Tag: Cuba

Humanitarian Parole Program for Cubans, Haitians, Nicaraguans, Venezuelans with Sponsorship

As of January 6, 2023, Cubans, Haitians, Nicaraguans, and Venezuelans and their immediate family members may be eligible for safe passage into the United States for up to two years as parolees if they have a financial supporter. This program is like the Uniting for Ukraine program. Organizations, including companies, can provide the financial support and, upon admission, the parolees may apply for Employment Authorization Documents (EADs).

Proposed beneficiaries cannot apply directly. Supporters must start the process.

The first step is for the supporter to submit a Form I-134A, Online Request to be Supporter and Declaration of Financial Support, including documentation proving they are able to financially support the beneficiaries they are agreeing to support. Only after that application is reviewed and adjudicated will USCIS notify the proposed beneficiary and provide instructions about how to proceed. The beneficiary will be told how to submit biographic information online and, if approved, will eventually receive travel instructions. They will be told to arrange to fly directly to their destination in the United States. Upon arrival at a U.S. port of entry, the beneficiary will be vetted again before being paroled into the country. Beneficiaries should not attempt to enter through a land port of entry as that will likely lead to a denial.

Financial supporters must be U.S. citizens or nationals, legal permanent residents (“green card holders”), conditional permanent residents, non-immigrants in lawful status, asylees, refugees, parolees, and beneficiaries of TPS, DACA or Deferred Enforced Departure (DED). While an individual must submit the Form I-134A, they can do so in association with or on behalf of an organization, business, or other entity that will provide some or all the support. Individuals who file the form on behalf of an organization must submit a letter of commitment or other documentation from an officer or other credible representative of the organization or business describing the monetary or other types of support they will provide. Beyond monetary support, other forms of support can include housing, basic necessities, and transportation. When an individual is submitting the form on behalf of an organization that will be providing the necessary level of support, the individual need not submit their own financial information.

Applications will be considered on a case-by-case basis. The grant of parole is discretionary, based on urgent humanitarian reasons or if the applicants would provide a significant public benefit to the United States.

To be eligible, proposed beneficiaries must:

  • Have a financial supporter in the United States;
  • Undergo robust security screening;
  • Have a passport valid for international travel;
  • Meet vaccination requirements;
  • Provide their own transportation to the United States, if approved for travel;
  • Meet other general requirements; and
  • Warrant an exercise of discretion.

Article By Forrest G. Read IV of Jackson Lewis P.C.

For more immigration legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2023

Venezuela Program Expanded to Cuba, Haiti, and Nicaragua – 30,000 Per Month for All Countries

The Biden administration has announced the expansion of its Venezuela Parole program to three additional countries – Cuba, Haiti, and Nicaragua. On Jan. 5, 2023, the Department of Homeland Security announced an expansion of its new migration process for Venezuelan nationals. The expansion allows those nationals from Cuba, Haiti, and Nicaragua and their immediate family members to request advance authorization for travel and temporary parole for up to two years in the United States, including work authorization. There will be a 30,000 per month cap on the number of parolees from all four countries.

Parolees must have a supporter in the United States who will provide financial and other support, among other requirements. In order to be eligible for advance travel to the United States to request parole at the border, a person must:

  • Be a national of one of the four countries or be an immediate family member (spouse, common-law partner, or unmarried child under the age of 21) of an eligible applicant and traveling with them;
  • Possess a passport valid for international travel;
  • Be outside the United States;
  • Have a U.S.-based supporter who filed a Form I-134 on their behalf that USCIS has vetted and confirmed;
  • Provide for their own commercial travel to a U.S. airport and final U.S. destination;
  • Undergo and clear required screening and vetting;
  • Not be a permanent resident or dual national of any country other than one of these four countries, and not currently hold refugee status in any country;
    • This requirement does not apply to immediate family members (spouse, common-law partner, or unmarried child under the age of 21) of an eligible national of Venezuela with whom are traveling.
  • Not be an unaccompanied child;
    • Children under the age of 18 must be traveling to the United States in the care and custody of their parent or legal guardian.
  • Not have been ordered removed from the United States within the past five years or be subject to a bar based on a prior removal order;
  • Not have crossed irregularly into the United States, between ports of entry, after Oct. 19, 2022;
  • Not have crossed irregularly into the United States, between ports of entry, after Oct. 19, 2022;
  • Not have unlawfully crossed the Mexican or Panamanian borders after Oct. 19, 2022; and
  • Comply with all additional requirements, including vaccination requirements and other public health guidelines.

