SEC PROBES OREGON FIRM OVER CUBAN NICKEL

Federal officials are investigating Portlandbased Esco Corp. for using nickel obtained from Cuba in violation of the trade embargo, OregonLive.com reported Mar. 17.

Esco lawyers said they expect the company to face fines of no more than $5.5 million, but acknowledge penalties could be more, according to a public filing with the U.S. Securities and Exchange Commission.

Disclosure of the violation by a Canadian subsidiary comes at a delicate moment for Esco, a company whose managers have been trying to take the manufacturer public on the Nasdaq exchange. Esco announced its plans in May for a $175 million public offering that has since languished.

The Cuban disclosure was contained in a 317-page amended IPO document filed by Esco and appearing on the SEC’s website.

“We learned that a foundry operated by one of our foreign subsidiaries had been purchasing and using material from a distributor that obtained the material from a supplier that procured the source material from Cuba,” said the statement.

“We voluntarily reported the violation to OFAC, stopped purchasing from the distributor, temporarily halted production at the foundry and sequestered all inventory containing Cuban material. In July 2011, we resumed production at the foundry with material provided by another supplier and subsequently received a license to sell most of the inventory that contained Cuban material.”

The OFAC investigation could take months to complete, said the company, warning that penalties could be significant because each purchase of Cuban material and each sale of a product containing the material could result in a fine of up to $65,000.

Esco has four foundries in Canada, among about 30 plants worldwide. It’s possible a Canadian subsidiary of Esco did business with a Cuban supplier without perhaps realizing the ramifications.

The Cuban connection could embarrass Esco, which makes parts such as teeth for gigantic mining shovels. But a $5.5 million fine would hardly set the company back. The SEC filing showed Esco’s net sales jumped to $1.12 billion in 2011, up 32% from $850 million in 2010. Gross profit grew 34%, from $223 million in 2010 to $299 million last year.

FRENCH TRADE MISSION UPBEAT ABOUT CUBA

A business delegation that included executives of 17 French corporations spent three days in Havana March 5-7 to scout for investments in energy, transportation, telecom and agribusiness, reported CubaStandard.com.

The Mar. 5-7 mission followed a November 2011 visit by Foreign Trade Secretary Pierre Lellouche, who expects French investments in Cuba to rise from €150 million ($201 million) to €250 million ($335 million) this year.

“Despite the U.S. embargo, the improvement of the economic situation since 2009 grants some flexibility to Cuban authorities

to update its economic model and the ministerial reorganization following the Party Congress in April 2011,” the Mouvement des Entreprises de France (Medef) said in an invitation letter to delegation participants.

The delegation was headed by Pierre Pringuet, CEO of Pernod Ricard SA. The Paris-based liquor giant is the foreign partner in the Havana Club rum joint venture.

The group met, among others, Deputy Foreign Minister Dagoberto Rodríguez. This was the second Medef delegation to visit Cuba since 2008, said CubaStandard.com.

Lellouche was the highest-ranking French official to visit Cuba in nine years. France suspended bilateral government cooperation in 2003, after Cuba imprisoned 75 people in a crackdown. In December 2010, a week after Cuba announced it had freed all of the 75, France and Cuba resumed cooperation.

Politics aside, the main stumbling block is Cuba’s debt and its falling behind on payments to French government agency Coface, which has not provided credit guarantees related to Cuba since 2006. A Cuban delegation traveled to France in January to discuss debt issues; neither Coface nor the Cuban government made an announcement about the outcome of the talks.

In its latest Cuba risk assessment, Coface predicts “mediocre” growth for 2012, citing the slowness of reforms and a slow shift of workers from state to private-sector jobs.

Coface expects rising unemployment, inflationary pressure, slowing tourism, and a fall in nickel prices to depress growth this year.

SANTIAGO GETS EXPERIMENTAL SOLAR POWER

A microphotovoltaic system has been connected to the power grid in Santiago de Cuba, with a view to evaluating the technology under tropical weather conditions and leading feasibility studies before it is extended to the rest of Cuba, ACN said Feb. 18.

Rubén Ramos, director of the Center for Solar Energy Research (CIES), said the new system — made up of 30 solar panels — will feed 7.5 kilowatts into the grid. 

During 2012, the system’s power should be doubled to 70 kw/day. Because of its climate, said Ramos, Cuba has great solar energy potential that would enable the development of technological solutions to replace fossil fuel.

CUBAN MARINE SCIENTIST WINS PEW AWARD

Fabián Pina Amargós, a scientist with the Center for Coastal Ecosystems Research in Cayo Coco, Cuba, has been awarded a 2012 Pew Fellowship in Marine Conservation for his project to study and conserve goliath grouper populations in Cuba.

The Pew fellowship — which gives recipients $150,000 for a three-year project aimed at addressing conservation challenges facing the oceans — is the first ever given for research in Cuba, and will be conducted under a U.S. Treasury Department license.

Pina Amargós hopes to establish important scientific data and better management recommendations for goliath grouper in Cuba, the Caribbean, and the Gulf of Mexico.