US Corps Claim Billions In Assets In Cuba And Now They’ll Want It Back

People burn tables and roulette wheels outside the Plaza Hotel Casino in Old Havana, Cuba, in Jan. 1959, shortly after revolutionary leader Fidel Castro gained power. On Jan. 1, 1959, dictator Fulgencio Batista fled ... People burn tables and roulette wheels outside the Plaza Hotel Casino in Old Havana, Cuba, in Jan. 1959, shortly after revolutionary leader Fidel Castro gained power. On Jan. 1, 1959, dictator Fulgencio Batista fled Cuba and Castro's rebels took power. (AP Photo/Fernando Lezcano) MORE LESS
Start your day with TPM.
Sign up for the Morning Memo newsletter

When the Castro regime assumed power in Cuba in 1959, it quickly nationalized the assets of almost every foreign corporation within its borders as the country transitioned to communism. For half a century now, American companies have laid claim to billions of dollars in lost assets on the Caribbean island 90 miles from U.S. shores. Under American law, the claims have been steadily accruing interest, but the companies have never seen a penny.

It’s one of many knotty issues for the two Cold War adversaries to resolve as they end their prolonged estrangement that outlasted the Cold War itself by more than two decades. Like many of the other points of contention, the claims of U.S. companies against the Castro government dredge up difficult memories, long-buried grievances, and unpleasant histories that neither side may be eager to confront.

While it’s not yet clear how the mid-century claims of U.S. companies will be handled, interviews in the days since President Obama’s historic policy change with those involved in the claims and experts on Cuba reveal the claims have not been forgotten by the businesses and they’re not going away.

“You can safely assume a large flare went up yesterday,” Robert Muse, a Washington, D.C., attorney who specializes in Cuban issues, including corporate claims, told TPM last week the day after Obama’s White House announcement. “They’re right now sending memos down the line: ‘What about our claim?'”

A nationalized cement factory in Mariel, Cuba which was once owned by Lone Star Industries of Connecticut, July 31, 1996. (AP Photo/John McConnico)

The federal government has a whole outfit, the Foreign Claims Settlement Commission, tasked with overseeing these claims. When a foreign country expropriates (or nationalizes) a U.S. company’s assets, as happened in Cuba but has also occurred in China, Vietnam and elsewhere, the companies file a claim with the commission. It then examines its validity and, if it checks out, the claim is officially certified. It is then up to either the companies individually to negotiate a settlement with the foreign government or for the federal government to negotiate on behalJf of the companies with claims as a whole.

In Cuba, American corporations have 5,913 claims that were worth $1.9 billion when they were certified in the 1960s. Those claims have been accruing interest for the last half century, at a 6 percent simple rate, meaning that they are worth upwards of $7.5 billion in 2014. Because of the U.S. embargo of Cuba and lack of any formal diplomatic relations between the United States and Cuba, the claims have never been resolved.

Some big U.S. claimants, like the Cuban Electric Company, became effectively defunct, but other marquee names like ITT Tech, Exxon, Texaco, Coca-Cola and Freeport-McMoRan mining have standing claims worth hundreds of millions of dollars. That isn’t the kind of value that Fortune 500 companies are going to just write off, Muse said.

“You’ll hear things from people who don’t know this, ‘Oh the claims have been written off,'” Muse said. “No one should imagine that the general counsel of these companies is unaware of that or that their shareholders are unaware of it.”

US Companies’ Cuba Claims

A long and nasty history complicates what experts agree will be an important part of normalizing relations with Cuba. As Philip Bonsal, a former U.S. ambassador to Cuba, detailed in Foreign Affairs in 1967, American companies in the first half of the 20th century became reviled in some quarters for having an outsized influence in internal Cuban affairs and for exploiting the country’s natural resources. They were also allies of the pre-Castro Batista regime, whose members enriched themselves while brutally suppressing dissent.

That might help explain why when U.S. companies have previously floated the idea of resolving claims, the Castro regime — which of course developed its own reputation for oppression and corruption — has responded with demands that the United States repay Cuba for the damages of the half-century embargo.

“Every time it’s come up, the Cuban government says, ‘We’re happy to negotiate, but you owe us X billions or trillion of dollars for the damage done to our economy by your sanctions,'” Julia Sweig, director for Latin American studies at the Council on Foreign Relations, told TPM. “Is this an actual living, breathing issue or is it a legacy issue once we get diplomatic relations? I think if we put it at the front end, it’s very hard to address.”

While Muse and others agree that addressing the claims won’t be the first step in the normalization process, they insist that it will be a crucial one. Not only do these companies have billions in existing claims for expropriated assets to resolve, but it might be difficult for Cuba to encourage further foreign investment until they put this issue in the past.