When the national arrives at the United States port of entry, there will be additional screening and vetting. If granted parole, it will typically be for two years. Once granted parole, nationals may apply for employment authorization and request a social security number.

©2023 Greenberg Traurig, LLP. All rights reserved.
For more Immigration Law news, click here to visit the National Law Review.

U.S. Restrictions on Travel to and Trade With Cuba Return

Effective November 9, 2017, new regulations took effect limiting U.S. travel and trade with Cuba. 

Decades ago, the United States imposed a commercial embargo on Cuba. The embargo existed in one form or another until 2015, when the United States eased some of its restrictions on trade and travel. Then, on June 16, 2017, President Trump signed the National Security Presidential Memorandum (NSPM) on Strengthening the Policy of the United States Toward Cuba. In accordance with the NSPM, the U.S. Department of State has now published a list of restricted entities associated with Cuba. The list names entities with which direct financial transactions will “generally be prohibited” under the Cuban Assets Control Regulations. The entities on the list are those that are “under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba.” Numerous hotels and tourism agencies, as well as retail shops popular with tourists, are included on the list. As a result, U.S. citizens will again have to travel as part of a group that is accompanied by a group representative and licensed by the U.S. Department of the Treasury.

The new restrictions will not impact certain existing transactions. Contracts that were in place and travel arrangements that were made prior to the new rule taking effect may move forward.

This post was written by Natalie L. McEwan of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.,© 2017
For more Antitrust Law legal analysis, go to The National Law Review 

U.S. Implements President Trump’s Cuba Policy

On Nov. 8, 2017, the U.S. Government announced new regulations in furtherance of the Trump Administration’s policy regarding Cuba.

In June 2017, President Trump published his National Security Presidential Memorandum “Strengthening the Policy of the United States Toward Cuba” (NSPM), which announced modification of U.S. policy with respect to Cuba to target the Cuban military, intelligence, and security agencies.  In the NSPM, President Trump emphasized the need to promote the flow of economic benefits to the Cuban people, rather than to its military.  The NSPM further directed the Commerce, State, and Treasury Departments to take various actions implementing the new policy.

Accordingly, regulations were released this week by the U.S. Department of State, Department of Treasury’s Office of Foreign Assets Control (OFAC), and Department of Commerce’s Bureau of Industry and Security (BIS) to implement the NSPM, and clarify the limitations imposed on U.S. persons wishing to travel to or do business in Cuba.

This post was written by Sonali Dohale, Kara M. Bombach, Yosbel A. Ibarra & Carl A. Fornaris of Greenberg Traurig, LLP. All rights reserved.,©2017
For more Antitrust legal analysis, go to The National Law Review 

President Trump Shifts the U.S. Policy Towards Cuba

As we have previously reported on the growing fear that the Trump Administration would roll back President Barack Obama’s plan to normalize relations with Cuba. Then-candidate Donald Trump was calling President Obama’s deals with Cuba “one-sided” and beneficial “only [to] the Castro regime.” Last week Friday, at an event at the Manuel Artime Theater in Miami, President Trump officially announced his Administration’s new public policy towards Cuba and fulfilled a campaign promise.

Cuban FlagPresident Trump’s speech culminated in the issuance of a National Security Presidential Memorandum and an accompanying White House Fact Sheet on the U.S. Policy toward Cuba.  In sum, President Trump’s directive:

(a)  Ends economic practices that “benefit the Cuban government” by prohibiting most economic activities with the Cuban military conglomerate, Grupo de Administración Empresarial (“GAESA”). This change is most likely to affect the hotel and tourism industry sectors, since these are the industries said to be largely controlled by GAESA. A list of companies that will be on the “blacklist” will be issued by the State Department at a later date.

(b)   Adheres “to the statutory ban on tourism to Cuba,” by amending regulations related to educational travel (i.e., by ending individual people-to-people travel) and enforcing the strict record keeping requirements related to travel to Cuba.

(c)   Opposes any efforts in the United Nations or other international forums to lift the embargo on Cuba.

(d)   Supports the expansion of internet services and free press in Cuba by convening a task force that will work with non-governmental organizations and private sector entities to examine the challenges and opportunities in those areas.

(e)  Keeps in place the Obama Administration’s elimination of the “Wet Foot, Dry Foot” policy.

(f)  Ensures that engagement with Cuba in general is advancing the interests of the United States.

