Business Report
June 27, 2004

Raul Castro leads Cuba's crackdown on corrupt capitalists

By Marc Frank

Havana - Cuba's ruling Communist Party had launched a drive against corruption in government and business, and what it viewed as a creeping capitalist ideology in its ranks, party sources said this week.

The campaign comes as the cash-strapped island recentralises the economy, reversing timid market-oriented reforms put in place by President Fidel Castro's government after the collapse of its Soviet Union ally plunged the island into economic crisis over a decade ago.

Thousands of officials, bureaucrats and executives of state-run companies are being told to stop corrupt practices such as accepting commissions, to send decisions up through the party hierarchy, and rein in their subordinates - or risk their jobs and party membership.

"There are those who have copied capitalist methods so well that they have become capitalists themselves," Communist Party political bureau member Jose Ramon Machado Ventura told party leaders in western Matanzas province, according to a transcript of part of the meeting.

Officials, bureaucrats and executives have already been hit by a myriad new government regulations to limit their use of hard currency, expenses and perks such as cars and homes that are better than many Cubans can aspire to.

Around 90 percent of Cuba's economy is in state hands.

Machado Ventura, long a defender of hard line ideology, is in charge of the campaign as head of the National Commission to Fight Corruption and Illegalities. He is a close associate of Castro's younger brother and chosen successor, defence minister Raul Castro.

Machado Ventura and other party political bureau members have fanned out across the country in recent months demanding accountability from party members who also hold most government and business jobs.

Raul Castro, speaking at the commission's first national meeting last month, reportedly said a US invasion, corruption and drug traffickers were the three biggest threats facing the 45-year-old Cuban revolution.

"Raul said corruption could never be eliminated, but must not be allowed to get out of control as in other Latin American countries," a participant at the closed-door meeting said. "Raul said we could live with corruption at our ankles but not around our necks."

The drive follows the sacking last November of the president and three executives of the largest state-run tourism corporation, Cubanacan, and tourism minister Ibrahim Ferradaz's replacement in February. Tourism has become Cuba's main source of foreign exchange.

"The main message was that a lack of respect for the party and government within the tourism and other economic sectors will no longer be tolerated, nor those who allow it, creating fertile ground for corruption," said a mid-level party leader, after viewing a video featuring Raul Castro on the tourism industry shake-up.

In the video, shown to party officers as part of the clean-up effort, Raul Castro tells tourism industry executives that fired Cubanacan president Juan Jose Vega did not control corrupt practices within his company and that he showed disrespect towards Ferradaz, who in turn did nothing about it.

Ferradaz is now working in the financial risk management group of Cuba's state-run airline industry.