“In the end, to fully normalize, it will need to be resolved. That needs to be gotten out of the way,” Philip Peters, a former State Department official now with the Cuba Research Center, told TPM. “I think this is a very interesting test of how creative Obama wants to be in moving from a policy that’s pure punishment to one that increasingly chips away at the embargo and offers a positive path forward.”

What isn’t clear is what the Obama administration now plans to do about the claims issue. The fact sheet released the day of the president’s announcement by the White House — which is not the fine print that experts will ultimately want to examine — didn’t address it. But in order for the Cuban embargo to be fully lifted, as Obama said last week he would like it to be, Muse said these claims have to be resolved under the 1996 Helms-Burton Act. Administration officials would not comment beyond a general statement from the Foreign Claims Settlement Commission.

“Although the broad outlines of these changes have been unveiled, it is not yet clear what effect such changes will have on the status of the claims previously adjudicated by the Commission,” the commission said.

Pedestrians walk past the Cuban Telephone Company, August 1, 1996, nationalized by the Cuban government in 1960. (AP Photo/John McConnico)

Obama should have substantial executive authority to address companies’ claims, experts said. His options likely range from a simple settlement, though companies typically receive pennies on the dollar in that case, to more creative options like U.S. companies entering into joint ventures with Cuban entities, which assures Cuba of additional outside investment while the U.S. companies receive a larger share of the profits to pay off their claims.

The companies themselves aren’t saying much. TPM reached out to some of the larger businesses: Exxon, Freeport, and ITT Tech. Freeport declined to comment. Exxon didn’t respond to TPM’s request. ITT said it was still processing the news.

“Given the recent announcement of renewed relations between the United States and Cuba, we are just beginning to digest what that news could mean for commerce between the two nations,” ITT spokeswoman Kathleen Barker said in an email. “We will continue to closely monitor developments to better understand the potential impacts of this historic event.”

Muse, who declined to name his clients with claims in Cuba, said that the issue could play an important role in speeding along the process that Obama began last week.

“If you can use the large claimants, almost as a wedge in, generate interest in the large American corporate sector, by direct negotiations with some of these claimants,” Muse said. “Then you get U.S. companies back on the island. You create interest in investment in Cuba.”

For many of the companies with claims, the surprise announcement of the dramatic shift in U.S. policy toward Cuba meant reviving claims that have been gathering dust for decades.

“They weren’t going to be sitting down in 1995 worrying over much about their claim,” Muse said. “They would wait until things ripen, political breakthroughs happen and the word ‘normalization’ is in the air. That’s when you’re going to start to hear from them.”

That time is now.

Latest DC

Notable Replies

  1. $7.5 billion is small potatoes. It will be an asterisk in the valuation going forward. The opportunity to help normalize relations to our mutual benefit is too great to let 60 year old claims get in the way.

  2. Avatar for anniew anniew says:

    What they are not going to get back is their property.

  3. Reparations?

  4. I want my hair back, but that ain’t happening. Sometimes you have to write off your losses, and start over from scratch if you want to move forward.

  5. Soon after Castro nationalized Cuba, the US had its chance for reparations and blew it.

    After removing Bautista for letting the US use Cuba as an offshore casino and brothel, Castro offered reparations to the foreign companies in a proposed ~20 year bond plan. He was refused by US hard liners, of course.

    Just as the redistribution of property after the US Civil War was irreversible, so it is for Cuban expatriates. The Supreme Court has not seen fit to invalidate General Lee’s surrender at Appomattox and I suspect no world court would entertain similar motions to void Bautista’s overthrow. This is euphemistically referred to as the Humpty Dumpty Rule.

Continue the discussion at

67 more replies


Avatar for paulw Avatar for slbinva Avatar for jw1 Avatar for sooner Avatar for johnmccutchen Avatar for tweetivism Avatar for mollynyc Avatar for pickwick Avatar for commiedearest Avatar for vonq Avatar for mantan Avatar for stephen_maturin Avatar for gr Avatar for martinstett Avatar for andy49 Avatar for robcat2075 Avatar for Snafu Avatar for twowolves Avatar for dickweed Avatar for emilianoelmexicano Avatar for nerfherder Avatar for denverretiree Avatar for misterneutron Avatar for SweetTomago

Continue Discussion
Masthead Masthead
Founder & Editor-in-Chief:
Executive Editor:
Managing Editor:
Associate Editor:
Editor at Large:
General Counsel:
Head of Product:
Director of Technology:
Associate Publisher:
Front End Developer:
Senior Designer: