Settlement of U.S. claims against Cuba unlikely as long as Fidel stays in power.

Roomfuls of files at a government storage facility in Suitland, Md., tell the story of the 5,911 certified U.S. property claims against Cuba--all of which are awaiting some political change in Havana that might settle a 45-year-old score.

The claims, ranging in value from hundreds of millions of dollars to a few thousand, were filed by Americans after Congress established a Cuban claims program in 1964. That program allows Washington to negotiate compensation for U.S. properties that were seized by the Castro regime in the early years of the revolution.

Castro's confiscations--provoked partly by the Kennedy administration's decision to stop purchasing most of the Cuban sugar crop--is at the root of the U.S. trade embargo against Cuba. The confiscations were also a major reason Washington severed diplomatic relations with Cuba in 1961.

Cuba has settled its property claims with other nations whose citizens and companies lost property to the revolution, sometimes in barter arrangements or for just cents on the dollar.

But there has never been a serious attempt to settle the U.S. claims, which dwarf those of other countries. In fact, the total settlement of Cuba's claims with France, Great Britain, Switzerland, Spain and Canada doesn't even amount to 5% of the value of U.S. claims (see our interview with Mauricio J. Tamargo, chairman of the Foreign Claims Settlement Commission, page 8).

More than 80% of the total amount in U.S. claims involve commercial land or debts. Valued at around $1.8 billion when they were first certified, the claims are today worth nearly $7 billion when aggregate interest is factored in.

Some of the largest U.S. claimants include Fortune 500 firms such as Boise Cascade, Coca-Cola Co., Borden Foods, Navistar International and Colgate-Palmolive.

Siboney Corp., a St. Louis-based publisher of educational software, is No. 80 on the list, with a claim of $2.45 million against the Castro regime.

At the time of its expropriation, Siboney was in the oil prospecting business--having been formed in 1955 by investment banker Jerome Tegeler through the purchase of seven Cuban oil exploration companies.

SEIZED OIL FIELDS AND SUGAR PLANTATIONS

Tegeler's son, Timothy J. Tegeler, says "there's not much we can do" to assert its claim, except to keep the pressure on U.S. officials not to normalize relations with Havana until the claims issue is looked into.

"We would hope that if Cuba returns to a democracy or re-establishes diplomatic relations with the United States, that somehow these claims would be addressed," he told CubaNews.

Tegeler added: "Those companies [which have since signed oil exploration concessions with the Castro regime] will have to face the consequences of having purchased damaged goods. How can they get clear title to it when they know these properties were illegally seized?"

That's also a concern for Boston stockbroker William Claflin. He represents the heirs to his grandmother, Helen Claflin, who owned a sugar plantation in Cienfuegos that was confiscated by the Castro regime in 1960. The Foreign Claims Settlement Commission has certified the family's claim at $12 million.

"I understand that a European company is operating a large cement factory on what was our sugar plantation," Claflin told CubaNews. "I hope that someone in the State Department could help us identify this company and assist us in receiving fair compensation."

In April 2004, CubaNews reported that Las Pailas de Cemento S.A., a Spanish company controlled by private investment bank Ibersuiza, had formed a 50-50 joint venture with Cuba's Ministry of Basic Industry.

That venture, known as Cementos Cienfuegos, has so far spent $105 million to modernize the old Karl Marx cement plant.

LAWYER: CLAIMANTS WILLING TO NEGOTIATE

Like many other companies on the list, Boise Cascade--the largest U.S. claimant--became the holder of a Cuba claim through an acquisition. The Idaho-based paper and wood products company holds the Cuban Electric claim, which was valued at $267.6 million at the time of its expropriation.

New Orleans-based Freeport McMoRan owns the Moa Bay Mining claim, valued at $88.3 million at the time of its certification, while Exxon owns the Standard Oil claim, valued at $71.6 million.

"Over the years, the approach to the claims is a great deal more dispassionate and the claimants are a good deal more pragmatic," said a Washington attorney familiar with the issue. He noted that claimants these days appear more willing to negotiate.

But hostilities between the United States and Cuba have blocked any chance of settlement. In addition, the U.S. embargo imposes several roadblocks for U.S. companies that may want to settle their claims against the Castro regime.

Mauricio Tamargo, chairman of the Foreign Claims Settlement Commission, which has authority over the certified Cuban claims, said a claimant would need a license or other type of authorization from the Treasury Department's Office of Foreign Assets Control (OFAC) to try to settle a claim.

But it's a moot point, he said, because Cuba isn't interested in settling U.S. claims.

"Inasmuch as the Cuban government's policy is not to negotiate with U.S. citizens, there is no precedent or existing licensing policy pertaining to this matter," he said.