As explained in the new FAQs issued by the U.S. Department of the Treasury, the policy changes will not go into effect until the Treasury Department and the U.S. Department of Commerce have finalized their new regulations. Importantly, the new Cuba policy changes will not have retro-active effect. Those travel arrangements and commercial engagements that were in place prior to the issuance of the upcoming regulations will not be affected.

Al Cardenas, who heads the Latin America practice group at Squire Patton Boggs and previously served as the former Chairman of American Conservative Union and former Chairman of the Florida GOP, explains:  “Despite the emotional setting and rightful remembrance of the struggles of the Cuban people found in President Trump’s speech, which was focused on a Cuban exile audience, President Trump’s executive action preserves many of the changes made during President Obama’s Administration (some of which were outlined in President Obama’s 2014 Speech). For example, the respective embassies in Washington and Havana will remain open, the U.S. licenses issued to airlines and cruise line companies have been kept, efforts to expand direct telecommunications and internet access will continue, and the additional categories for travel to Cuba for the most part remain in place. While one-step back is the prohibition on U.S. travelers from staying at government-owed facilities, this should be a boon to the family-owned B&B’s and other rentals on the island. It remains to be seen whether there will be a significant drop off in tourist travel to the island.”

Viewed as a whole, President Trump is tightening some areas where improved economic relations with the United States could have benefitted some auspices of the Cuban Government.

This post was written by Beatriz E. Jaramillo and  Stacy A. Swanson of Squire Patton Boggs (US) LLP.

Negotiation By Tweet: The Uncertain Future of U.S. Cuba Relations

U.S. Cuba relationsAfter the announcement of Fidel Castro’s death on November 26, 2016, President Barack Obama sent a message to the Cuban people highlighting his administration’s efforts to improve relations between the United States and Cuba. “History will record and judge the enormous impact of this singular figure on the people and world around him…[T]he Cuban people must know that they have a friend and partner in the United States of America,” Obama said.

President-Elect Donald Trump took a different tack, tweeting simply, “Fidel Castro is dead!”

The following Monday, as the first U.S. direct commercial flight in over 50 years landed in Havana, Mr. Trump tweeted: “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate deal.” It is unclear what he means by the “deal.” President Obama’s relaxation of restrictions on Cuba is not part of a single deal. Rather, the President’s decision to increase engagement and shift policy toward the island nation has been implemented through a gradual series of Presidential Executive Orders, regulatory changes, and shifts in licensing policy.

Mr. Trump’s threat to terminate the “deal” might be read as a threat to reverse the steps the Obama administration has taken to ease travel and trade restrictions on Cuba. That threat has created a great deal of uncertainty for the future of U.S.-Cuba relations. During his campaign, Mr. Trump sent mixed signals about his approach on Cuba. In September 2015, Mr. Trump reportedly commented that “the concept of opening Cuba is fine.” His stance hardened closer to the election (as he fought for votes in the key electoral state of Florida), reportedly saying that he would close the newly opened U.S. Embassy in Havana and undo President Obama’s policies on Cuba.

Other influences may tend to harden Mr. Trump’s views further. His choice of Reince Priebus has a reputation as a Cuba hawk, as do influential members of the Republican Congressional delegation, including Marco Rubio and Ted Cruz.  Mr. Trump’s choice to head the National Security Council, Michael Flynn, has written that he sees Cuba as a country “allied with” Radical Islamists in a war against the United States.

Theoretically, undoing President Obama’s efforts would be easy for the new Trump administration. There is no legal barrier to reversing most or all of the Obama administration’s Cuba initiatives.

On the other hand, it is somewhat possible that the businessman in President-elect Trump could influence his views on Cuba, especially considering that his own organization reportedly investigated business opportunities in the Cuban hospitality sector as recently as six months ago. Since hospitality is one of the major sectors benefitting from Obama administration’s Cuba policies, it might provide fertile ground for further opening of the relationship.

There may be a possible approach lying between normalization and retrenchment. As noted by the US-Cuba Trade and Economic Council, Mr. Trump may choose to require that the Cuban government meet certain requirements as conditions to continuing the existing initiatives. Such conditions might include concrete steps on human rights. At the same time, enforcement of existing restrictions (which are many) could be beefed up through allocations to the chronically underfunded and understaffed Office of Foreign Assets Control within the U.S. Department of Treasury. But negotiating this middle path will be delicate. The Cuban leadership is extremely sensitive to criticism of its human rights record, but there are small signs of movement. For example, when President Obama visited the island in March 2016, he met personally with dissidents critical of both Castro and the United States. And Fox News reported after Fidel Castro’s death that Raul Castro’s regime has moved away from the worst abuses, including executions of dissidents and long-term sentences of political prisoners. But according to the same report, under the Raoul Castro regime, harassment and short-term detention reportedly continues to be used to disrupt the activities of dissident groups. Navigating those issues will place high demands on the diplomatic skills of Mr. Trump’s administration.

