Military man to head Cuba's biggest company

HAVANA Mon Sep 27, 2010 4:10pm EDT

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HAVANA (Reuters) - President Raul Castro has put a military officer in charge of Cuba's largest commercial corporation as part of a drive to increase efficiency and reduce corruption in the country's major foreign exchange companies.

Colonel Hector Oroza Busutin arrived at the headquarters of the Cuban Export-Import Corporation (CIMEX) earlier this month, replacing its long-time President Eduardo Bencomo, according to various company employees.

"Since then, there have been a lot of military people running around here," one of them said, asking that her name not be used.

Since taking over the presidency from older brother Fidel Castro in 2008, Raul Castro has taken steps to boost Cuba's troubled state-run economy and weed out corruption.

He reportedly wants to brings some of the country's independent companies under government ministries and views consolidation, which has already begun, as the best path forward.

In many cases, he has entrusted the task to military officers, with whom he is said to feel more comfortable after almost five decades as Cuba's defense minister.

At least 10 military men hold positions in his cabinet or as deputy ministers and heads of key agencies.

Oroza Busutin moved to CIMEX from his position as No. 2 in the military-run Administrative Group of Businesses (GAE.SA), a holding company which also operates numerous foreign exchange businesses including the country's largest tourism corporation and real estate firm, a chain of warehouses and hundreds of retail outlets selling everything from groceries to domestic appliances.

Castro's son-in-law, Colonel Luis Alberto Rodriguez, is the chief executive of GAE.SA.

CIMEX's new deputy director, Ana Maria Oretega, held a similar position at the military's retail chain, TRD-Caribe, according to the company sources.

"I'm not surprised. It follows the trend under Raul," said a Western diplomat in Havana.

The appointment has not been announced despite CIMEX's relations with hundreds of foreign suppliers and significant role in Cuba's everyday life.

CONSOLIDATION UNDER WAY

CIMEX, with annual revenues of more than $1 billion, is an independent state-run conglomerate that operates exclusively in foreign exchange and the local equivalent called the convertible peso, valued at $1.08 per unit.

It runs its own shipping line and bank, clears foreign credit card transactions, controls remittance wire transfers, operates a real estate business and the country's largest travel agency and owns more than 2,500 commercial outlets including department stores, fast food spots and gas stations.

The change in command at CIMEX follows the liquidation last year of CUBALSE, Cuba's second-largest foreign exchange company. Its numerous businesses were spun off mainly to military-run companies and CIMEX.

The dissolution of CUBALSE, Cuban authorities said at the time, would "reduce expenses, increase negotiating power, concentrate the administration of service-providing entities, and carry these out with greater efficiency."

In the 1990s, after the fall of the Soviet Union, Cuba's chief benefactor, the elder Castro opened the door to international tourism and investment, legalized the dollar and later the convertible peso and welcomed family remittances.

The military along with CIMEX and CUBALSE were given the task of absorbing the influx of cash by establishing retail and other businesses in what the government viewed as an experiment in state-managed competition.

But Raul Castro reportedly has come to view the competitive model in state-run foreign exchange operations as redundant and rife with corruption.

Theft at their gas stations has been estimated at up to 50 percent by the official media and much of Cuba's prolific black market is said to be fed by warehouses under the various companies' control.

It is still not clear what will happen to CIMEX, but many believe some of its operations will be spun off, with, for example tourism businesses going to the Tourism Ministry.

There is also talk that a single chain of retail establishments operating in convertible pesos is planned.

(Editing by Jeff Franks and Cynthia Osterman)

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