U.S.-owned utility.

International Telephone and Telegraph had the next-biggest claim, now worth $483.5 million. The company in 1995 broke apart, and part of its claim went to Starwood Hotels and Resorts Worldwide Inc., the White Plains, N.Y., company that runs the Sheraton and other hotel chains.

A predecessor to Freeport-McMoRan Copper & Gold, a New Orleans mining outfit, owned nickel and cobalt mines and processing facilities in Cuba. Canada’s Sherritt Corp. now runs the mines in a joint venture with the Cuban government.

“If the embargo is lifted, Freeport is likely to reclaim the asset,” Robbert van Batenburg, head of research at Louis Capital Markets, said last week. “Freeport may have to fight Sherritt for the Cuban asset.”

Freeport’s legal rights, however, may be muddied because it transferred the expropriation claim to a bank during bankruptcy proceedings.

“The whole situation is too speculative for us to comment on right now,” said William Collier, Freeport spokesman.

Ultimately, the State Department would use the commission’s decisions as the basis for negotiating a claims-settlement agreement with Cuba. The companies are entitled to compensation, whether property or cash.

In one recent case, the U.S. and Vietnam in 1995 settled claims dating to the 1975 fall of South Vietnam. The communist country provided $203.5 million for payment of 192 claims, which covered principal and interest at about 4.8 percent — less than the 6 percent in the original awards.

Without a political solution, U.S. companies and individuals could slow trade with a hypothetical post-embargo Cuba.

“Unless the claims are resolved, there will be a large amount of litigation seeking to attach Cuban bank accounts and Cuban cargoes entering the U.S.,” Mr. Muse said. Essentially, a claimant could ask U.S. authorities to seize and hold Cuban goods, like sugar or nickel, entering the U.S. as security against their losses.

Resolution of the multibillion-dollar issue, however, still awaits a new government in Cuba. Mr. Castro’s health yesterday remained a mystery. And the direction of any new government was even less clear.

“Once the people of Cuba decide the form of government, then Cuban-Americans can, you know, take an interest in that country and redress the … issues of property confiscation,” President Bush told reporters Monday at his ranch in Crawford, Texas. “But first things first, and that is the Cuban people need to decide the future of their country.”

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