Despite new Cuba relationship, U.S. fines persist against firms accused of violating embargo

Cuba’s Minister of Foreign Trade and Investment, Rodrigo Malmierca, left, meets U.S. Secretary of State John Kerry in Washington on Feb. 18, 2016.
Cuba’s Minister of Foreign Trade and Investment, Rodrigo Malmierca, left, meets U.S. Secretary of State John Kerry in Washington on Feb. 18, 2016. AP

As President Barack Obama prepares to visit Cuba next month, the United States has continued to fine companies accused of violating the U.S. embargo against the island.

A review of the Treasury Department’s enforcement actions involving Cuba show eight sanctions cases since Dec. 17, 2014, when the United States and Cuba began normalizing relations. Fines imposed since the rapprochement began have totaled $5,278,901, according to Treasury, and all the cases involved transactions predating the president’s Cuba announcement.

A Cuban government tally published Tuesday, before the eighth case was announced, came up with a far higher total for fines imposed since rapprochement was announced. It calculated fines totaling $2.84 billion imposed on four U.S. companies and three foreign firms. It was unclear why there was such a large discrepancy. Cuba’s Foreign Ministry also said there had been 48 fines associated with U.S. sanctions against Cuba during the Obama administration.

The latest companies to be fined are a French geoscience company, CGG Services, which provides spare parts, services, and equipment for oil and gas exploration as well as seismic surveys, and Halliburton Atlantic and Halliburton Overseas — two Cayman Island subsidiaries of Houston-based Halliburton Energy Services. Treasury made both cases public this week.

CGG and its affiliates agreed to pay a $614,250 fine to settle potential liability connected with its use of U.S. spare parts, equipment, and other U.S.-origin goods on its vessels operating in Cuban territorial waters in 2010 and 2011. The vessels were the M/V Amadeus, M/V Veritas Vantage and the M/V Princess.

In addition, Treasury said that Veritas Geoservices, a Venezuelan subsidiary of CGG, appears to have violated Cuban Assets Control regulations when it engaged in five transactions involving processing data from seismic surveys in Cuba’s Exclusive Economic Zone, a maritime area in the Gulf of Mexico.

Cuba’s Foreign Ministry said the latest fine “confirms the extraterritoriality of the [embargo] and its deterrent effect not only on foreign entities but also on U.S. ones, which — even in the limited context of current regulations — might be interested in doing business with Cuba.”

Coming on the heels of Cuban Foreign Trade Minister Rodrigo Malmierca’s visit to Washington last week, the Cuban Foreign Ministry said the CGG sanction was “incongruous in the current context of relations between the two countries and corroborates that to move forward toward normalization of bilateral ties it is essential to lift the blockade,” the term Cuba uses for the embargo.

Former U.S. Commerce Secretary Carlos Gutierrez, who favors engagement with Cuba, said Thursday that the U.S. sanctions against Cuba are the strongest on any country in the world. “Right now Cuba is totally isolated because of our sanctions,” he said.

Even though the Obama administration has relaxed regulations on some Cuba trade and travel through executive authority, the new rules aren’t retroactive. “The policy of the United States is that it will continue to enforce the embargo to the extent required by law,” said Jose W. Fernandez, a New York lawyer who is a former assistant secretary of state for economic, energy, and business affairs.

Treasury said the Halliburton subsidiaries agreed to pay a $304,706 fine to settle allegations they dealt in property in which Cuba had an interest when they exported goods and services for oil and gas exploration and drilling to be used in Angola’s Cabinda Onshore South Block oil concession in 2011. Cuba Petroleo (CUPET), Cuba’s state-owned oil company, has a five percent interest in an Angola-based oil and gas production consortium and corresponding interests in the concession.

The consortium had provided Halliburton Atlantic with documents that showed CUPET was a member, according to Treasury.

The CGG case points up the difficulties that foreign oil companies may experience as they explore for oil in Cuban waters with the embargo in place. The Scarabeo 9, a state-of-the-art rig that explored for oil in Cuban waters in 2012, was specially built so that fewer than 10 percent of its components were made by U.S. manufacturers so it wouldn’t run afoul of embargo restrictions.

CUPET is expected to begin a new round of drilling in the Cuban area of the Gulf of Mexico late this year. Earlier exploratory wells weren’t commercially viable. Venezuela’s PDVSA and Angola’s Sonangol are expected to drill in the Gulf at depths of 4,900 feet.

Mimi Whitefield on Twitter: @HeraldMimi