Canadian Golf Project in Cuba Hits Snag

capitolhillcubans

From The Miami Herald:

Canadian golf project in Cuba hits a snag

A Canadian real estate company planning a golf resort in Cuba has filed a $25.5million suit against the PGA of America in Palm Beach County, alleging that the group blocked its right to use the valuable brand on the island.

The firm, 360 Vox Corp., formerly Leisure Canada, claims it lost $20 million in anticipated profits, $5.5 million in feasibility studies, the $80,000 licensing fee it paid to the British-based PGA Ltd (PGAL), and other expenses.

Leisure Canada was one of 16 foreign companies that eagerly rushed to propose golf and marina resorts in Cuba after the government announced that it wanted to expand the island’s tourist offerings. None has started construction to date.

The lawsuit alleges that PGA of America, which represents teaching professionals and is not linked to the PGA Tour, pushed PGAL to cancel the license because of criticism, including from the blog Capitol Hill Cubans.

On March 14, 2011, Leisure Canada announced it had signed the licensing agreement with PGAL, which has the right to the PGA brand in Cuba, for the future use of names such as PGA Village Cuba and PGA National Golf Academy Cuba.

But three days later the blog “suggested that PGAL was using its British brand to ‘skirt sanctions’ ” imposed on Cuba by the half-century-old U.S. trade embargo, according to the lawsuit.

The following day, PGA of America, by far the largest and most powerful member of PGAL, disavowed any role in the Cuba project and four months later met with PGAL officials to discuss the Cuba licensing issue, the lawsuit noted.

“Succumbing to pressure from the PGA of America … on Dec. 18, 2012, PGAL sent 360 Vox a letter stating that it was terminating the agreement and would no longer agree to work with 360 Vox in Cuba,” according to the lawsuit.

“PGA of America strong-armed the PGA in England, that’s what they did,” said Glen H. Waldman, the lawyer who filed the 360 Vox lawsuit on Sept. 9 in Palm Beach County Court. “They caved, and my client is out millions of dollars.”

Leisure Canada, a publicly traded company, has launched several development projects in Cuba since the late 1990s and a subsidiary, Wilton Properties Ltd., has a joint venture in hotels with the Cuban government’s Grupo Hotelero Gran Caribe S.A.

In 2010, it announced it was updating its plans for a golf course, condos and marina in the fishing village of Jibacoa, on Cuba’s north coast about 50 miles east of Havana.

Mauricio Claver-Carone, of the U.S.-Cuba Democracy Political Action Committee and who runs the Capitol Hill Cubans blog, wrote Friday that Leisure Canada has been talking about building golf resorts in Cuba since 1999 but has never begun construction.

“So why doesn’t Leisure Canada... sue the Castro regime?” he wrote. “Do business with a bloody dictatorship, and then seek relief in the good ol’ democratic U.S.A. when you get scammed.”

Cuba unleashed a frantic wave of interest from foreign developers in 2010 when word began to leak that it was considering approving foreign investments in golf and marina resorts. The communist-run island now has one 18-hole and one nine-hole course for the “bourgeoisie” sport.

But only four projects were reported in the summer of 2011 to be in the group that had finished negotiations with the government.

The Tourism Ministry has publicly mentioned final approval for only one of the four, The Carbonera Club, a $350 million project near Varadero beach east of Havana proposed by the British investment firm Esencia.

The three others were a Spanish project in Pinar del Rio province; a proposal in Holguin by Canada’s Standing Feather company; and a Bellomonte proposal by the British Coral Capital firm for a beach 15 miles east of Havana.

Bellomonte’s current standing is unclear because Coral Capital Executive Director Amado Fakhre and Chief of Operations Stephen Purvis were freed from a Cuban prison in June after two years under investigation for corruption.