According to a recent Pew Research poll, there is broad approval across party lines for reestablishing diplomatic relations with Cuba and ending the embargo. Many sectors of the American business community would likely oppose rolling back President Obama’s changes, which have broken down economic and social barriers between the United States and Cuba. Travel to Cuba is immensely popular. Many companies have invested millions to enter the Cuban market, with the U.S. government’s authorization. As White House Press Secretary Josh Earnest argued, “unrolling” Obama’s policy is “just not as simple as one tweet might make it seem.” But this may not be enough to sway Mr. Trump.

For American businesses exploring opportunities in Cuba, it is important to be mindful that the next administration is likely to freeze any expansion of Cuba initiatives, at least while the new President sorts out his priorities. In the best case, existing policies might be made contingent on Cuba meeting certain human rights and other objectives important to the new President. Some of the more permissive Obama administration policies could be rescinded, and there may be increased enforcement by OFAC of the restrictions that remain. We also expect that after Inauguration Day, January 20, 2017, work on pending OFAC license applications is likely to be frozen until a clear agenda is set. While the uncertainty is unsettling, we will continue to look to a future, as President Obama stated, “in which the relationship between our two countries is defined not by our differences but by the many things that we share as neighbors and friends – bonds of family, culture, commerce, and common humanity.”

ARTICLE BY J. Scott Maberry & Fatema K. Merchant of Sheppard, Mullin, Richter & Hampton LLP

Copyright © 2016, Sheppard Mullin Richter & Hampton LLP.

OFAC Allows Joint Medical Research with Cuba

OFAC Medical ResearchThe Department of the Treasury, Office of Foreign Assets Control (OFAC), has modified the Cuban Assets Control Regulations (CACR) (31 C.F.R. Part 515) to allow joint medical research between persons subject to U.S. jurisdiction and Cuban nationals. In the context of the CACR, a “person subject to U.S. jurisdiction” includes any non-U.S. entity owned or controlled by a U.S. person or company directly or indirectly.

It is important to note that the focus of this rule is the development and sale of Cuban origin pharmaceutical products into the United Sates and not the sale of U.S. origin products into Cuba. The changes published today have no impact on the sale of U.S. origin pharmaceutical products into Cuba, and the modified rules do not eliminate the need for sales into Cuba to be licensed by the U.S. Department of Commerce and/or the Department of the Treasury.

As a result of this rule change, effective October 17, 2016, U.S. pharmaceutical companies and their foreign subsidiaries, as well as U.S. nationals, are authorized to engage in various types of transactions “incident to obtaining approval from the U.S. Food and Drug Administration (FDA) of Cuban origin pharmaceuticals, including discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities, and the importation into the United States of Cuban-origin pharmaceuticals,” as well as the “marketing, sale, or other distribution in the United States of FDA-approved Cuban-origin pharmaceuticals, including the importation into the United States of Cuban-origin pharmaceuticals.”

In its most recent Portfolio of Opportunities for Foreign Investment, Cuba identified the biotechnology and pharmaceutical sector, where BioCubaFarma has been producing vaccines and drug products for years, as one of the targets of foreign investment through strategic partnerships. Specifically, the Cuban government stated that it was promoting joint R&D projects, distribution and representation arrangements and technology transfer arrangements that complemented domestic projects in the sector. This week’s changes to the CACR will facilitate participation in these types of investments and activities in Cuba by U.S. companies.

ARTICLE BY Joan Koenig & Mollie D. Sitkowski of Drinker Biddle & Reath LLP

©2016 Drinker Biddle & Reath LLP. All Rights Reserved

Hotels and Hospitality in Cuba: OFAC and Obama Paving the Way

cuba_800_11429With more flights, relaxing regulations, a historic presidential trip to Cuba, and news of hospitality services expanding into Cuba, the pathway into Cuba for hotels and hospitality companies seems smooth.  But businesses should look out for the potential hurdles and compliance risks.  Don’t fret – we can help you welcome your guests.

Reserve Your Room: Regulatory Background. Since President Obama announced the intent to improve our country’s relationship with Cuba and its people a year and a half ago, several revisions to the sanctions regime have focused on easing restrictions related to travel between the two nations.  In February 2016, Cuba and the United States agreed to reestablish commercial air travel between the two countries.  According to media reports, this agreement means the potential for 110 daily round-trip flights in and out of Cuba, including 20 daily flights to Havana.