The 1996 Helms-Burton Act--which was aimed at discouraging foreign investment in Cuba--set as a condition for lifting the U.S. embargo the requirement that Cuba makes "demonstrable progress in returning to U.S. citizens (and entities which were 50% or more beneficially owned by U.S. citizens) property taken by the Cuban government from such citizens and entities ..."

STATUS OF CLAIMS IN A POST-CASTRO CUBA

The Commission for Assistance to a Free Cuba, the interagency panel that made a series of proposals to President Bush last year, also said settling the U.S. claims would be critical to the U.S. recognition of a post-Castro government.

But Tamargo warned that the process of settling claims won't be easy, because there are multiple claimants for some properties, a wide array of different types of claims and foreign companies operating through joint ventures with the Cuban government on expropriated properties.

Tamargo told CubaNews that it will be important to establish a process to settle commercial property claims "without disrupting jobs and distribution systems" in Cuba.

Tamargo also said that the fate of joint ventures between foreign governments and the Castro government should be addressed by any future Cuban government so that there is a "smooth titling" of those properties.

TITLE III WAIVED IN THE 'NATIONAL INTEREST'

Residential property claims will be even tougher to settle and may never be sorted out.

"The issue of residential housing raises the potential for major political dissatisfaction by a large number of Cubans at the start of a transitional government," Tamargo said.

While some of the certified claims involve residential property, most homes that were confiscated belonged to Cubans, who couldn't certify their claims with Washington because they weren't U.S. citizens at the time they lost their properties.

An attempt to recognize the claims of Cuban exiles who were not U.S. citizens when their property was confiscated was made in the Helms-Burton Act.

The law opened the door to federal courtrooms for exiles to sue foreign companies using their confiscated properties in Cuba. But the lawsuit was opposed by many certified claimants who said it would make it more difficult for them to receive compensation for their claims.

In any event, that provision of the law has been waived every six months since it took effect in 1997, first by former President Clinton and now by Bush.

In a Jan. 14 letter to Congress, Bush said the waiver was "necessary to the national interests of the United States and will expedite a transition to democracy in Cuba."

TOP 50 CERTIFIED CLAIMS *

COMPANY                                VALUE

1. Cuban Electric Co.                 $267.6
2. North American Sugar Industries      97.4
3. Moa Bay Mining Co.                   88.3
4. United Fruit Sugar Co.               85.1
5. West Indies Sugar Corp.              84.9
6. American Sugar Co.                   81.0
7. ITT Corp.--Trustee                   80.0
8. Standard Oil Co.                     71.6
9. Francisco Sugar Co.                  58.5
10. Int'l Telephone & Telegraph         50.7
11. Texaco Inc.                         50.1
12. Manati Sugar Co.                    48.6
13. Bangor Punta Corp.                  39.2
14. Nicaro Nickel Co.                   33.0
15. Coca-Cola Co.                       27.5
16. Lone Star Cement Corp.              24.9
17. New Tuinucu Sugar Co. Inc.          23.3
18. Colgate-Palmolive Co.               14.5
19. Braga Brothers Inc.                 12.6
20. Boise Cascade Corp.                 11.7
21. American Brands Inc.                11.7
22. West India Co.                      11.5
23. Atlantic Richfield Co.              10.2
24. Burrus Mills Inc.                    9.8
25. Pan-American Life Insurance Co.      9.7
26. United States Rubber Co. Ltd.        9.5
27. William A. Powe                      9.5
28. Estate of Sumner Pingree             9.3
29. F.W. Woolworth Co.                   9.2
30. Havana Docks Corp.                   9.2
31. Inter-Continental Hotels Corp.       8.9
32. Continental Can Co. Inc.             8.9
33. John L. Loeb                         8.6
34. Owens Illinois Inc.                  8.0
35. Brothers of Order of Hermits         7.9
36. Firestone Tire &Rubber Co.           7.6
37. Helen A. Claflin                     7.5
38. Chase Manhattan Bank                 7.5
39. Carl Marks & Co. Inc.                7.3
40. IBM World Trade Corp.                6.4
41. Baragua Industrial Corp. of NY       6.2
42. Swift & Co.                          5.9
43. First National Bank of Boston        5.9
44. General Electric Co.                 5.9
45. Estate of Sumner Pingree             5.8
46. Libby, McNeill & Libby               5.7
47. Texas Petroleum Co.                  5.1
48. Goodyear Tire & Rubber Co.           5.1
49. Proctor & Gamble Co.                 5.0
50. Olga Lengyel                         4.9

* Value is at time of certification and does
not include interest.