Ministry orders successful co-op to shut down

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Screenshot from the Scenius website

Screenshot from the Scenius website

CUBA STANDARD — Saying it was “not the biggest cooperative in the country” and that members are free to apply for jobs in the state sector, the finance ministry ordered the shutdown of Scenius, one of the fastest-growing and most dynamic new coops in Cuba, apparently because it went beyond the scope of services it was permitted to provide.

The Havana-based enterprise, started two-and-half years ago by a group of accountants and other professionals, provides accounting services almost exclusively to state companies, many of which are struggling to keep track of their finances in a confusing environment of two currencies. The cooperative’s more than 300 members work with 50 clients; Scenius has expanded beyond Havana, opening offices in Matanzas and Camagüey. In 2015, the coop’s founders projected more than $1 million in revenues by 2016 — an astronomical sum for a non-state player in Cuba.

Three days after El Toque , an independent news site in Cuba run by young journalists, broke the news, the Ministry of Finance and Prices issued a statement, citing “repeated violations” of the cooperative’s social purpose.

“These violations were detected during control actions by this ministry and the Comptroller General. At the time, they were alerted about these breaches,” the statement says about the cooperative, adding that it is within the realm of the ministry to shut down a coop if it exceeds its permitted purpose.

“The members of this cooperative may join work activities in the Cuban state sector,” the statement continues. “We hope that the leaders of the cooperative, who have distributed the information, act responsibly and in a transparent way with their members. This cooperative is not the most important one in the country; there are others of this type offering services.”

The official announcement triggered a storm of comments on official website Cubadebate, many of which criticize a lack of transparency, asking for specific information about the nature of the alleged violations.

On Aug. 4, the finance ministry ordered Scenius — one of six coops providing accounting services — to shut down all business within 30 days, coop President Alfonso Larrea told El Toque, adding that he hadn’t yet been able to see the actual text of the notification. He assumes the ministry is accusing Scenius of going beyond its “social purpose”, by providing what officials apparently consider non-accounting services.

Although they say the finance ministry had not been supportive since the coop was formed, Scenius members say they were “shocked” by the drastic step. Larrea reiterates that coop has remained within its social object, and announced Scenius will appeal.

However, it will be the same ministry that ordered the shutdown, which will decide the appeal. In the absence of a cooperative law regulating the sector, non-agricultural startup cooperatives like Scenius are still considered “experimental”.

The shutdown news comes on the heels of the government’s indefinite stop to granting some of the most sought-after business licenses to cuentapropistas, announced by way of a decree in the Gaceta Oficial on Aug. 1.

As part of its economic reforms, in 2014 the Council of Ministers approved 228 non-agricultural cooperatives, bringing the total to 452. Cuba is granting space to private enterprises in “non-strategic” sectors of the economy, with the overwhelming majority of the new co-ops operating in retail and gastronomy. Twelve coops are active in construction, six in accounting services, five offer energy services, three are in transportation, 15 are manufacturers, and one produces food.

Cuba has yet to publish the new rules that will govern cooperatives in the island.

In a speech published by official daily Granma, Yovana Vega, director of the Permanent Commission for Implementation and Development, apparently played down the Scenius shutdown by highlighting that the new coops include more than 12,000 members. Inspections had detected “limitations and deficiencies”, Vega said, such as a “lack of discipline, illicit appropriation of resources and income, as well as people acting as partners in various cooperatives at once”, in addition to problems in accounting and bookkeeping, wrong use of bank cards, and corruption.

Even so, the Scenius shutdown could stunt the growth of Cuba’s cooperative sector.

“Is it about creating bonsai, dwarf, short cooperatives?” Larrea asked in an El Toque guest editorial about official policy regarding coops.

Larrea, 53 — a lawyer by training who built his career in international cooperation projects — started Scenius in 2014 together with Luis Alberto Dueñas, 46 — a naval engineer with years of experience working abroad.

In an interview with Cuba Standard in 2015, Larrea described worker coops as a key plank in Cuba’s transition from a state-controlled economy.

Larrea

Larrea

“Coops are a very strong movement, stronger than cuentapropismo,” Larrea said, referring to self-employment in Cuba. “That’s partly because the Cuban government feels more politically comfortable with worker co-ops “as an intermediary step in a process toward new types of private business.”

For professionals who are members, Scenius works like this: Sign up and agree to pay 30% of any contracts obtained through the co-op back to the group, to cover administration and other expenses. The co-op posts all contracts available, and members decide which work they want. Customers pay either in Cuban pesos or in Cuba’s convertible currency, CUC.

Scenius aims for a member working full-time to earn no less than 2,500 Cuban pesos monthly, after taxes and fees. In comparison, economists earn about 600 Cuban pesos per month at full-time jobs with the state.

By far most of the coop’s clients are state enterprises; even state agencies as the Cuba’s Institute of Sports (INDER) hired Scenius.

“We expected our services to be aimed mainly at the private sector,” Larrea said in the 2015 interview. “Now, our biggest client is the state.”

Scenius also aimed to serve more coops, as Cuba’s government accelerates plans to convert state enterprises to worker-owned ventures. Some 12,000 state restaurants, cafeterias and eateries are set to become worker-owned coops.

Scenius offers new coops to develop business plans and set up their operations. It then works for them on a recurring basis to keep their financial records. Business cards for the group and its “economic management services” offer a tag-line focused on customer success: “Every Champion needs a Coach.”

The two partners were among the first to apply for authorization to form a worker co-op in Cuba in December 2012.

“We thought it would be a fast process,” recalled Larrea in the 2015 interview. Instead, it took until mid-2013 for the government to spell out which sectors would get new worker co-ops. And it was not until October 2014 that Scenius received approvals to start offering its professional services as a co-op, said Larrea.

—Doreen Hemlock contributed to this article

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