Soon after the agreement was announced, major U.S. airlines submitted applications to fly commercial flights to Cuba.  Though tourist travel is still prohibited, twelve fairly broad categories of travel are authorized, including family visits, travel for government work, journalism, professional research, humanitarian work and educational activities, and “people-to-people” educational travel.

In mid-March of this year, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) again revised the Cuban Asset Control Regulations (CACR), permitting more travel-related transactions.  According to OFAC, the steps “expand opportunities for economic engagement between the Cuban people and the American business community.”  The agency announced the changes in preparation for President Obama’s historic trip to Cuba.

  • People-to-people educational travel. Previously, the general authorization for educational travel required that trips took place under the sponsorship of an organization and required that a representative from the organization accompany the travelers. The regulations no longer require booking through an authorized organization when going to Cuba under the people-to-people educational travel general license. This means that U.S. persons can freely travel to Cuba to engage in educational exchange activities that enhance contact with the Cuban people, support civil society in Cuba, or promote Cubans’ independence from their government, as long as they keep records of the travel transactions and full-time schedule of activities.

  • Financial Transactions. The regulations enable U.S. banks to process U.S. dollars and travelers’ checks from Cuban banks, to conduct U-turn transactions in which Cubans have an interest, and to allow Cuban nationals to open bank accounts to receive payments in the U.S.

  • Business Presence. In addition, the regulations allow certain carrier and travel services providers to maintain a business presence in Cuba under a general license.  This means that travel-service providers are authorized to establish and maintain subsidiaries, branches, offices, joint ventures, franchises, and other business relationships with any Cuban national, and enter into all necessary agreements or arrangements with such entity or individual.

These changes encourage much more travel between Cuba and the United States, ease restrictions that affect the ability to operate hotels and hospitality services in Cuba, and demonstrate a policy shift in favor of facilitating business, particularly in the travel sector, in Cuba.

Checking In: President Obama’s Historic Visit.  In late March 2016, President Obama visited Cuba as the first sitting U.S. president to visit Cuba since Calvin Coolidge visited in 1928.  Not only was President Obama’s visit a diplomatic feat as he quoted Cuban independence poet Jose Marti’s line: “Cultivo una rosa blanca” (“Cultivate a white rose”) in a live address on Cuban television, but it was also a marked invitation for more American business involvement in the island nation.  Notably, Marriott CEO Arne Sorenson accompanied President Obama on his visit.  According to media reports, Marriott is pursuing business opportunities to run or develop hotels on the island, and to provide training and opportunities for Cuban nationals to supply hotel needs.

Enjoy Your Stay: A Suite of Opportunities.  As a result of the steady changes in the travel regulations, many hotels and hospitality companies are eager to take advantage of the opportunities that await in Cuba.  Even before the most recent updates announced this year, Airbnb announced its presence in Cuba to provide bookings for U.S. travelers in the authorized travel categories.  More recently, the company announced it has received permission from OFAC to open its doors to non-U.S. travelers as well.  Starwood has reportedly signed three deals to open properties in Havana, apparently being the first hospitality company to obtain specific authorization from OFAC to operate hotels in Cuba.  We think this signals OFAC’s willingness to use its licensing authority favorably for hotel and hospitality companies looking to develop in Cuba.

Earlier this month, a trade fair in Havana hosted a hall full of companies in the construction industry eager to get in on the ground floor of real estate and hotel projects that seem to be on the horizon.  U.S. travel to Cuba reportedly increased between 77 percent in 2015, and this upward trend is expected to continue as a result of the recent regulatory changes.  As the travel restrictions ease, travel-related businesses may gain greater latitude to develop the infrastructure to support such travelers and provide economic benefits to the Cuban people.

Check All Your Belongings: Compliance Challenges to Consider

  • Working under General Licenses. Though there is a general license authorizing certain travel services, providing lodging services is still prohibited unless specifically licensed by OFAC. Tourist travel is still prohibited by statute. Businesses that wish to operate under the general licenses must put together procedures that comply with these restrictions.

  • Getting Authorization. In order to effectively negotiate and finalize agreements with Cuban counterparties for the provision of services outside the general licenses, U.S. companies must receive authorization from OFAC.  This makes doing business difficult because putting in the resources and time to apply and receive authorization may not make business sense unless companies have concrete opportunities.  OFAC is currently inundated with applications and Cuba questions.  Hotel and hospitality companies looking to expand in Cuba should plan as early as possible and be prepared for the license application process and approval to take several months.

