Closure of Havana Restaurants

[Ryan]

I had heard stories of money laundering though paladares in the past. Looks like somebody has now been at least accused of it in Havana.

"Ties to drug trafficing" is a serious accusation on top of the money-laundering.

I didn't know Lungo Mare but El Litoral was in my top 10, at least for lunch.

Shame to see them go, I can't imagine what the owner is going through.

There is a lot of the "wild-west" about doing business in Cuba with high risk/reward, along with who you know.

It's possible some owners are taking a risk too far.

http://www.havanatimes.org/?p=125698

[Nino]

Hmmm,

like you Andy, I am sorry to hear El Litoral has been shut down.
It was already closed last month when I drove by and the Lungo Mare was the paladar next door to El Litotal IIRC.

The gvt doesn't want individuals to get rich. Might be a warning to other owners, might be legitimate accusations, who knows, there is little disclosure and no way to find out.

[garbandz]

versus our elected ones?

[Winchester21]

Murderous thugs calling themselves a govt. My vote is for a setup 

[El Presidente]

57 minutes ago, sarkozy said:

What government. They're a dictatorial bunch of thieves

..that is the definition of modern government. 

[dshapiro]

El Litoral was always on my short list of restaurants when visiting Havana. The patio overlooking the malecon... what a great experience.

[Corylax18]

I happened to make friends with the Girlfriend of a bartender(and eventually the bartender) at El Litoral on my flight from Cancun to Havana last year. I had a couple unforgettable nights with them there and it will always hold a special place in my heart.

Marcel (bartender) made about the same $40 USD per week the Rosa (Radiologist) made per month. Its impossible to know the reason it was shutdown, but unfortunate regardless. 

[NSXCIGAR]

There's as close to zero a chance as there can be that these paladars were engaging in drug trafficking. Please. In fact, here's a Miami Herald article from 2015 remarking how little drug trade or drug use there is on the island: http://www.miamiherald.com/news/nation-world/world/americas/cuba/article136310783.html, and the story about the 2016 bust of this Jamaica-Cuba-Bahamas "ring" sounds a bit fishy to me. 

Drug trafficking and/or drugs in Cuba makes little sense. The Cubans can't make, grow or afford them. Drugs are not being brought to Cuba and they certainly aren't leaving there--at least not by the Cuban people. Europeans--Cuba's main tourist base--don't consume a lot of drugs and aren't looking for them and if they want marijuana they can get all they want cheaper and in higher quality in Amsterdam. Ha!--if only the Cubans had enough freedom to even attempt to become drug runners or traffickers. That one really is rich even for the state.

The state is simply looking to shut these successful paladars down and send a unspoken message. Don't get too successful,. Don't buy ingredients on the black market. Don't take a foot when you get an inch. We'll always be in control. 

[El Presidente]

1 hour ago, NSXCIGAR said:

There's as close to zero a chance as there can be that these paladars were engaging in drug trafficking. Please. In fact, here's a Miami Herald article from 2015 remarking how little drug trade or drug use there is on the island: http://www.miamiherald.com/news/nation-world/world/americas/cuba/article136310783.html, and the story about the 2016 bust of this Jamaica-Cuba-Bahamas "ring" sounds a bit fishy to me. 

Drug trafficking and/or drugs in Cuba makes little sense. The Cubans can't make, grow or afford them. Drugs are not being brought to Cuba and they certainly aren't leaving there--at least not by the Cuban people. Europeans--Cuba's main tourist base--don't consume a lot of drugs and aren't looking for them and if they want marijuana they can get all they want cheaper and in higher quality in Amsterdam. Ha!--if only the Cubans had enough freedom to even attempt to become drug runners or traffickers. That one really is rich even for the state.

The state is simply looking to shut these successful paladars down and send a unspoken message. Don't get too successful,. Don't buy ingredients on the black market. Don't take a foot when you get an inch. We'll always be in control. 

Let me give you the flip side on the drug issue as it pertains to Havana at least....and I need to put in the following caveats to my comments. 

1. I have no idea as to Paladars and drugs. No idea as to those paladars affected. 
2. The Govt will use paladars while they are useful and crackdown when they interfere with their own plans or get too big for their boots (as determined by the Govt). 

Last visit it was pointed out to me by a good friend living in Havana how pill use had escalated in the Havana night club and bar scene. I was told the same by another a few days later. 

There is a nice little class of young smart Cubans doing very well indeed financially. The last 5 -7 years have been very good if you are in and around the services sector (bars/clubs/paladars) etc. These are not people earning $20 a month through the state. These are people earning thousands in and around private enterprise. 

