CFR Fund Accuses the Cuban Government of Prolonging the Judicial Process in London to Delay the Payment of its Debt

The investment fund sent a letter to Cuban President Díaz-Canel with a proposal to stagger payments

The National Bank of Cuba has filed an appeal in the Supreme Court of the United Kingdom. / supremecourt.uk

14ymedio bigger14ymedio, Madrid, 20 January 2025 — Until last Saturday, it was not known that the National Bank of Cuba (BNC) had appealed to the Supreme Court of the United Kingdom the ruling in favor of the investment fund CRF I Limited, which is claiming a debt of more than 72 million euros. The Miami channel Telemundo 51 announced on Saturday that the appeal was filed on December 18 and that the creditor sent a letter to Cuban President Miguel Díaz-Canel in which it proposed an agreement – ​​whose deadline for acceptance expired this Sunday – to settle the matter, renouncing the judicial route.

“We write with disappointment to note that your legal representatives are continuing to pursue this matter before the Supreme Court of the United Kingdom,” the document begins. In the letter, the fund states that so far the courts have ruled in its favor and that, while the appeal is clearly legitimate, “it appears to serve little purpose, beyond prolonging the process, increasing costs for all parties and leaving Cuba’s access to international financial markets severely restricted.”

“It appears to serve little purpose, beyond prolonging the process, increasing costs for all parties and leaving Cuba’s access to international financial markets severely restricted.”

In order to satisfy the claim, CRF is making an offer to settle the claim quickly – although stressing that it is confident that the courts would again rule in its favor – which appears in an attached document. According to Telemundo 51, the agreement basically consists of the immediate payment of 40 million pounds into a British account determined by the fund and the creation of a new loan mechanism that will allow the remaining amount to be restructured without interest for five years.

In the letter, CRF warns that with the arrival of Donald Trump to the presidency of the United States “the global panorama is likely to change, potentially closing the current window of opportunity for a negotiated agreement.” The fund asked Díaz-Canel to reflect on the proposal and, if he considers it appropriate, to make a counteroffer as part of a negotiation to resolve the situation as soon as possible. In addition, the Cuban president was asked to designate a contact to carry out the conversations if he agreed, insisting that the agreement should be finalized on January 19, 2025.

“We are confident that a mutually beneficial solution is within reach, one that resolves CRF’s claims while signaling to the global financial community Cuba’s willingness to engage constructively with its creditors,” the document insists.

Telemundo 51 consulted with an expert, economist Luis R. Luis, a contributor to 14ymedio, who questioned whether the Cuban government would accept this path to conciliation. “Knowing that they have a low availability of foreign currency and assets, and also the fact that, in general, they do not give in very easily, I imagine that they will not agree to negotiate this offer. It is simply speculation, but I would say that this will probably not advance in that direction,” he indicated.

“Knowing that they have a low availability of currencies and assets, and also the fact that, in general, they do not give in very easily, I imagine that they will not agree.”

The case between CRF and the Cuban regime stems from loans taken out in 1984 with Credit Lyonnais and Istituto Banco Italiano and then transferred to ICBC Standard Bank (the British subsidiary of the Chinese bank ICBC). CRF, a fund created in 2009 in the Cayman Islands, acquired this debt, valued at more than 72 million euros, in 2019 and attempted to contact the Cuban side to collect it.

The version defended by the Cuban State is that CRF, which it calls a vulture fund, obtained the debt in an invalid manner, since the then director of operations of the BNC, Raúl Olivera Lozano, signed the operation without following the “appropriate internal processes,” which is why he is in prison.

The BNC also argued that it did not receive the notice required by contract for the reallocation of the debt and, consequently, rejects that CRF is the legitimate owner of the debt.

The legal process began in January 2023 in London, and the first ruling, issued by Judge Sara Cockerill in April, determined that the BNC was responsible for the debt. The entity is currently a commercial bank, but until 1997 it acted as the Central Bank of Cuba (BCC) and continued to be responsible for the registration, control and service of the debt it had placed until the creation of the BCC, for which it was sued.

The judge concluded that CRF could claim payment not from the State, but from the BNC, a decision that was presented as a victory by the regime but which, in practice, meant the same thing, since ultimately the entity is state-owned. In addition, the ruling indicated that CRF was a legitimate creditor.

The BNC appealed the ruling to an appeals court, but in November 2024 the British court again ruled in favor of the fund. “This unanimous decision is a fundamental milestone in our efforts to achieve justice and enforce contractual rights,” said Jeet Gordhandas, a representative of CRF.

Havana remained silent for several days, and finally the BCN issued a statement stating that it was analyzing “its defense position for the next steps to follow,” in addition to ratifying “its firm will for dialogue and unwavering respect for the debts that have been contracted legitimately.”

Havana remained silent for several days and finally the BCN issued a statement stating that it was analyzing “its defense position for the next steps to follow.”

The entity now, unless – unlikely – it has accepted the agreement, hopes that the Supreme Court will rule in its favor in a trial that could take a long time to be held. “The facts are clear: Cuba borrowed these sums and did not comply with its payment obligations, a constant pattern in its dealings,” CFR said last November, before attempting to collect through its proposal without exhausting, like the other party, the legal route.

This weekend it became known that Cuba has managed to renegotiate its debt with the Paris Club, the amount of which – in the latest report from 2022 – amounted to 4.827 billion dollars.

In addition, the island also has a debt of approximately 2 billion euros with Spain, the collection of which is “difficult to resolve,” according to Israel Arroyo, Secretary of State for Economy and Business Support, speaking this November. The regime has reached several agreements in recent years to reduce the amounts, including that owed to China, which in 2011 forgave 6 billion dollars; Mexico, 487 million forgiven in 2013; and Russia, which in 2014 reduced the island’s debt by 90%, leaving the 35 billion it owed to just 3.5 billion that it had to pay in agreed installments.

According to the latest official debt data, corresponding to 2020, Cuba has 19.743 billion dollars of external debt, of which 11.202 correspond to official debt, 2.737 to bank debt and 5.804 to debt with suppliers.

____________

COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.