CubaBrief: Are U.S. taxpayer dollars going to fund the Cuban dictatorship through the Central American Bank for Economic Integration?

A process started during the Obama Administration in 2016 and continued during the Trump Administration has already resulted in the entry of tens of millions of dollars into the coffers of the Cuban dictatorship starting in 2020. With a chunk of the cash probably coming from U.S. taxpayers.

CABEI receives “a large degree of American financing, notably receiving $100 million from the U.S. International Development Finance Corporation (DFC), together with financial support from the U.S. Agency for International Development (USAID), to support lending to micro-, small-, and medium-sized enterprises”, according to Ryan C. Berg at the Center for Strategic and International Studies.

Concerns were raised in 2022 when news broke that the US Agency for International Development (USAID) had sent personal protective equipment for firefighters in Cuba following a devastating fire, but could not account for where they ended up.

However, not picked up in the press was the news that the Central American Bank for Economic Integration (CABEI), an entity created in 1961 through funding by USAID and the Inter-American Development Bank (IDB), announced on January 10, 2022 “the first financing to its extra-regional member country the Republic of Cuba for €46.7 million to benefit more than 11 million people through the production of 200 million vaccines against COVID-19.” On September 23, 2022 (CABEI) signed the first financing agreement with Havana “for the execution of the Project to Strengthen the Cuban Biopharmaceutical Industry aimed at combating COVID-19 for €46.7 million.”

During the Trump Administration “(CABEI), announced the approval of a Non-Reimbursable Financial Cooperation for Emergency Assistance to the Republic of Cuba, for an amount of up to €935,600.00 with the objective of strengthening the efforts to combat health care implemented in the country.”

You can read more about CABEI’s country strategy for Cuba through 2024 here.

This should raise a number of questions.

1. U.S government officials in the past have expressed concerns that Havana’s biotech program could be used for developing bioweapons. Was that taken into consideration before authorizing these funds?

2.  What vaccines were being produced in 2022 and 2023 by Cuba with the ” €46.7 million to benefit more than 11 million people”?

3. Havana’s allies purchased vaccines made in Cuba and provided positive media coverage, but after the initial public relations blitz, questions about the effectiveness and safety of the vaccine arose.

Venezuela received the first shipment of Cuba’s Abdala coronavirus vaccine on June 24, 2021, but on September 26, 2021 Venezuela’s National Academy of Medicine “expressed concern over the use of Cuba’s Abdala coronavirus vaccine due to a lack of scientific research on its safety and efficacy.”

On February 7, 2023 it was reported that Mexico had used less than 3 percent of the nine million Abdala vaccines purchased from Cuba. Similar concerns were raised in Nicaragua, and by June 2022 the vaccine brigade was no longer using the Cuban vaccine, but Pfizer donated by the United States

Countries in Africa and South Asia didn’t take Cuba’s offer because 1) it was not free and 2) the vaccine is not effective.

Were these issues taken into consideration by CABEI?

4. Money is fungible. What oversight is undertaken to assure the funds are used as designated?

These are urgent questions that need answers. Especially in light of the ongoing scandal.

Transparency International on November 16, 2023 called for accountability and systemic reforms at the Central American Bank for Economic Integration (CABEI). “In a letter addressed to CABEI’s governors, Transparency International expresses concern over allegations of corruption in bank’s supported projects going back at least ten years.”

This letter was based on the damning report by the Organized Crime and Corruption Reporting Project released on October 31, 2023 titled, “The Dictators’ Bank: How Central America’s Main Development Bank Enabled Corruption and Authoritarianism“, and the funding of the communist dictatorship fits the pattern established in the report.

Transparency International, November 16, 2023

Central American Bank for Economic Integration: Need for accountability and reform to address corruption and governance failings

16 November 2023

In the wake of serious failings exposed by investigative journalists, Transparency International and its chapters in ten countries are calling for accountability and systemic reforms at the Central American Bank for Economic Integration (CABEI). In a letter addressed to CABEI’s governors, Transparency International expresses concern over allegations of corruption in bank’s supported projects going back at least ten years. The appeal comes ahead of the Board of Governors’ meeting on Friday when they are scheduled to elect the bank’s new executive president.

