By Alexandra Wrage
[email protected]
Companies looking to Cuba over the next year or two should be ready for some compliance surprises. We (at TRACE) obtained a license to travel to Havana a few years ago. We conducted interviews and got a first-hand look at the ways the business community has adapted to government restrictions, some of which are quite peculiar.
While this is likely to change when the country is fully open, we heard very little about traditional bribery. That is, no one seemed to think, or perhaps wanted to admit, that people made payments or provided other benefits, either directly or through intermediaries, to win contracts.
Instead, the wide-spread shortages meant there was a tacit understanding by employers that there would be substantial pilferage by employees. Similarly, state controlled wages so low that people couldn’t possibly live on them led to companies offering “gratifications” to retain good employees. These ranged from actual cash payments in hard currency to “permanent loans” of company cars. These perquisites aren’t legal, but they’re widespread.
Many of the compliance challenges that companies will face in Cuba revolve around a workforce that has adapted by breaking almost every rule. They’ve done it without consequences, while the government looked the other way, and with the rationalization that they were crafting a work-around to an untenable situation. If Cuba’s antiquated HR system doesn’t adapt as the economy is pried open, multinational companies will face a long-standing and entrenched culture of deliberate anti-compliance. This will have to be addressed by multinational companies almost immediately upon arrival in Cuba, but how that will work is still unclear as the underlying legal and HR obstacles remain in place.
TRACE will return to Cuba in the autumn for follow-up research, which we’ll share with the compliance community upon our return.
[bctt tweet=”@TRACE_Inc #Compliance Surprises in #Cuba ” via=”no”]