  • Restrictions on Property and Development. The inability to own property outright under Cuban law is an obstacle for many hotel companies that seek to invest in facilities that will maintain and build their brands.  It is a challenge to find an existing property to develop or property on which to build. It can be an even greater challenge to import the materials needed to develop and maintain the property.  Even if a company acquires authorization to build and develop a hotel, there will be a plethora of suppliers who may also need to seek authorization.  S. businesses must plan accordingly when seeking authority to develop properties.

  • Dealing with the Cuban Government. S. businesses will have to learn quickly about negotiating with the Cuban government and getting government approvals because most potential counterparties are state-owned, and each step in the development process will likely include government involvement. This also raises corruption risks (Don’t forget the FCPA!) as companies wine and dine potential counterparties and work toward getting permits.

  • Employee Base. For foreign companies seeking to establish a brand in the market, restrictions on hiring may pose extreme challenges.  Employment in Cuba is not left to market dynamics. Hiring Cuban employees involves working with the Cuban government and hiring the personnel designated by the government.  Generally the employer is required to pay the Cuban government directly, and the government pays the employees.  Complying with such Cuban laws may fly directly in the face of a company’s business model and may compound the U.S. law compliance challenges.

  • Cuban Law. Having counsel who understand the Cuban legal landscape and regulatory challenges will be crucial for U.S. companies.  Structuring deals in Cuba that comply with Cuban law can be tricky.  The legal infrastructure in Cuba for foreign investment is not well developed, so U.S. companies will face a steep learning curve to successfully finalize and implement deals in Cuba.  Moreover, Cuban lawyers have very different ethical obligations than U.S. clients may be used to (including a virtual complete lack of attorney-client privilege).

Even with the host of challenges, exploring the Cuban market presents an intriguing opportunity for hotel and hospitality companies.  With the right compliance strategy and the right team, U.S. businesses could enjoy their stay in Cuba for years to come.

Article By Fatema K. Merchant & Lisa C. Mays of Sheppard, Mullin, Richter & Hampton LLP

© 2016, Sheppard Mullin Richter & Hampton LLP.

Improved US – Cuba Relations Create Potential FCPA Risks for US Companies Looking to do Business There

The normalization of relations between the United States and Cuba offers potential lucrative business opportunities for companies that are prepared to meet Cuba’s unique corruption risks. On December 17, 2014, President Barack Obama and Cuban President Raul Castro announced the restoration of full diplomatic relations between the United States and Cuba; an act which President Obama stated was aimed at ending “an outdated approach that for decades has failed to advance our interests” and that would instead begin to “normalize relations between our two countries.” In furtherance of that goal, on January 16, 2015, the U.S. Government eased travel restrictions between the U.S. and Cuba and, perhaps more importantly, reduced certain obstacles that prevented American companies from doing business on the island. For example, U.S. businesses will be allowed to provide financing to Cuban small businesses and sell communications devices, software, and hardware services among other things. Indeed, American companies in the aviation, telecommunications, or financial industries stand to gain a substantial foothold in a burgeoning new – and potentially lucrative – Cuban market.

Before diving in head first, however, American companies must recognize and prepare for the significant Foreign Corrupt Practices Act (“FCPA”) risks inherent in doing business in Cuba. But first, a quick refresher on the FCPA. Generally speaking, the FCPA prohibits bribing foreign officials for the purpose of obtaining or retaining business. The term “foreign official” is broadly defined and includes, among other things: (i) officers or employees of a foreign government or any department, agency, or instrumentality thereof; or (ii) anyone acting in an official capacity for or on behalf of said foreign government or any department, agency, or instrumentality thereof.

Doing business in Cuba presents a host of unique FCPA risks, three of which are particularly worth highlighting. First, while the Cuban government has taken steps to permit its citizens to open small businesses, the vast majority of Cuba’s economy remains government-owned and controlled. Former economist for the International Monetary Fund, Ernesto Hernandez-Cata, estimated that the Cuban government, directly and through state-owned businesses, accounts for more than 75% of Cuba’s total economic activity.  Essentially, the state is involved in virtually all of the island’s major businesses, including services typically run by the private sector in the U.S. In other words, American companies will almost certainly deal with foreign officials when doing business in Cuba.

