August 9, 2011 / 6:56 PM / 8 years ago

Cuba arrests telephone executives in corruption sweep

* ETECSA executives arrested, one defected in Panama

* President Raul Castro has targeted white-collar crime

* Corruption probes put business class under microscope

By Marc Frank

HAVANA, Aug 9 (Reuters) - Cuba arrested senior executives at state-run telephone company ETECSA in an anti-corruption sweep at one of the communist-run country’s top businesses, according to sources with knowledge of the scandal.

Several executives at Empresa de Telecomunicaciones de Cuba SA were arrested in July while the company’s president Maimir Mesa and most of its vice presidents have been suspended at least temporarily and sent home, the sources said.

ETECSA, which is owned by Cuban state and military companies, is one of the 10 largest enterprises in the country, with annual revenues well over $500 million.

“Five or six department directors and deputy directors, and maybe a vice president, have been arrested so far and the vice president of logistics, who was in Panama when the investigation began, decided not to return,” one source said.

“But the investigation has just begun and many more people might be involved,” the source said, adding that a retired company vice president was brought to Havana for questioning.

The sources said two separate investigations underway at ETECSA, one involving its booming cellular phone business and the other into a submarine fiber optic cable financed largely by Venezuela that links Cuba to that country.

The $70 million cable project, designed to circumvent U.S. efforts to deprive the island of a ground-based connection to the Internet, was supposed to be activated in July, but has reportedly run into technical difficulties.

The number of cellphones in use in Cuba trebled between 2008 and 2010 to more than one million, according to the government’s statistics office. Mobile phone cards can sometimes be purchased on the black market.

CASTRO BATTLING CORRUPTION

President Raul Castro, who is locked in a battle with the state bureaucracy as he tries to decentralize government and move Cuba in a more market oriented direction, has made fighting white-collar crime a top priority.

Soon after succeeding his ailing brother Fidel in 2008, Castro created the Office of the Comptroller General and put the comptroller on the ruling Council of State.

Hundreds of senior Cuban Communist Party officials, state managers and employees have lost their jobs and often their freedom in the shake-up that has followed.

It has included the breaking up of high-level organized graft in the civil aviation, cigar and nickel industries, and at least two ministries and one provincial government.

Cuba’s state-run media does not cover corruption scandals, but at times announces verdicts once cases are concluded.

Nevertheless, when high level officials are involved, word filters onto the streets with various versions of the details.

According to Western diplomats Cuba does not suffer from drug-related corruption like many of its Latin American and Caribbean neighbors, but corruption is rife in foreign trade and offshore companies and operations.

“A big problem is there is no transparency, no open bidding when Cuba goes to market,” a Western businessman said, asking that his name not be used.

After 20 years of economic crisis, and with the average state wage at the equivalent of $18 a month, almost all Cubans engage in illegal activities to survive, setting the scene for the business class to do the same.

Top state managers make around $50 to $100 equivalent per month, barely enough to feed their families, even as foreign consumer goods tempt them at state-run hard currency shops. (Editing by Jeff Franks and Anthony Boadle)

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