Several people have been wondering if I would write something about the allegation that Trump may have violated the Cuban embargo back in 1998. This blog expresses no opinion on political campaigns or figures, so I hesitate to wade into this other than as an opportunity to talk about how the Cuban sanctions are structured. So, for purposes of this post, I will take as hypothetically true for discussion the allegation, which has not been admitted by the Trump campaign, that in 1998 Trump asked consultants to go to Cuba on his company’s behalf to explore business opportunities there and that he later reimbursed their travel.
To begin with, it has to be observed that there is a five year statute of limitations on criminal and civil penalties related to the Cuba embargo. As a result, the possibility of a criminal prosecution or civil penalties if there was a violation, has long past.
The relevant prohibition of the Cuba sanctions is the oddly phrased prohibition in section 515.201 of the Cuban Assets Control Regulations. That section prohibits any person “subject to the jurisdiction of the United States” from engaging in specified transactions that “involve property in which [Cuba], or any national thereof, has at any time on or since the effective date of this section had any interest of any nature whatsoever, direct or indirect.” Those specified transactions are transfers through banking institutions, foreign exchange transactions, dealings in property and transfers of property outside the United States.
So the first question is whether asking consultants to go to Cuba to explore business opportunities there for your company violates that. Certainly when in Cuba, those consultants will have dealings in property in which Cubans have an interest — they’ll do that the minute they check into a hotel or drink a mojito. But does the U.S. person who simply asks them to go to Cuba by that request transfer anything through banks, engage in a foreign exchange transaction, deal in property or transfer property outside the United States? It would not seem so, which makes it hard to see a violation of this rule as written by sending consultants to Cuba.
The second question is whether the language in section 515.201 prohibits somebody from reimbursing the travel expenses of someone who has traveled to Cuba. It seems to me that there is a good argument that it does not. Unlike the mere travel request, this reimbursement transaction does involve dealing in property as well as a banking transaction. But it’s hard to see that it involves any property in which a Cuban has or had an interest. No Cuban has any interest in the money paid to the traveler after he has left Cuba and has already made payments to hotels and restaurants in Cuba. And that money seems to be the only property involved in the transaction. Clearly, the consultants engaged in one of the specified transactions involving Cuban property when they paid the hotel bill in Cuba, but it’s not so clear that, once the hotel was paid, any Cuban has or had any interest in the money used later to reimburse the traveler.
That being said, let me say that OFAC, which enforces these rules, takes the position that the reimbursement somehow or other does “involve” the Cuban hotel, which is, by my view, something like saying the butterfly that spreads its wings in Africa is involved in the hurricane that slams into the Outer Banks. In the end, of course, OFAC’s opinion, even if I think it stretches the meaning of “involve,” will control.
But, you say, since the consultants are violating the Cuban embargo, would Trump, if he sent them to Cuba and reimbursed them, have violated the embargo by conspiring with them or by aiding and abetting them in the violation of the sanctions? That is not clear either. The penalties established for violations of the Cuban embargo are set forth in section 501.701 That section prohibits and penalizes violations of the rules but does not include a penalty for aiding and abetting a violation, conspiring with someone to violate or causing a violation. This is in contradistinction to the parallel provision in the Iran sanctions, for example, which punishes anyone who “violates, attempts to violate, conspires to violate, or causes a violation” of the rules.
Again, I have to be clear that OFAC is not troubled by the niceties of the language of the Cuban embargo rules themselves, but would unambigously take the position that both sending the consultants to Cuba and the reimbursement of their travel expenses after they return, if that in fact occurred, would violate the Cuban sanctions. So, kids, don’t try this at home.