In what appears to be a widening investigation of what used to be a key foreign investor in the Cuban economy, authorities have arrested the chief operating officer of Coral Capital Group Ltd., people close to the company say.
“I can confirm that a British citizen has been arrested and is under investigation by Cuban authorities,” Rhys Patrick, head of political affairs and press at the British embassy in Havana, told Cuba Standard. “We are providing full consular support.”
Stephen Purvis â€” an architect hailing from Britain â€” kept a high profile, not only as the company’s face in an ambitious golf resort project, but also as producer of the Havana Rakatan dance show, and as a board member of the international school in Havana.
Purvis’ arrest follows that in October of Amado Fakhre, managing partner of Coral Capital Group. Cuban authorities have been mute about the arrests and investigation; according to sources cited by Reuters, the thrust of the investigation is about commissions paid to Cuban nationals by Coral’s trading arm. Â Coral, people close to the company told Cuba Standard, has since tried to separate its incriminated trading division from the remainder of its business. As recently as last summer Coral, which has taken its Website offline, planned an ambitious golf resort and participated in a high-profile port expansion project.
The arrests are partÂ of a broad anti-corruption sweep against Cuban state company executives, ministry officials and the foreign investors they interact with. The move against Coral Capital comes after long prison sentences, in absence, for the Chilean owners of Alimentos RĂo Zaza and shut-downs amid investigations of Canadian trading companies Tokmakjian Group and Tri-Star Caribbean.
Cuban company executives receive tiny salaries, while often handling millions of dollars worth of transactions.
In November, Attorney General Dario Delgado Cura told an international audience at a law conference on corruption that the crackdown in Cuba is â€śpermanentâ€ť and no one is exempt from prosecution.
â€śWe will continue fighting until exhaustion, with fire and sword, against all signs of corruption in the country, no matter whether committed by foreigners or nationals,â€ť Delgado said.Â â€śWhat we are doing in the struggle against corruption is systematic and permanent. There is no negative commitment with foreign businesspeople, they have understood it must be eliminated.â€ť
Even so, foreign businesspeople in Havana are â€“ at the least â€” divided over the prosecution. Most complain about a lack of transparency regarding rules and prosecution.
â€śUntil I know what this is all about, Iâ€™ve scaled down my operations to bare essentials, and I know other companies have done the same,â€ť one British businessman told Cuba Standard last fall.Â Another British businessman said that, while other groups may take over Coral Capital’s projects, it will be more difficult for Cuba to find investors in the future.
Since late December, high- and mid-ranking Cuban cadres have been shown a series of videos behind closed doors, including “documentaries and interrogations of white-collar criminals,â€ť to â€śprofoundly analyzeâ€ť recent corruption cases, according to RaĂşl Castro. According to participants, the videos detail money laundering operations by foreign joint ventures and implicate more than 400 Cuban officials in corruption. However, official media have been mute.
Funded in 1999 by wealthy European investors and incorporated on the British Virgin Islands, London-based Coral Capital Group rose quickly but quietly to become a strategic player in the Cuban economy. Coral offered trade financing, managed a trading fund, provided brand representation in Cuba, invested in plastics bottle manufacturing, and financed the production of the film “El Benny” as well as other cultural ventures in Cuba. It also spent $28 million on theÂ Saratoga boutique hotel in the historic center of Havana and led the 2006 buyout of the foreign side of the El Senador joint venture hotel on Cayo Coco, managed by Iberostar.
Coral had the biggest impact with its plans to build a 1,200-home golf resort at Bellomonte, just 15 miles from the center of the capital. The 628-acre site at Playas del Este, within the city limits of Havana, would be anchored by two 18-hole golf courses; plans include a country club, spa, and 323,000 square feet of commercial space. On a separate 20-acre property, Coral planned to build a 160-room beach hotel and beach club.
Bellomonte is one of four golf projects the Cuban government was expected to approve soon, and Coral was planning to start construction of the $120 million first phase for the end of 2012.
In another key project for Cuban economic development, Coral is a partner in a planned $43 million investment in the Mariel logistics zone just west of Havana. Over five years,Â Coral produced a master plan with Dubai-basedÂ Economic Zones World. The first phase includes 540,000 square feet of warehousing, light industrial plants and offices.