See our letter to CABEI governors: English and Spanish

The Dictators’ Bank investigations by the Organized Crime and Corruption Reporting Project (OCCRP), the Columbia Journalism School, and Redacción Regional uncover misuse of funds, possible conflicts of interest and alleged breaches of procurement rules. In many cases, the bank appears to have failed to conduct appropriate due diligence before approving the loans. In some cases, internal audit documents reviewed by journalists show that risks had been flagged but ignored.

The signatories urge CABEI governors to initiate an independent investigation into the bank’s operations and undertake a comprehensive review of all projects. Additionally, the letter stresses the need to put in place an adequate oversight mechanism for the bank to monitor implementation of anti-corruption conditions in its supported projects. Finally, for enhanced public debt transparency, CABEI should disclose detailed information on issued loans.

Edie Cux, Legal Director of Acción Ciudadana, Transparency International’s chapter in Guatemala, said: “Corruption in CABEI’s projects hinders progress and exacts a toll on the daily lives of the people the bank is meant to serve. In Guatemala, CABEI’s loans have not contributed to economic development but instead resulted in a string of unfinished infrastructure projects. We urge the Board of Governors to address systemic governance failings that have come to light in order to prevent abuses going forward.”

https://www.transparency.org/en/press/central-american-bank-economic-integration-cabei-accountability-reform-corruption-governance-failings


Organized Crime and Corruption Reporting Project, October 31, 2023

The Dictators’ Bank: How Central America’s Main Development Bank Enabled Corruption and Authoritarianism

The Central American Bank for Economic Integration was created to give the region more control over its own development, but a new investigation by OCCRP and partners raises questions about the bank’s lending practices.

by Eli Moskowitz (OCCRP), Jonny Wrate (OCCRP), Madeline Fixler (Columbia Journalism Investigations), Bill Barreto (No Ficción), Ernesto Rivera (Lado B), Daniel Valencia (Redacción Regional), Andrew Little (Columbia Journalism Investigations), and Mariana Castro (Columbia Journalism Investigations). Data by Romina Colman (OCCRP). Research by Angus Peacock (OCCRP)

31 October 2023

Key Findings

  • CABEI has funded major infrastructure projects that have later been engulfed in scandal, where its loans were used to pay bribes, or seen as an easy source of cash by alleged conspirators.

  • Internal audits obtained by reporters show the bank has ignored red flags when investing in projects, including lending money for hydroelectric dams even after violent crackdowns on protesters.

  • In recent years the bank has begun giving out policy-based loans, a few-strings-attached type of financing that critics say is easily misused.

  • In El Salvador, reporters found $200 million of one CABEI loan designed to support small businesses through the pandemic was diverted to fund the country’s ill-fated plan to make Bitcoin a national currency.

  • CABEI has faced criticism for lending billions of dollars to Central America’s authoritarian governments, providing an important source of funding for the region’s authoritarian leaders as they committed widespread human rights abuses.

  • Late in 2021, nine of CABEI’s directors wrote a letter warning of the bank’s worsening financial situation and raising transparency concerns. Financial statements show these indicators have declined since then.

In mid-November, the Central American Bank for Economic Integration (CABEI) will appoint a new executive president for the next five years. Whoever takes the helm of the region’s main investment bank does so at a key moment in its history.

While only a small player compared to global institutions like the World Bank, CABEI plays a vital role in channeling billions of dollars into its five founding states: Nicaragua, El Salvador, Honduras, Guatemala, and Costa Rica. The bank says it accounts for close to half the development finance in Central America, one of the poorest parts of the Western hemisphere.

