A kleptocracy is defined as “a society or system ruled by people who use their power to steal their country’s resources.” It is organized corruption on a grand scale, by political leaders for their personal enrichment. The Castro regime has not only stolen Cuba’s resources, but those of other countries, and inserted itself into transnational criminal networks to both enrich itself, and pursue ideological objectives to export its governing model.
The dictatorship in Havana, by that definition, is a kleptocracy, but it is more. “In many respects, Cuba can beaccurately characterized as a violent criminal organization masquerading as a government. The island’s five intelligence services exist not to protect the nation, but to ensure the survival of the regime,” testified former Defense Intelligence Agency CounterIntelligence Officer Christopher Simmons before the U.S. Congress on May 17, 2012, when describing the regime in Havana.
Corruption: A Working Definition
Public-sector corruption is the use of public office for private gain by an official, entrusted with an official responsibility, who uses his position for private enrichment.
Corruption is a universal problem that transcends race, religion, economic, and political systems, and has been an ever-present problem throughout human existence. “It involves obtaining a private and illegitimate profit, in money, other material resources or intangible benefits, generated at the expense of another’s private, community, social or public good.”
Positive and Negative Correlations with Corruption
Ricardo Puerta in his 2004 book, Corruption in Cuba and how to combat it, looks at the positive and negative correlations with corruption. Puerta found that the generation of wealth and social well-being is negatively correlated with high levels of corruption, but is positively correlated with rising poverty, inequality in wealth distribution, authoritarianism.
These tendencies were observed throughout Cuban history, and the present high levels of corruption, correlate with the poverty, inequality, and over six decades of authoritarian rule.
The modern Cuban state is the product of 406 years of Spanish colonial rule, protracted wars of independence (The Ten Years War 1868 – 1878) and the Cuban War of Independence (1895 – 1898), a four year American occupation (1898 – 1902) and the 57 year Cuban Republic (1902 – 1959), and the ongoing Communist dictatorship (1959 – present). Corruption is an ever present problem throughout this history, but reached levels never seen before under Castroism.
Corruption Prior to the 1959 Revolution
Spanish colonial rule that rejected free trade, in favor of a mercantilist economic policy that benefited Spain, that led to the emergence of a Cuban identity that traded in contraband with British, French, and Dutch traders. Colonial administrators looked the other way in exchange for bribes. “By the eighteenth century, few Cubans paid much attention to fiscal or commercial regulations.”
A contributing factor to the culture of corruption was the institution of slavery which corrupted both elites, who engaged in the exploitation and denial of rights of their slaves, and the slaves who responded by stealing what they could from their “owners” in retaliation.
The legacy of Spanish colonial rule in terms of governance was one of “fraud, corruption, and laxity in applying the rule of law were generalized during the four centuries of Spanish colonial rule.” This is part of a pattern found in the rest of Colonial Latin America that would leave an imprint on the emerging Cuban Republic.
Castro broke his promises, imposing a communist dictatorship.
Cuba’s war of independence in the 19th century led to the destruction of wealth of Cubans on the island, and the peace that followed left foreign actors, including the Spanish in possession of large properties, and Cubans who had fought for independence were left to seek their fortunes in government.
The Cuban Republic faced numerous corruption scandals between 1902 and 1952, but the rule of law, and a critical free press challenged endemic corruption. This led to the rise of the culture of the “choteo” which challenged both corruption, and frustrations with government inefficiency or incompetence. Civil society and a free press responded to Gerardo Machado, a president elected democratically in 1925, extending his rule through dubious means, in the process becoming a dictator, and overthrew him in 1933.
Nevertheless, the Cuban Republic, beginning in 1899, had an independent Supreme Court that survived until 1959 that due to the above mentioned history, contained a mixture of the Spanish and American systems of justice combined with innovations generated under the Cuban Republic.
The regime of Fidel and Raúl Castro institutionalized corruption.
Over these 50 years, Cuba developed a multiparty system, competitive elections, a free press, a modern public health system and a strong labor movement. This translated to social achievements placing pre-1959 Cuba at the top of Latin American indexes, outperforming Castro’s Cuba. Cuba even led in proposing, drafting and lobbying for the passage of the 1948 Universal Declaration of Human Rights. Between 1902 and 1952, 17 different presidents were elected in Cuba in multiparty elections.
Fulgencio Batista ended Cuban democracy on March 10, 1952 which abandoned the rule of law, but the judiciary maintained independence, and the Cuban bar operated on the island, although members of both institutions were under threat from the authoritarian dictator. Batista’s regime in turn doubled down on more corruption and disrupted the constitutional order. Batista fled Cuba on January 1, 1959 with a fortune he had amassed of $300 million.
Castroism Built a Kleptocracy
Fidel Castro denounced Fulgencio Batista’s dictatorship, and promised a democratic restoration to the pre-existing system based in the 1940 Constitution. Castro had also criticized corruption, and promised reforms, and honest government.
