A lawsuit in Spain has turned up documents indicating that a giant Swiss firm invested in a cement plant in Cuba despite warnings the deal might violate U.S. law because the plant sits on land seized from U.S. citizens.
“Holderbank’s investment in the Cienfuegos property clearly would constitute ‘trafficking’ in confiscated property under Title IV of Helms-Burton,” wrote U.S. lawyers hired to advise the Zurich-based Holderbank, now named Holcim, the world’s largest cement company.
The deal to update and manage the plant went through in 2000, but ownership was put under a string of companies in Spain, the Netherlands and Panama to put distance between Holcim and the investment, according to a dozen documents filed in the lawsuit.
Holcim, whose website claims it is the largest supplier of cement in the United States, said it has no investments in Cuba. “Holcim does not own a business or a stake in a business in Cuba,” said spokesman Eike Christian Meuter.
The court documents, obtained by el Nuevo Herald, are part of a lawsuit involving three Spanish firms. Firebrick SA and Acedos Trading allege that Inversiones Ibersuizas owes them more than $2 million from an old investment in Cuba.
The legal battle dates back to 2000, when Acedos Trading and Ibersuizas joined forces for an attempt to enter the home-construction market in Cuba.
The attempt failed, but Ibersuizas then proposed to Holderbank that they establish a 50-50 partnership with Cuba to run the Carlos Marx cement plant in Cienfuegos, the documents showed. The Swiss firm was to provide capital, technical expertise and management, one document said.
A July 11, 2000, letter to Ibersuizas signed by Marcos Portal, then Cuba’s minister of basic industries, said Havana had accepted “the offer presented by Ibersuizas-Holderbank to establish a joint venture in the Carlos Marx plant.”
One month earlier, the Arnold & Porter firm in Washington raised a red flag after it was retained to advise Holderbank “regarding the risk posed under U.S. law” if the Swiss firm invested in the Cienfuegos plant and another in eastern Santiago de Cuba.
The Cienfuegos project represented a “significant and immediate risk” under the U.S. 1996 Helms-Burton law because the plant sat on land seized from U.S. citizens, the law firm wrote in a fax to Holderbank. The Santiago investment was probably OK, it said.
In the Cienfuegos project, “the only feasible way for Holderbank to minimize these risks is to reach a negotiated settlement” with the U.S. citizens who had owned the land, added the fax, dated June 12, 2000, and part of the court record.
Under Helms-Burton, the United States can deny visas to foreigners — as well as their spouses and children — who “traffic” on such properties. The Carlos Marx plant sits on the Soledad sugar cane farm, seized in 1960 from the Claflin family of Boston.
The fax added that executives of three foreign companies had been denied visas under the law: Sherritt International in Canada, Grupo Domos in Mexico, and the B.M. Group in Israel. Ten other companies backed out of possible Cuba deals to avoid risking violations.
Ibersuizas created a Spanish firm, Las Pailas de Cemento, in 2000 that paid $70 million to Cuba for 50 percent of the joint venture, Cementos Cienfuegos plant. Holderbank controlled the project through a Panama company, Windward Overseas, and a sophisticated “put option” mechanism, the court documents showed.
A “put” locks in the value of a company’s share, for a fee. The holder of the “put” can have a powerful hold on the company if exercising the option would damage the company.
The deal began to break down in 2004, when Ibersuizas President Luis Chicharro complained in a letter to Holcim that the investment was in trouble because the Swiss company “had assumed control of all the business” and was making bad decisions.
“Ibersuizas is convinced that when we brought you into this project our return had two elements, the payment in cash and the put,” Chicharro wrote in the letter, which is part of the court documents. “The put is losing practically all its value.”
The letter added that the problems “could be counterproductive for Holcim” — an apparent reference to a European Union law designed to shield European companies from Helms-Burton. Switzerland is not part of the EU.
“The protection a Spanish company offers to the investment . . . is losing its nature and in case of problems it will be very difficult for European and Spanish authorities to protect [it] . . . from American authorities,” Chicharro wrote.
Just a few months later, the Zuckerman Spaeder law firm in Washington wrote to Ibersuizas saying it was aware of “the structure of Holcim’s concealed ownership interest in Las Pailas” and raising the possibility of a monetary settlement with the Claflin family.
William H. Claflin IV, a Boston investment advisor involved in the family claims over the Cuba land, said that a U.S. law firm told him in 2004 that it had a client who could broker a settlement with Holcim for a share of the settlement amount.
Other family members were not interested in pursuing the deal, Claflin told el Nuevo Herald. The family still has a claim of $11 million on the Cuba land, recognized in 1969 by the U.S. Foreign Claims Settlement Commission.
Ibersuizas replied to Zuckerman Spaeder that it was not interested in a deal, but within months it began moving the shares in Las Pailas through other companies in Spain and the Netherlands, according to the court documents.
In 2005, it was reported to have sold the shares for about $65 million to Apollo 200, identified in court documents as a Spanish firm controlled by Chicharro and three other Ibersuizas officials.
Holcim was reported in 2009 to have more than 80,000 workers in 70 countries around the world and sales estimated at roughly $35 billion. Its main U.S. office is in Miami, where officials did not reply to el Nuevo Herald’s requests for a comment.
Since 2004, the U.S. Treasury Department’s Office of Foreign Assets Control, which enforces the U.S. embargo on Cuba, has slapped fines totaling more than $1.25 billion on foreign companies for violating U.S. laws and regulations.
The companies have included two Swiss banks and one from the Netherlands.