How a Canadian businessman lost everything in Cuba

How a Canadian businessman lost everything in Cuba
JEFF GRAY
The Globe and Mail
Last updated Friday, Mar. 20 2015, 8:14 PM EDT

Canadian businessman Sarkis Yacoubian only knew his Cuban interrogator –
the Cubans call them "instructors" – as Major Carlito. When they first
met in the dim basement of the Havana house where security agents had
initially imprisoned Mr. Yacoubian in July, 2011, he says Major Carlito
greeted him by grabbing his own crotch.

"If you are expecting that the Canadian embassy is going to come to your
help, this is what they are going to get," Mr. Yacoubian, 54, says his
captor warned him. Then, he says, Major Carlito accused him of being a
spy, an accusation that would eventually be abandoned before the
Canadian was convicted by a Cuban court of corruption charges and
expelled last year.

His story, and that of Toronto-area businessman Cy Tokmakjian, who was
released from incarceration in Cuba last month after a similar
corruption trial, are cautionary tales for would-be investors in Cuba.

However, some say the historic Dec. 17 announcement of Canada-brokered
talks to normalize Cuba's relations with the United States – plus recent
moves by leader Raul Castro to liberalize the economy – still has
Canadian investors and entrepreneurs interested in the Communist-ruled
island.

Despite Major Carlito's threat, the Canadian embassy did closely
monitor's Mr. Yacoubian's status as he spent two years in jail before
facing any formal charge. And the ambassador attended Mr. Yacoubian's
2013 trial, which saw him sentenced to nine years in prison and fined
$7-million for corruption, tax evasion and doing "economic damage" to Cuba.

Mr. Tokmakjian, 74, spent more than three years in prison. Two of his
Canadian employees who had been blocked from leaving Cuba were also
recently freed. His Concord, Ont.-based Tokmakjian Group reportedly had
a $90-million-a-year business on the island importing vehicles and
construction equipment. His assets in Cuba were seized. Mr. Yacoubian, a
former employee of Mr. Tokmakjian's who broke away from his boss to
build what he said was a $20-million-a-year business in Cuba bringing in
similar products, says all of his assets on the island were also seized.

Both were caught up in what has been described as an anti-corruption
sweep. Some of their Cuban employees as well as Cuban state officials
were jailed. Several Cuban officials associated with a joint venture
with Toronto-based miner Sherritt International Corp., Canada's largest
investor in Cuba, were also convicted of corruption offences in 2012.
And a handful of other foreign businessmen in Cuba, including Briton
Stephen Purvis – who told reporters his captors also initially accused
him of espionage – and Frenchman Jean-Louis Autret were also imprisoned.
Both have since been freed.

Mr. Yacoubian's account of his ordeal sounds plucked from a spy novel.
But even though months before his arrest he did buy a 2011 Aston Martin
– James Bond's car of choice – he says he was no spy.

He also says he was not corrupt and was only following common business
practices in Cuba. He said he was forced to hand over 1 or 2 per cent on
many transactions for what he called "protection money" for Cuban
officials for routine things, such as permission to operate a mechanics'
shop or to obtain payment for goods sold. But he insists he never paid
kickbacks to obtain contracts as the Cubans alleged. He questions why he
was targeted.

"If there's a traffic light that's red, everybody passes. Now that I am
passing you say, hold on a second, you can't do that," he said.

Before Mr. Yacoubian was arrested at gunpoint at his Havana offices in
July, 2011, he had been running his own business in Cuba for 15 years
after breaking away from Mr. Tokmakjian and founding his own company,
Tri-Star Caribbean Inc., in the mid-1990s.

During his two and a half years in some of Cuba's most notorious
prisons, Mr. Yacoubian says he sank into a depression, attempted a
hunger strike and threatened suicide. He says he was arbitrarily moved
from cell to cell, which he described as "psychological torture." But
early on he says he was treated much better, held in a house in Havana,
even playing dominoes with his captors. He was also allowed out to visit
his elderly mother, who had flown into Havana, and from whom his
imprisonment was kept secret.

He says he told his captors about the practices of other companies and
of Cuban officials who received payments, and says he was made to
testify against Cuban officials at what he said were closed sessions
with military prosecutors.

Toronto-area Conservative MP Peter Kent, who represents the Thornhill,
Ont., riding where Mr. Tokmakjian and his family live, visited both men
while they were held at La Condesa, a prison an hour outside of Havana.
He says their cases and those of the other foreign businessmen is
chilling investment in Cuba.

"They have lost a lot of significant investment because, I believe, of
the treatment of guys like Cy and [British national] Purvis and others,"
Mr. Kent said, adding that businessmen from close U.S. allies but not
from Venezuela, China or Russia had been targeted. "There, but for the
whim of somebody in the Interior Ministry, they would either find
themselves in jail one day or their assets seized.… It doesn't matter
how well you've behaved, you're vulnerable."

In Mr. Tokmakjian's case, the Cubans alleged that he paid for vacations
in Varadero, a barbecue and a flat-screen TV for Cuban officials, as
well as for casino chips for a Cuban delegation on a visit to Niagara
Falls, Ont. But Mr. Kent called these "confected charges" and said the
Cubans refused to allow various expert witnesses to testify in Mr.
Tokmakjian's defence, before sentencing him to 15 years in jail in what
his company called a "show trial." Mr. Tokmakjian has denied all of the
allegations against him. Through a lawyer, he declined to be interviewed
for this story.

Cuba, by comparison with many of its Latin American neighbours, appears
to have less large-scale bribery involving high-ranking officials, says
Alexandra Wrage, who runs a non-profit called Trace International and
advises multinationals on anti-corruption. But lower-level officials,
she says, are often engaged in more widespread run-of-the-mill
corruption demanding small payments or perks from foreigners.

"The consequences for corporations are kind of terrifying," Ms. Wrage
said. "You have a whole population that has basically been trained into
the idea that they need to circumvent the rules to survive."

Still, those risks – and the stories of Mr. Yacoubian and Mr. Tokmakjian
– don't appear to be dramatically dampening enthusiasm for investment in
Cuba from Canada. In one sign of the demand, national law firm Gowling
Lafleur Henderson LLP will announce this week the launch of a new Cuba
practice to help guide foreign investors there.

Gowlings is working with Gregory Biniowksy, a Canadian lawyer who has
lived in Cuba for more than 20 years, who says he has seen a significant
boost in interest from Canadian investors since December, with none
overconcerned about being thrown in jail: "My experience with Canadian,
European and even American investors that are looking at Cuba is that it
doesn't seem to be playing much of a factor in their calculations."

Mark Entwistle, a former Canadian ambassador to Cuba who now works as a
consultant for investors in the country with Toronto-based Acasta
Capital, says it is quite possible to do business in Cuba without paying
bribes. He said he could not comment on the specifics of the two cases
but said he did not think they were scaring business away: "I don't
think there has been any great impact of these specific cases and the
media attention they have generated on people interested in exploring
the Cuba opportunity."

When asked, even Mr. Yacoubian himself declines to outright warn
Canadian businesspeople to avoid Cuba: "The businessmen are smart. There
is a risk-reward factor. I am not going to comment. If they want to try
it, they can try it. It worked for me for 20 years. And then I lost
everything."

Source: How a Canadian businessman lost everything in Cuba - The Globe
and Mail -
http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/canadian-businessman-accused-of-spying-lost-everything-in-cuba/article23569652/