Early on the “rule of law” was abandoned for the “rule by law”. Two Cuban Supreme Court justices resigned their positions in November 1960 in protest of the worsening situation under the new Revolutionary Government. The Havana Bar Association “for the first time in its long history of more than one hundred years of existence” had to meet in exile in Miami citing “the complete absence of the rule of law.”
The Rule of Law is a principle under which all persons, institutions, and entities are accountable to laws that are: publicly promulgated; equally enforced; independently adjudicated; and consistent with international human rights principles.
Rule by law regards the governing authority as being above the law and having the capacity to create and implement legislation where they feel it convenient, regardless of the effect it has on people’s larger liberties. It is the antithesis of the rule of law. Writing in 1980, Professor Max Azicri explained how rule by law in Cuba was rationalized to achieve revolutionary objectives through social engineering to achieve a profound transformation of Cuban society.
Castro broke his promises, imposing a communist dictatorship. Prior to taking power, he was already conspiring with the KGB to do away with civil society, and the free press that had successfully resisted the Batista dictatorship, and exposed corruption, replacing it with a police state.
The Commandant’s Reserves
Beginning in 1959, Fidel Castro occupied multiple luxury mansions, yachts, and expensive cars and gave others to his close colleagues and protégés, maintaining lifestyles that ran counter to the Communist revolutionary doctrine, and at the time of his death in 2016 had a personal net worth of $900 million dollars. In 2014, Juan Reinaldo Sánchez, a former bodyguard for Fidel Castro and a member of the dictator’s inner circle, disclosed that the Cuban leader ruled the nation as his personal fiefdom, resembling a hybrid between Louis XV and a medieval monarch.
The Cuban dictatorship also in 1959 began a process of expropriating all enterprises. The Castro brothers imposed communist central planning, the rationing of food became official on March 12, 1962, the total expropriation of the Agricultural sector became a legal reality when, according to Reuters, “in 1963 the government made it illegal for Cubans to slaughter their cows or sell beef and byproducts without state permission.” In 1968, Fidel Castro carried out what he called a “Revolutionary Offensive” that wiped out all remnants of the private sector in the island.
These decisions in governing expanded the scope and scale of corruption in Cuba due both to the expansion of the state, the Castro brothers absolute power, and the lack of accountability. Sergio Diaz-Briquetz, and Jorge Perez Lopez in their 2006 monograph on corruption in Cuba cited and explained the formula for “Corruption = Monopoly + Discretion – Accountability.” The Cuban communist dictatorship has monopoly control over all aspects of life (economic, political, cultural, etc.), the dictatorship has total discretion over how to allocate resources, and zero accountability, thus resulting in a heightened level of systemic corruption never seen before.
Massive subsidies from the Soviet Union covered up the scale of corruption in the Cuban communist dictatorship, and the failure of Cuba’s economic model. In 2014, Moscow wrote off $32 billion dollars in Soviet era debt owed by Havana.
Instead of ending corruption, government monopolies, cronyism, and a lack of accountability for the new revolutionary elite, the regime of Fidel and Raúl Castro institutionalized corruption; a new class emerged that benefited from exemptions from rationing imposed on the Cuban populace, among other perks in the first decades of the communist dictatorship.
GAESA and Enriching the New Class in a “Classless” Society
The Cuban military conglomerate Grupo de Administración Empresarial S.A. (GAESA) is a holding company of the Cuban military established for market-organized military enterprises.
GAESA began in the 1980s as an effort to modernize management, shifting from Soviet-style administration. Raul Castro oversaw its creation, and his son in law, Luis Alberto Rodríguez López-Calleja administered GAESA before dying of natural causes in 2022.
Journalist Nora Gámez Torres in a December 30, 2024 article in the Miami Herald reported on leaked documents showing that Gaviota, a sub entity of the Cuban military conglomerate Grupo de Administración Empresarial S.A. (GAESA), is currently sitting on $4.3 billion in its bank accounts. Cubans are dying due to a lack of 70% “of the essential medications to treat most illnesses, Cuba’s prime minister said” earlier in December 2024. According to Gámez Torres that means Gaviota has ” almost 13 times the $339 million the government said it needed to buy medications to supply Cuban pharmacies annually.”
What About the Cubans?
Castro’s military conglomerate GAESA, which had only 10% of the tourism market with less than 4,000 guest rooms in the 1990s, was transformed into the undisputed leader of the hotel sector, with over 100,000 guest rooms.
GAESA has become the major investor, wielding such financial power that, contrary to MINTUR’s own entities, it never has to accept the participation of foreign capital in hotel construction.
Meanwhile, homes and apartments of everyday Cubans are collapsing, and occasionally killing occupants or passersby when pieces of the building fall off into the street.
The energy infrastructure has not been invested in, despite an offer by Moscow of investing $1.36 billion in 2015 that was rejected by Havana, but there are shiny new luxury hotels with their own generators to shine on when the rest of the community is in the dark due to frequent black outs.
The Cost of Complaining
Yoleisy Oviedo Rodríguez (age 44) , mother of two children, died on February 11, 2025 at the El Guatao Forced Labor Camp in Havana.
