Property claims loom as issue in U.S.-Cuba normalization

El Capitolio in Havana, Cuba. (Flicker/Bud Ellison)

Cuba will soon get an American ambassador and a full U.S. embassy in Havana for the first time in more than half a century. But on the path to normalized relations, there’s a $7 billion potential roadblock. And large U.S. corporations with big lobbying operations aren’t taking the lead on this one — individual Americans are.

A group of 10 American families has hired a law firm in Alexandria, Va., to take aim at the issue of property claims in Cuba, of which there are about 6,000 certified by the U.S. government with a total value of between $7 and $8 billion, including interest. When Cuban revolutionaries seized assets owned by foreigners after the country’s 1959 revolution, the U.S. was the largest foreign investor on the island. Many Americans with Cuban assets made claims on their lost property, which then ballooned in value with interest and have been passed down through families.

Before June 2015, the Alexandria firm Poblete & Tomargo had just two clients with property claims in Cuba. One is a former American ambassador to Denmark who’s a frequent donor to political campaigns; the other is a family in Omaha, Neb.

Then came the Obama administration’s overtures to Cuba in December. The firm has added eight more clients this year, riding the surge of renewed popular interest.

Each of Poblete & Tomargo’s clients will pay the firm less than $5,000, according to Jason Poblete, one of the firm’s principals and a former aide to Rep. Bill Thomas (R-Calif.) and the House Oversight Committee.The goal for each: get a check from Cuba that sets right the expropriation from many years ago.

Before the revolution, Poblete said, “There was a positive relationship between the Cuban and American people…[W]hen the break happened in 1959, it was kind of a shock to all these people. And eventually they had to pack up and leave.”

Assets owned by large U.S. corporations were seized, too. One of the companies that had to decamp from the country was Exxon, now Exxon Mobil. The company lost $71 million as Cuba seized its Havana refinery. Office Depot owns a $256 million claim through corporate mergers.

But “the overwhelming majority of claims are not corporate or large claims,” Poblete said. And in fact, the large companies don’t seem to be pressing on the issue of property claims. When it comes to Cuba lobbying, most large U.S. corporations and trade associations have focused on easing the embargo. Exxon has never disclosed lobbying on the issue of Cuba at all. A lobbyist for Officemax, later acquired by Office Depot, did work on “foreign relations with Cuba as it relates to company interests involving electric utility” — referring to the company’s property claim, which involved an electric company — but did so for just one year, 2003.

Overall, interest in — and lobbying on — Cuba has soared since Obama’s December announcement. In the first quarter of 2014, there were 15 companies or other clients lobbying on anything Cuba-related. A year later, that number had more than tripled to 51. Some of the entities that newly hired lobbyists on Cuba issues this year include the American Society of Travel Agents, the City of Key West, Corning Inc., the commissioner’s office of Major League Baseball and Halliburton.

But restitution for property taken “was an issue nobody was paying attention to,” Poblete said. “The property issue should have been close to the front of the discussion, and it hasn’t been.”

Thanks to the new agreement between the two countries to restore diplomatic relations, the Obama administration is ready to start a discussion about the claims, according to a State Department official. “We have proposed to the Cubans starting such discussions,” the official said.

But Poblete believes that Cuba will almost certainly try to get the U.S. to shrink the $7-8 billion figure calculated by including interest owed on the claims. The impoverished island country will likely argue that it deserves a discount for the hardship it experienced at the hands of the U.S., due to the embargo.

Ahead of that debate, Poblete wants to educate Congress and the State Department.

“Let me be frank with you, a lot of folks on the Hill had no idea this even existed,” he said. “We’re trying to change that.”

Two of Poblete’s & Tamargo’s clients spoke at a House Foreign Affairs Committee hearing on June 18. If getting Cuba to cut a check for their property was the witnesses’ main goal, it didn’t show. For the most part, their testimony veered into the emotional.

“I would love to reclaim ownership of grandmother’s house. It’s truly a family legacy and has great sentimental value to us. I don’t know how realistic that is,” Amy Rosoff, one of Poblete’s clients, said at the hearing. Her family lost a 17-room Spanish Colonial house in Havana to the Cuban takeover, according to the Associated Press. “My father and grandmother had their homes, businesses, property and investments stolen from them. There’s no way to quantify it…their lives were redefined without their consent.”

Congress passed the Helms-Burton Act in 1996, in which it laid out its desire for the U.S. to make progress on resolving claims like Rosoff’s before normalizing relations. The U.S. and Cuba haven’t yet done so, but “the [State] Department is committed to pursuing a resolution,” the State official said.