In many cases these young Cubans travel (receive visas and bring back goods predominantly from other central, south and north american countries)  and have non Cuban friends who live and work in Havana and also travel. 

I haven't noticed personally an increase in drugs. I wouldn't know where to look as I am an old goat. However when one and then two trusted Havana locals tell me it is on the increase then I have no reason to question them on it.  They are both out on the town 4-5 nights per week in these very haunts. 

There is no 'Ice" epidemic. However there is the money in a subset of the local demographic, there are tourists, and one can only assume there is a profit motive. 

 

 

 

 

[wabashcr]

5 hours ago, NSXCIGAR said:

Drug trafficking and/or drugs in Cuba makes little sense. The Cubans can't make, grow or afford them. Drugs are not being brought to Cuba and they certainly aren't leaving there--at least not by the Cuban people. Europeans--Cuba's main tourist base--don't consume a lot of drugs and aren't looking for them and if they want marijuana they can get all they want cheaper and in higher quality in Amsterdam. Ha!--if only the Cubans had enough freedom to even attempt to become drug runners or traffickers. That one really is rich even for the state.

I agree there's probably not a widespread drug trafficking problem in Cuba.  You're not going to find large amounts of people strung out on heroin, meth, crack, etc.  But with Havana's burgeoning nightlife scene, an influx of younger tourists, and a vibrant black market, I guarantee someone is in the business of selling club drugs like cocaine and ecstasy in Cuba.  Probably nowhere near the volume that we'd see in a major US or European city, but definitely enough to concern the authorities.  Anywhere in the world you can find nightclubs and a party atmosphere, someone is selling drugs.  

I obviously have no idea if these paladars were involved, but I wouldn't be shocked at all to learn that a paladar owner was dabbling in some small time drug trade on the side.  And I certainly wouldn't judge anyone who did.  Survival and making a better life for yourself and your family in Cuba is all about the hustle.  You do what you have to do.

[Ryan]

I've been offered cocaine and ecstasy in Cuba in a few different places, with increasing frequency over the last few years, El Litoral was not one of the places.

I agree with others who have said that it makes no sense for paladar owners to get involved in drug trafficking but that's possibly a poor translation of the original article, it was possibly simply drug sales on the premises and that could even be prescription pills. I've been offered Viagra on numerous occasions in Cuba, often on the street.

Having said that, paladar owners, by the nature of the work, have to have a lot of contacts.

Money laundering however, a cash business like a restaurant is perfect and with 50% tax on private businesses in Cuba, the temptation must be enormous.

Say I ran restaurant in Havana with a profit of $1 million per year. I declare 500k to the government. That's leaves 500k cucs I need to hide.

The Cuban government charges 10% "tax" on remittances sent to Cuban individuals from abroad.

Well I have a friend set up a US bank account so I have the Cuban relative deposit the money in my US bank account in USD and pay out cucs to the local Cuban in Havana, and only charge 5%. Money cleaned and in the US, or wherever, plus I make another 5% on it.

Anti-laundering authorities in the US might ask questions and who knows if there is contact between US regulatory authorities and the Cuban government. Doubtful, but who knows.

 

[NSXCIGAR]

2 hours ago, Ryan said:

...Well I have a friend set up a US bank account so I have the Cuban relative deposit the money in my US bank account in USD and pay out cucs to the local Cuban in Havana, and only charge 5%. Money cleaned and in the US, or wherever, plus I make another 5% on it.

Anti-laundering authorities in the US might ask questions and who knows if there is contact between US regulatory authorities and the Cuban government. Doubtful, but who knows.

How does the Cuban deposit the cash into a US bank account? How do they get it to the relative or out of the country? The state isn't going to let anyone leave the island with that kind of money. I guess possibly the young Cubans Rob refers to with Visas? They just load them with cash?

And I suppose that's less money laundering and more tax evasion. Money laundering pertains to making ill-gotten gains appear to be legitimate gains. Hiding drug profits would be laundering, but simply evading the tax man is basic tax evasion. 

[Ryan]

30 minutes ago, NSXCIGAR said:

How does the Cuban deposit the cash into a US bank account?

How do they get it to the relative or out of the country? The state isn't going to let anyone leave the island with that kind of money. I guess possibly the young Cubans Rob refers to with Visas? They just load them with cash?

And I suppose that's less money laundering and more tax evasion. Money laundering pertains to making ill-gotten gains appear to be legitimate gains. Hiding drug profits would be laundering, but simply evading the tax man is basic tax evasion. 

 

Here's an example.

A Cuban relative, living in the US, wants to send money to his family in Cuba.

Rather than put the money in an envelope, post it and have the Cuban government take 10%; the Cuban relative, living in the US, deposits the money in my (Cuban restaurant owner) US bank account. I act as the middle man.