CABEI played a critical role during the COVID-19 pandemic, when the bank gave over a billion dollars in loans and grants to keep its founders afloat. With all of these states’ sovereign bonds rated as “junk,” CABEI has become a lifeline to international financial markets — and a key source of funding for the region’s authoritarian leaders.

“It doesn’t matter what the politics are as long as poor people are getting services,” the bank’s outgoing president, Dante Mossi, said at an event in Washington, D.C., this year, as he faced criticism for providing funding to Nicaraguan dictator Daniel Ortega.

“The bank is not a political model,” Mossi told the assembled crowd.

Others disagree.

CABEI has been criticized for giving billions of dollars to Central America’s authoritarian regimes — led by Ortega, President Nayib Bukele in El Salvador, and the former president of Honduras, Juan Orlando Hernández. Now an investigation by OCCRP and partners can show the bank has funded projects that led to environmental destruction, and others where loans were diverted for corrupt practices or used to fund the pet projects of dictators.

Reporters spent more than a year investigating CABEI, combining open-source data with official investigations, leaked documents, and interviews with current and former bank employees. To get a clearer picture of the bank’s track record, reporters also compiled a database of more than 500 approved operations from the past quarter century. Together, they show how CABEI’s failures have enabled waste and corruption in one of the most unequal regions on Earth.

About The Investigation

To develop this project on CABEI, reporters and editors from OCCRP worked alongside journalists at Columbia Journalism Investigations — an investigative reporting unit at the Columbia Journalism School — and members of collaborative Central American reporting project Redacción Regional, including ContraCorriente in Honduras, No-Ficción in Guatemala, Lado B in Costa Rica, Focos in El Salvador, La Prensa Panamá in Panama, and Divergentes and Confidencial in Nicaragua, along with KCIJ-Newstapa in South Korea and the Taiwan Anti-Corruption & Whistleblower Protection Association (TAWPA) in Taiwan.

[ Full report here ]

https://www.occrp.org/en/the-dictators-bank/the-dictators-bank-how-central-americas-main-development-bank-enabled-corruption-and-authoritarianism

In case you missed it.

Central American Bank for Economic Integration (CABEI), September 23, 2022

CABEI signs loan with the Republic of Cuba to support the fight against COVID-19

The initiative, approved in January by the multilateral organization, is financed with €46.7 million for the benefit of more than 11 million Cubans.

Mérida, Yucatán, September 23, 2022.- The Central American Bank for Economic Integration (CABEI) signed the first financing agreement with the Republic of Cuba for the execution of the Project to Strengthen the Cuban Biopharmaceutical Industry aimed at combating COVID-19 for €46.7 million.

The initiative, which will benefit more than 11 million people through the production of 200 million doses of vaccines, is expected to achieve higher levels of economic productivity through the development of innovative medicines of great importance in the context of the pandemic and the modernization of technology, which will contribute to diversification for the benefit of the national health system and other countries in the region.

At the signing ceremony, CABEI Executive President Dr. Dante Mossi said, “As a development Bank and with the consent of all our member countries, I am pleased to celebrate today this health support response aimed at protecting the lives of Cuban families by strengthening the health system. I am also grateful for the support of our partners; UNDP’s support is of vital importance for the development of this initiative.”

The project, which will be executed by the United Nations Development Program (UNDP), in accordance with its procurement policies and regulations, will also allow for increased production of injectable antibiotics, parenteral solutions (serums), generic and biosimilar drugs, diagnostics, medical equipment and specific vaccines against COVID-19, as well as the acquisition of medical supplies and protection material to prevent its transmission.

In addition, the loan is granted under the. specialized mechanism established by CABEI for activities and operations with the Republic of Cuba.

https://www.bcie.org/en/news-and-media/news/article/bcie-firma-prestamo-con-la-republica-de-cuba-en-apoyo-al-combate-de-la-covid-19


Labiotech, September 26, 2022

Cuba to receive €46.7M to boost biopharma sector

By Jim Cornall

September 26, 2022

The Central American Bank for Economic Integration (CABEI) has signed the first financing agreement with the Republic of Cuba for the execution of a project to strengthen the Cuban biopharmaceutical industry.

