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HavanaJournal.com: Cuba Business

Max Marambio and Rio Zaza - another business opportunity in Cuba closed

Posted August 26, 2010 by publisher in Cuba Business.
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The Economist

Here’s an interesting story about doing business in Cuba. It’s atypical that a businessman actually made money in Cuba. What is typical is that his business has been shut down by the Cuban government.

For anyone thinking about doing ANY business in Cuba… don’t bother. You will lose money and then be kicked out when you either become too successful or replaceable for a better or most likely a cheaper alternative.

Max Marambio a Chilean businessman, can claim an unusual consequence of his friendship with Fidel Castro. It made him rich. A guerrilla in the 1960s and then a bodyguard of Chile’s socialist president, Salvador Allende, Mr Marambio set up one of the earliest business joint-ventures with Cuba’s Communist regime. For the past two decades this company, Rio Zaza, enjoyed a near-monopoly on sales of packaged fruit juice and milk across the island. Mr Marambio, dubbed in Cuba “the potbelly” because of his portly figure, became a multimillionaire.

That apparently did not offend Mr Castro. Neighbors at the businessman’s grand 1950s home on the outskirts of Havana recall that the Cuban leader was a frequent evening guest (the home itself is believed to have been a gift from Mr Castro). But now the house lies empty, its rolling lawns unkempt. Mr Marambio is a wanted man. Cuba’s government, led now by Fidel’s brother Raúl, ordered him to return to the island by August 23rd for questioning about bribery and fraud at Rio Zaza. Mr Marambio, who denies all the allegations, declined the invitation.

His fall from grace began two years ago. Faced with an acute shortage of foreign currency, the authorities imposed strict limits on the amount foreign businesses could withdraw from their Cuban bank accounts. Rio Zaza was unable to gain access to some $30m dollars of revenue.

Mr Marambio was furious. But he had no one to turn to. Fidel Castro stood down as Cuba’s leader in 2006 with an intestinal illness, and was still too unwell to receive calls. Instead, the Chilean is said to have vented his frustration on officials at the Central Bank. Their reaction was to launch an investigation against him.

They accuse Rio Zaza of supplying food to Cuba’s large black market, of overcharging its state-owned joint-venture partner and bribing Cuban managers to look the other way. Rio Zaza was shut down earlier this year. In April Robert Baudrand, another Chilean who was the firm’s managing director, was found dead in his Havana apartment. The Cuban government said that his death was a coincidence, possibly the result of a drug overdose. Others say it was hastened by hours of intensive interrogation. His body was cremated in Chile, without a thorough post mortem.

Other foreign joint ventures in Cuba cut corners, but Rio Zaza’s alleged misdeeds involved particularly large sums of money. It was also linked to the illicit use of planes belonging to Cubana, READ THE REST OF THE STORY HERE

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