I receive word, a phone call, from whoever is running my account for me in the US and I pay out to the Cuban family expecting the money from their relative, minus 5%.

Which is only half what the Cuban government would have taken.

This way, I get rid of my extra Cuban cash by having the equivalent deposited into my US bank account, then handing the cash out to the people expecting it.

No need to take any cash out of Cuba at all, that's the point. It's a means of transfer of funds from within Cuba to a bank outside Cuba without any hard cash changing jurisdiction. In effect I act like a "Western-Union", just without the red-tape (i.e. "being legal").

It is tax evasion. And if I (the Cuban business-person) can convince the US banking authorities that those US deposits are legitimate and any tax due has been paid, then it is also money laundering.

If I can't convince the US banking authorities that those US deposits are legitimate and any tax due has been paid, then it is merely attempted money-laundering.

The term "money-laundering" has evolved from meaning simply cleaning up dirty money, to include "hiding money on which there is tax or other duties due".

[Guest Nekhyludov]

5 minutes ago, Ryan said:

Here's an example. 

Note to self: if you ever need advice on illicit financial transactions, call @Ryan

[Troels]

Friend of mine reports that cocaine was a frequent offer back in 1999, so not an all new thing 

[Troels]

22 minutes ago, Ryan said:

Here's an example.

A Cuban relative, living in the US, wants to send money to his family in Cuba.

Rather than put the money in an envelope, post it and have the Cuban government take 10%; the Cuban relative, living in the US, deposits the money in my (Cuban restaurant owner) US bank account. I act as the middle man.

I receive word, a phone call, from whoever is running my account for me in the US and I pay out to the Cuban family expecting the money from their relative, minus 5%.

Which is only half what the Cuban government would have taken.

This way, I get rid of my extra Cuban cash by having the equivalent deposited into my US bank account, then handing the cash out to the people expecting it.

No need to take any cash out of Cuba at all, that's the point. It's a means of transfer of funds from within Cuba to a bank outside Cuba without any hard cash changing jurisdiction. In effect I act like a "Western-Union", just without the red-tape (i.e. "being legal").

It is tax evasion. And if I (the Cuban business-person) can convince the US banking authorities that those US deposits are legitimate and any tax due has been paid, then it is also money laundering.

If I can't convince the US banking authorities that those US deposits are legitimate and any tax due has been paid, then it is merely attempted money-laundering.

The term "money-laundering" has evolved from meaning simply cleaning up dirty money, to include "hiding money on which there is tax or other duties due".

Great insight - thanks

[Ryan]

3 minutes ago, Troels said:

Friend of mine reports that cocaine was a frequent offer back in 1999, so not an all new thing 

I have a friend, I was in kindergarden with him, who went through a difficult patch in his 20s. He went a bit off the rails, he's fine now. He spent the last 4 days of his trip to Cuba in the late '90s on an enforced "detox" program in a hospital, connected to I.V.s. The person who sold him the illicit drugs on his first night in Cuba, came back having decided that my friend had not paid enough. My friend protested. Hotel security and police were called. My friend's room safe was opened and his money was split three ways, my friend not being one of the three. Then he was taken to detox until his flight out.

Don't do drugs.

Don't do drugs in Cuba.

Don't do drugs in Cuba and tell the person selling them to you where you're staying.

That wasn't even the funniest story he had from his Cuban trip.

[Ryan]

15 minutes ago, Troels said:

Great insight - thanks

I hope you don't think I'm recommending it!

People go to prison all the time for this stuff, unless you happen to be a bank manager. 

You don't even have to be in Cuba to go to prison for this stuff.

What I gave was just an example. I've no idea if anyone in Cuba is doing anything like this. As I said, I certainly wouldn't recommend it.

Banking authorities, internationally, in the last few years are finally coming close to harmonising their anti-money-laundering regulations. Up until a few years ago, you could move a lump of money to a foreign bank and it was just about no questions asked. That has changed significantly.

[Booyaa]

Europeans don't consume a lot of drugs? I would beg to differ.

There is also a lot of drugs in Cuba, whether that has anything to do,with these restaurants, I have No idea.

[Troels]

ah what - had just seen a bright alternative to the Office 

no worries - had wealth been of interest I would never have become a bureaucrate

Been a little puzzled how thing were run in cuba - and an explanation like this cast some light - much appriciated

[NSXCIGAR]

2 hours ago, Ryan said:

Here's an example.

A Cuban relative, living in the US, wants to send money to his family in Cuba.

Rather than put the money in an envelope, post it and have the Cuban government take 10%; the Cuban relative, living in the US, deposits the money in my (Cuban restaurant owner) US bank account. I act as the middle man.