One of the goals of the project is to combat COVID-19.

The funding is for a total of €46.7 million ($45 million).

The initiative, which will benefit more than 11 million people through the production of 200 million doses of vaccines, is expected to achieve higher levels of economic productivity through the development of innovative medicines of great importance in the context of the pandemic and the modernization of technology, which will contribute to diversification for the benefit of the national health system and other countries in the region.

At the signing ceremony, CABEI executive president Dante Mossi said, “As a development bank and with the consent of all our member countries, I am pleased to celebrate today this health support response aimed at protecting the lives of Cuban families by strengthening the health system. I am also grateful for the support of our partners; UNDP’s support is of vital importance for the development of this initiative.”

The project, which will be executed by the United Nations Development Program (UNDP), in accordance with its procurement policies and regulations, will also allow for increased production of injectable antibiotics, parenteral solutions (serums), generic and biosimilar drugs, diagnostics, medical equipment and specific vaccines against COVID-19, as well as the acquisition of medical supplies and protection material to prevent its transmission.

In addition, the loan is granted under the. specialized mechanism established by CABEI for activities and operations with the Republic of Cuba.

https://www.labiotech.eu/trends-news/cuba-funding-boost-biopharma-sector/

The Washington Post, May 7, 2002

Cuba Seeks Bioweapons, U.S. Says

By Peter Slevin

May 7, 2002

The Bush administration believes Cuba is developing biological weapons and collaborating with pariah states that have their own germ warfare programs, State Department arms control chief John R. Bolton said yesterday.

Bolton, who offered no details when questioned, called on Cuba to stop delivering equipment and expertise that could be used for biological warfare by “rogue states.” He said Cuba should honor its commitment to the Biological Weapons Convention, which prohibits the development and use of germ weapons.

The State Department considers Cuba a state sponsor of terrorism, and U.S. officials have long expressed fears that Fidel Castro’s regime could use its sophisticated capabilities to manufacture toxins designed to kill. But this administration is the first to level an explicit charge.

The Cuban government made no official response to the allegation yesterday and attempts to reach officials at the Cuban Interests Section in Washington were unsuccessful. The Dallas Morning News quoted Cuban spokesman Luis Mariano Fernandez as calling Bolton’s statement “ridiculous, absurd and a downright lie.”

President Bush and members of his administration have taken a strong line against Castro, who has been in power for 43 years despite a U.S. economic embargo and strenuous attempts to isolate him. The administration is conducting a review of tools available to undercut Castro and foster democracy in Cuba, even as sentiment increases on Capitol Hill for greater engagement with Cuba toward the same goal.

In a speech to the Heritage Foundation, a Washington think tank, Bolton said Cuba’s threat to U.S. security “often has been underplayed.” He noted that then-Defense Secretary William S. Cohen warned in 1998 of Cuba’s potential to produce biological agents. Bolton also said that Castro visited Iran, Syria and Libya last year. All appear on the U.S. list of terrorism sponsors.

Some administration officials, convinced that Cuba has an active germ warfare program, have been pressing to make the evidence public, but guardians of the information have worried that its release would compromise U.S. intelligence sources, according to more than one official.

The public statement followed extensive debate within the administration, these sources said, and “represents the considered judgment of this administration that there is a serious problem.” Another official called the evidence of Cuban collaboration on biological weapons programs “incontrovertible.”

As it happens, Bolton was not the first official to make a public statement on the subject. Carl W. Ford Jr., assistant secretary of state for intelligence and research, used identical language in March 19 congressional testimony that largely went unnoticed.

https://www.washingtonpost.com/archive/politics/2002/05/07/cuba-seeks-bioweapons-us-says/bfa31f3f-b2e2-4ca3-8459-c5d1ac8faa99/