Second, Cuban government officials are notoriously undercompensated. On average, government officials earn between $20 and $40 per month while, in some cases, being tasked with administering Cuba’s multi-million dollar business ventures. Unsurprisingly, low wages and extensive state involvement in business matters have incentivized some Cuban officials to solicit bribes (and, occasionally, have tempted foreign companies to offer them). For example, in September 2014, Cy Tokmakjian, Claudio Vetere, and Marco Puche, executives at Tokmakjian Group, a Concord, Ontario, Canada-based company,  were convicted of using bribery and other means to avoid paying taxes. They received sentences of 15, 12, and 8 years respectively as part of President Raul Castro’s crack down on graft and other forms of corruption. Tokmakjian, Vetere, and Puche may not be subject to the FCPA, but similar payments by American companies in Cuba would likely expose the companies and employees to FCPA liability.

Third, and finally, Cuba suffers from a widespread lack of transparency. The 2015 Transparency International Corruption Perceptions Index ranked Cuba 56th out of 168 countries surveyed, tied with Ghana.  American companies may find themselves in the dark with respect to Cuban regulations and procurement practices. As a result, companies may not be aware of inconsistent and/or improper application of Cuban regulations. Worse still, American companies may be unaware of the true purposes for certain payments. For example, a company may be informed that a particular payment is required to obtain a specific license but find out that the money was directed to a foreign official.

Note that the FCPA does have a knowledge requirement; however, knowledge may be demonstrated by establishing awareness of a high probability of impropriety, unless the person actually believed that there was nothing improper in that instance. See 15 U.S.C. § 78dd-1(f)(2). The “high probability” standard was intended to ensure that the FCPA’s “knowledge” requirement included instances of “conscious disregard” and “willful blindness.” H.R. Rep. No. 100-576, at 919 (1988) (citing United States v. Bright, 517 F.2d 584 (2d Cir. 1975)); see also United States v. Kozeny, No. 09-cr-4704, 2011 WL 6184494 (2d Cir. Dec. 14, 2011). Furthermore, the vast majority of FCPA cases settle before trial which means that there is little case law that speaks specifically to the FCPA’s scienter requirement. As a result, the DOJ and SEC have broad discretion to attempt to settle cases based on facts that may be out of tune with a strict interpretation of the FCPA’s scienter requirement.

At a minimum, reducing FCPA risks in any foreign country requires that companies take a few basic, but important, steps: conduct a risk assessment of the country, the industry, and the market; use the assessment to prepare a potent anti-bribery policy aimed at both prevention and remediation; implement the policy and disseminate it to all employees; adequately train employees and company agents; and modify the policy when necessary to ensure adequate protection in a changing market.

More specifically, doing business in Cuba – a market with which few American companies are deeply familiar – requires a thorough risk assessment. The quality of the analysis can mean the difference between a deficient anti-bribery policy and one that adequately shields the company from risk exposure. Accordingly, American companies should seek the advice of counsel before, during, and after the assessment. Counsel with experience in dealing with FCPA issues will be well-equipped to make sure the risk analysis is efficient, comprehensive, and targeted. This information will prove invaluable when designing an anti-bribery policy. Furthermore, experienced counsel can assist in implementing the policy, modifying the policy to ensure ongoing effectiveness, and representing the company should any FCPA-related issues arise.

Article By Philip J. Bezanson, Glen A. Kopp & Jeffery B. Vaden of Bracewell LLP
© 2016 Bracewell LLP

The Future of Business Relations in Cuba – Commentary from a Seasoned Customs Attorney

cuba_800_11429Since the December 2014 reopening of diplomatic relations, access to Cuba has been greatly widened, with new changes to regulations taking place as recently as late January.  These developments signal opportunities for legal service providers to assist clients who are seeking advice on business development opportunities in Cuba. However, effective advising requires a thorough understanding of the history of the U.S. embargo on Cuba and the changes in the laws themselves.

Peter Quinter, Chair of the Customs and International Trade Law Group at GrayRobinson P.A., offers a unique perspective regarding U.S. and Cuban relations as a former attorney in the Office of Chief Counsel for U.S. Customs in Miami. As a South Florida resident surrounded by the stories about the 1959 Cuban Revolution and Fidel Castro, Peter was fascinated with the unique relationship between the two countries. As an attorney with U.S. Customs, he was also responsible for enforcing the U.S. embargo of Cuba. I recently had the opportunity to discuss his perspective on the progress of reopening relations with Cuba following his participation in a panel discussion at the recent Marketing Partner Forum.1

Since the imposition of the U.S. embargo on Cuba 55 years ago, Cuba’s economy has remained relatively stagnant in growth. I was initially focused on the idea that only the U.S. refused to trade with Cuba, and that despite access to everywhere else in the world, their economy did not grow. Mr. Quinter corrected my assumption, stating “[t]here were multiple embargoes, but they disappeared long ago. Only the U.S. retains the embargo, and it was U.S. policy to punish any country doing business with Cuba.”  In fact, the UN General Assembly has nearly unanimously voted to condemn the embargo every year since 1992. The U.S. only garnered support from one other nation –Israel– in the most recent vote on the embargo in October 2015.