I receive word, a phone call, from whoever is running my account for me in the US and I pay out to the Cuban family expecting the money from their relative, minus 5%.

Which is only half what the Cuban government would have taken.

This way, I get rid of my extra Cuban cash by having the equivalent deposited into my US bank account, then handing the cash out to the people expecting it.

No need to take any cash out of Cuba at all, that's the point. It's a means of transfer of funds from within Cuba to a bank outside Cuba without any hard cash changing jurisdiction. In effect I act like a "Western-Union", just without the red-tape (i.e. "being legal").

It is tax evasion. And if I (the Cuban business-person) can convince the US banking authorities that those US deposits are legitimate and any tax due has been paid, then it is also money laundering.

If I can't convince the US banking authorities that those US deposits are legitimate and any tax due has been paid, then it is merely attempted money-laundering.

The term "money-laundering" has evolved from meaning simply cleaning up dirty money, to include "hiding money on which there is tax or other duties due".

OK, I'm still not clear how the money that is generated by a paladar or any Cuban enterprise gets to the US, the Cuban relative in the US, or a US bank account. The cash is in Cuba. How does it move out of Cuba? I get that once it is out it can simply be distributed, but the Cuban cash must be sent or deposited somewhere.

[NSXCIGAR]

2 hours ago, Booyaa said:

Europeans don't consume a lot of drugs? I would beg to differ.

There is also a lot of drugs in Cuba, whether that has anything to do,with these restaurants, I have No idea.

Relative, I suppose, but European drug use is roughly half of drug use in the US per capita: 

http://recoverybrands.com/drugs-in-america-vs-europe/

https://www.issup.net/knowledge-share/publications/2016-09/usa-and-europe-drug-use-compared

Not that inherent demand is less, per se, but you have a smaller population, more easily managed ports, borders and customs, and a much longer trip for the drugs. Almost all heroin is coming from Asia. Almost all cocaine is coming from South America. Almost all methamphetamine is coming from Mexico and Asia. The origin points are much closer to the US and a very long trip to Europe. Because of this prices are higher in Europe, and drug purity much lower. Less exposure to the people in general.

[Ryan]

1 hour ago, NSXCIGAR said:

OK, I'm still not clear how the money that is generated by a paladar or any Cuban enterprise gets to the US, the Cuban relative in the US, or a US bank account. The cash is in Cuba. How does it move out of Cuba? I get that once it is out it can simply be distributed, but the Cuban cash must be sent or deposited somewhere.

The cash never leaves Cuba.

A Cuban person living in Miami wants to send $1,000 to relatives in Havana. We'll call this person "Sender".

I (Cuban business owner) have 500k CUCs and want to hide it, because I am anti-revolutionary etc.

I (Cuban business owner) also have a friend in Florida who has opened a US bank account for me to use.

I let Sender know that he can deposit $1,000 in my US bank account, I give Sender my details and funds are deposited.

On hearing that the funds have cleared, I give Sender's Cuban family 950 cucs.

Sender's Cuban family is happy, they have got their 950 cucs.

 Sender is happy as he managed to get 950 cucs to his family for his $1,000, rather than 900 cucs if he had done it the legal way (with the government taking 10% or 100cucs)

I am happy because I have 950 cucs less to hide under the floorboards (or wherever) and I have $1,000 in my US bank account.

 

As I said, this is just an example I made up, and I don't condone this sort of thing.

However with Cuba being the way it is i.e.

1.  Cash rich businesses, but rich in cucs

2.  Cuban Americans living in the US with access to plenty of US dollars but want to get cucs cheaply and securely to their Cuban relatives.

I can see where there might be anti-revolutionary temptation.

[El Presidente]

25 minutes ago, Ryan said:

e up, and I don't condone this sort of thing.

However with Cuba being the way it is i.e.

1.  Cash rich businesses, but rich in cucs

2.  Cuban Americans living in the US with access to plenty of US dollars but want to get cucs cheaply and securely to their Cuban relatives.

I can see where there might be anti-revolutionary temptation.

So Andy

.....I am guessing you can set us up for a "Paladar License" 

Banking experience......tick

Grey market experience......tick

Speak the lingo......tick

Andy ...we will need a name for the paladar license application

"El Banco"   seems perfect  

[Ryan]

12 minutes ago, El Presidente said:

So Andy

.....I am guessing you can set us up for a "Paladar License" 

Banking experience......tick

Grey market experience......tick

Speak the lingo......tick

Andy ...we will need a name for the paladar license application

"El Banco"   seems perfect  

"Abierto 24 horas!"

If only funds transfer was that easy!