Cuba May Use Middlemen for Flights to U.S.

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By Lenore T. Adkins

Jan. 4 — The Cuban government is considering different ways to bypass the potential expropriation of its aircraft, which the U.S. could impound on American soil as payment for billions of dollars in unpaid U.S. terrorism judgments against Cuba, a State Department official told Bloomberg BNA.

Meanwhile, several Miami attorneys who won multi-million dollar terrorism judgments for their clients against Cuba are watching how a civil aviation arrangement plays out between the U.S. and Cuba, in case there's an opportunity to collect.

The Cuban government has shown interest in a code-share agreement with U.S. airlines so that American, not Cuban, planes land in the U.S., the State Department official said. The official spoke on the condition of anonymity under State Department ground rules for reporters.

Another option the Cubans are weighing is leasing airplanes from the U.S. or a third country to fly routes between Cuba and the U.S. All of the choices would give Cuba an opportunity to use more modern aircraft while protecting their own from seizure. The Cuban government owns the airlines based on the communist island, so if its airplanes land in the U.S., they may be confiscated for the balance of about $2 billion in unpaid judgments.

“The Cuban government is very well aware of that risk,” the State Department official told Bloomberg BNA.

The U.S. announced an informal civil aviation arrangement with Cuba in December to govern regularly scheduled flights and charter service between the two countries in the absence of a formal agreement. Both sides are expected to sign off on the arrangement in early 2016 (243 ITD, 12/18/15).

As the Cuban government figures out how to enter the U.S. market, Cuban air service to the U.S. is not scheduled for departure anytime soon, the State Department official said. Airlines interested in flying routes on Cuba's behalf to the U.S. would have to secure licenses from the U.S. Commerce and Treasury departments, as well as authorization from the U.S. Department of Transportation, the State Department official said.

“We told the Cubans we were prepared to give positive consideration to such license applications,” the official told Bloomberg BNA.

Scheduled service from the U.S. to Cuba in American aircraft is expected to commence in the first half of 2016, after the Department of Transportation divvies up the Havana slots to U.S. airlines. Currently, there would be a maximum of 20 slots available.

“This is a completely new destination and origin, or at least it's new for this generation of Americans,” Transportation Secretary Anthony Foxx told reporters. “And so we're going to work through it as quickly as we can.”

Behavior Going Back to 1959

Frozen Cuban assets in the U.S. have satisfied some of the judgment awards, but most of the balance remains uncollected while creditors sweep the U.S. for Cuban assets. A federal antiterrorism law lets the families of state-sponsored terrorism victims seek damages in U.S. courts. Total compensatory damages for the 11 judgments exceed $2.1 billion, while punitive damages account for nearly $1.8 billion. Foreign governments are not required to pay punitive damages, Alfonso Perez, an attorney who in 2006 helped secured a $400 million judgment against Cuba for clients, said.

U.S. state and federal courts imposed the judgments against the Cuban government when it was labeled a state sponsor of international terrorism. The State Department placed Cuba on the terrorism blacklist in 1982, and, following a review, Secretary of State John Kerry scrubbed Cuba from the list last May.

Eight judgments seek compensation for executions, torture and other behavior that occurred prior to Cuba's inclusion on the terrorism list. For example, Perez was one of the attorneys who represented the family of Robert Fuller, a U.S. plantation owner in Cuba. Fuller was tortured and executed in 1960. Other judgments are tied to the torture and execution of political dissidents and other U.S. citizens.

The U.S. discussed the judgments and other claims in a preliminary meeting with the Cuban government in December 2015. Both sides will reconvene for the next round of talks in the first quarter of 2016. In addition to the roughly $2 billion in judgments the U.S. is seeking, it also wants Cuba to compensate U.S. citizens for 5,913 certified claims over property and assets the Cuban government seized shortly after Fidel Castro took power. Without interest, the certified claims total $1.9 billion. Cuban officials have countered that the U.S. owes Cuba more than $100 billion in reparations for human and economic damages they say the country suffered under the U.S. embargo.

‘Ear to the Ground.'

Attorney Arturo Hernandez represented Ana Margarita Martinez, a Miami woman who in 2001 won a $27.1 million judgment against the Cuban government, because her husband at the time, Juan Pablo Roque, was a Cuban double agent who once worked for the FBI. She recovered $198,000 in exchange for waiving her right to collect $20 million in punitive damages. With 6 percent interest in the remaining $7.1 million, Hernandez said the Cuban government actually owes his client $14 million.

“I do believe that there are going to be, I think, opportunities presented in the future to be able to collect on these judgments based either on seizing Cuban property in the United States, whether that be funds or whether that be airlines, because we are a judgment creditor of the government of Cuba,” Hernandez told Bloomberg BNA Dec. 21. “We certainly have our ear to the ground with respect to these issues.”

Attorney Jorge Borron won a $253 million judgment for the family of Rafael del Pino Siero in 2008. Del Pino was an ex-friend of Castro who was imprisoned in Cuba shortly after Castro took over. Borron alleged that the Cuban government in the late 1970s tortured and hanged del Pino in his cell.

Airplanes aren't Cuba's only assets, but Borron, who has yet to collect on the judgment, is frustrated the Cuban government is looking for ways to protect their aircraft from the judgments. He said he is disappointed that the U.S. appears to be “bending over backwards” to help Cuba.

“That's going to create a lot of backlash with many, many individuals objecting to this,” Borron said.

Perez isn't surprised the Cuban government is trying to protect its assets. He said the larger issue is the absence of a process to resolve the judgments.

“I think the country, the Congress, the White House, who has shown tremendous leadership in this area, should really push to have a mechanism for resolving these claims,” Perez told Bloomberg BNA.

With assistance from Stephanie Beasley.

To contact the reporter on this story: Lenore T. Adkins in Washington

To contact the editor responsible for this story: Jerome Ashton