Despite the standing embargo, the U.S. is now poised to begin contributing to the significant growth of the Cuban economy. Although most U.S. companies are still prohibited from doing business in Cuba, the relaxed rules and opening of embassies in D.C. and Havana have allowed a few major companies to start doing business in Cuba including Verizon, Netflix, and AirBNB. Mr. Quinter believes many industries have the opportunity to rapidly develop in Cuba due to the expansion of diplomatic relations: “Logistics, warehousing, hospitality, aviation, travel agents, sports, education..to name a few.” These developments signal new opportunities for U.S. law firms to advise companies in their up-and-coming dealings in Cuba.

Like business dealings in any country, it is imperative to understand and work within the laws of Cuba’s socialist government. Mr. Quinter’s extensive experience in advising clients on OFAC regulations and policies (Office of Foreign Assets Control) for 26 years makes him uniquely positioned to comment on the current state of U.S. law firm involvement in this rapidly evolving area. During the presentation, he stated that few firms are approaching this opportunity in the appropriate manner. In our follow up discussion, he called attention to this error: “Suddenly, numerous law firms are ‘experts’ in this, and are attempting to be business brokers, instead of legal advisors.”

As a legal advisor, Mr. Quinter elaborated that law firms’ focus should remain on advising U.S. persons and companies about the relevant legal requirements that allow these entities to travel to, trade with, or invest in Cuba. A major part of this practice is determining whether a license is required to do any of these things, and if so, obtaining the license from the U.S. Treasury for the client. Once the appropriate license is obtained, then the firm will need to assist the client in working with the Cuban government.

Law firms can add value to their practice by beginning to form new partnerships now so they can be better equipped to help their clients establish businesses down the line. Mr. Quinter advises that traveling to Cuba, experiencing the culture, and introducing themselves to the community is an excellent way for law firms to equip themselves to guide clients who are looking to do business in Cuba. In May 2015, Mr. Quinter, as Chair of the Florida Bar’s International Law Section, led the largest lawyer delegation ever to visit Cuba. While the group was in Cuba, they met with lawyers, journalists, and dissidents to get a better lay of the land and to help move toward opening up business relationships. Mr. Quinter has since returned to Cuba in October 2015 on behalf of a client meeting with government officials.

The upcoming 2016 presidential elections could greatly impact the progress being made in Cuba. Several presidential hopefuls have made their sentiments toward the embargo known: Republican candidate Marco Rubio staunchly for the embargo, and Democratic candidate Hillary Clinton ardently against it. However, Mr. Quinter posited, “What has happened to date is legally reversible, but realistically not.” He believes the embargo will eventually meet its end: “As more investment in and trade with and authorized travel by Americans occur to Cuba, even the few people who support the U.S. embargo (Cubans call it a ‘blockade’) will realize the embargo is counterproductive, and a leftover from the Cold War of the 1950’s and 1960’s.”

At the moment, Mr. Quinter acknowledges that in the short term, OFAC regulations continue to make it difficult to do business in Cuba. However, he is hopeful for the future: “In 10 years, we will look back and wonder why the U.S. did not terminate the U.S. embargo of Cuba decades ago, and we will recognize the leadership of President Obama in having the courage and vision to starting the process.” In fact, President Obama has recently announced that he will be the first sitting U.S. president to visit Cuba in over the 85 years. This is a signal of the U.S.’s overall sentiment toward Cuba, but only time will tell how U.S.-Cuban relations are progressing.

Article By Nicole Cudiamat Minnis of The National Law Review / The National Law Forum LLC

Copyright ©2016 National Law Forum, LLC

 

1 Mr. Quinter was a part of a panel at the Legal Executives Institute 23rd Annual Marketing Partner Forum, held January 20-22nd in Orlando. He was joined by Eddy Arriola, Chairman of the Board & Chief Executive Officer, Apollo Bank for the presentation, “From Swords to Plowshares: Cuba, Legal Business Development and Industrial (R)evolution (Breakout)”.