She had been sentenced to five years in prison on November 20, 2023, but was jailed from October 10, 2022. Her alleged crime? Protesting prolonged power outages in her community that impacted her, and her family.
There are over 1,150 identified Cuban political prisoners in Cuba, but this is a partial number. The International Committee of the Red Cross (ICRC) has not had access to visit Cuban prisons and examine conditions since 1989. It is important to provide some context.
The ICRC has visited the U.S. Guantanamo detention facility over 100 times since 2002. Meanwhile over the past 60 years the Cuban government permitted some visits by the ICRC to Cuba’s prisons between 1988-1989. The last visit was 36 years ago.
Havana’s Transnational Corruption
Drug Trafficking
Cuban intelligence infiltrated already-existing drug trafficking networks in the United States and Latin America beginning in the 1960s to improve their ability to traffic narcotics into America.
Cuba was added to the list of state terror sponsors on March 1, 1982, after the State Department found in January 1982 that Havana was providing weapons to the M-19 terrorist organization in return for shipping cocaine into America. Four high-ranking Cuban officials were indicted by a U.S. grand jury for narcotics smuggling on November 5, 1982.
With the rise of Hugo Chavez in Venezuela in 1999, Havana played a major role in the formation of the Soles Cartel, and the exponential increase in cocaine entering the U.S. over the next 25 years.
Cooperation between Havana and the Washington to combat cocaine trafficking began during the Clinton Administration when 3,186 Americans died of cocaine overdoses and after over 20 years, the amount of cocaine flooding the country has increased, and during the Biden Administration 23,513 Americans were dying from cocaine overdoses in one year.
Medicaid and Medicare Fraud
The Department of Health and Human Services (HHS) in 2011 “unveiled its top 10 most wanted Medicare fraud fugitives and 7 of the 10 had ties to Cuba.”
Some high profile cases linked to Cuba are:
- Oscar Sanchez was arrested in 2012 for defrauding Medicare of $31 million and laundering funds into Cuban banks. He was sentenced to four years and seven months in prison in 2013.
- Ubert Guillermo Rodriguez had been wanted by authorities since 2013 for $2.6 million in false Medicare claims. He was arrested upon arrival from Cuba in 2015. He pled guilty in 2016, and was sentenced to three years in prison.
- Joel Regino Díaz Martín returned to Cuba in 2020. The scheme involving a mental health clinic through which he had defrauded Medicaid of $4 million was discovered in 2024.
NPR reported on February 8, 2011 on the curious case of what he described as a “homeless guy” who “supposedly got rent money and food to be the front man for a discount pharmacy that defrauded Medicare.”
The “homeless guy” was Lieutenant Colonel Renier Vicente Rodriguez Fleitas, a former Cuban military officer who ran Pirifer Pharmacy and Discount and submitted approximately $1.8 million in false Medicare claims, according to the NPR story.
Vanessa Lopez, a research associate at the University of Miami’s Institute for Cuban and Cuban-American Studies, discovered in 2011 that Rodriguez Fleitas had “lived” in South Florida for the preceding 15 years yet spent a significant amount of time in Cuba. Although he claimed to have been living on the streets when he was contacted to commit the Medicare fraud, he had visited Cuba every year since leaving. Rodriguez Fleitas was in Cuba when his company committed Medicare fraud.
A former Cuban intelligence official said there are strong indications of the Cuban government’s direct involvement in Medicare fraud, that they are also assisting other instances of Medicare fraud, and also providing fugitives a place to flee in exchange for paying large sums of money for refuge in Cuba.
FBI and HHS investigators have privately stated that they have always suspected if the Castro brothers were behind the wave of Medicare cases, but have yet to find any evidence linking the Cuban government to the widespread fraud in Miami and elsewhere.
Remittances and Possible Money Laundering
The Inter-American Dialogue on March 22, 2024 released the report “Remittances to Cuba and the Marketplace in 2024” by Manuel Orozco, director of their Migration, Remittances, and Development program. In the report Orozco provides data demonstrating that in 2023, Cubans around the world sent $2.458 billion dollars in remittances to Cuba per year.
Not considered in The Dialogue’s report is the possibility that a portion of this huge amount of money for the regime to legitimize —illegitimate income flows. Jorge Pérez-López and Sergio Díaz-Briquets in their 2014 report REMITTANCES TO CUBA: A SURVEY OF METHODS AND ESTIMATES cited Ernesto Betancourt who raised this concern when remittances reached over one billion dollars per year in the 1990s citing they were “not consistent with the capacity to remit of the Cuban-American community abroad and actually hide foreign exchange that flows illegally to Cuba from drug trafficking and/or money laundering.”
Conclusion
The Cuban dictatorship is a criminal enterprise with a clear ideological goal of undermining and harming the United States through drug trafficking, Medicare and Medicaid fraud, and money laundering, as well as exporting its political system to other countries.
It has done so successfully in Nicaragua and Venezuela, to the benefit of Havana and the detriment of the peoples of those three countries.
