How a corrupt Cuban conglomerate started by the Castros owns 40% of Cuban economy
Yesterday Secretary of State Marco Rubio appeared before a congressional committee--and blew the lid off one of the longest-running scams in the world.
Cuba is supposed to be a socialist/communist country, right? Rubio revealed the truth:
"Cuba is actually not controlled by the government. Cuba is controlled by a military holding company named GAESA. GAESA owns virtually everything, and not a penny of that money translates over to the public treasury.
WOW! The U.S. Left did NOT like that, and immediately went into damage-control mode. Shills popped up on every website: "Dis not true! Dis FAKE news! A lie to make duh leaders of ouah glorious communist state look bad!!"
Except it's totally true. Take a look:
By Luis Flores, February 21, 2026
Cuba is supposedly a socialist country where the means of production belong to the people. If so, how is it possible for a military company to
* control 40% of the national economy
* accumulate $14.5 billion in bank deposits
* not publish financial statements
* avoid paying taxes, and
* not be accountable to the National Assembly?
The conglomerate is called GAESA (Grupo de Administración Empresarial S.A.). Translates "Group for Business Administration," which sounds totally benign, eh? "S.A." is an acronym used by almost all businesses. So from the outset, the owners are saying this is a business.
Except it's run by what we'd call the Defense Department--the civilian overseers of the military.
Wait...in a country that constantly claims to be socialist, how does a "business" owning 40% of the economy exist? And yet it does: the largest economic conglomerate in the country, running tourism, banking, commerce, ports, telecomms, fuels—is run by Cuban military, NOT as a state-owned enterprise subject to public control, but as a regular business that's not required to disclose ownership or profits.
GAESA's legal form was specifically chosen so it wouldn't be accountable to the Cuban people. The people aren't allowed to audit its books, even though the empire is controlled by a branch of the socialist government--the military.
So where do the enormous profits go, eh? They won't say. And don't ask.
And there you have the dirty secret of communist governments: citizens must sacrifice while the rulers reap the profits. Always.
GAESA was created by Raúl Castro, Fidel's brother and head of the armed forces. For 26 years it was headed by his son-in-law, and is currently overseen by his grandson. And again, it owns or controls companies that account for at least 40% of Cuba's economy.
Internal documents of GAESA were leaked in 2025 and analyzed by the Miami Herald and economist Pavel Vidal Columbia University. They proved what many had long suspected: Its total income was 3.2 times greater than the total government budget. It controlled 95% of financial transactions in foreign currency in the country. And Cuba's reserves of foreign currency were NOT in the country's central bank, but in GAESA's accounts.
How the monster was born
GAESA became a vast empire after the collapse of the former USSR, which had been giving Cuba between $4 billion and $6 Billion every year in various subsidies. When the USSR dissolved, those subsidies ended, forcing Cuba to buy oil, food and most medicine at world market prices.
In other words, like so many socialist client states, duh faaabulous socialist Cuban government had never been able to support itself.
Without Russian food imports, Cubans suffered from higher prices--and hunger. But Raúl Castro, then Minister of the Armed Forces, had a Plan--not to feed the population, but to enrich himself and his lackeys.
He tasked General Julio Casas Regueiro to create a holding company to generate foreign currency for the Armed Forces. This would be based in Gaviota, which had been a vacation site for Cuban and Soviet military personnel since 1988.
By the late 90s GAESA-owned companies were making profits equal to 80% of the budget of the armed forces. Soon the military no longer depended on the State. Instead the socialist government started to be dependent on the military.
From 1996 until his death in 2022, GAESA was run by General Luis Alberto Rodríguez López-Calleja, son-in-law of defense minister Raúl Castro. During those 26 years the conglomerate evolved from a modest currency operation to dominate entire sectors of the economy: tourism, retail, banking, port logistics, telecommunications, construction, import/export, and foreign-currency "remittances" (money sent to Cuban families by Cubans working overseas).
A decade ago Bloomberg described him as the man in charge of "the largest business empire in Cuba, a conglomerate of at least 57 companies." So it's not like this hasn't been known for years. It's just that no one of Rubio's rank has mentioned it. And of course the corrupt, socialist U.S. media ignored the story...until it couldn't.
How GAESA came to control...everything
The map of GAESA's holdings is essentially the map of Cuba's economy. The "crown jewel" was Gaviota S.A, which owns 121 hotels, 20 marinas, the airline Aerogaviota, the car-rental company Transgaviota, the agency Gaviota Tours, and more. In the first quarter of 2024 this vast empire accounted for 72% of GAESA's total revenue.
Interestingly, the Gaviota hotel empire had a profit margin of 42%—almost four times the global average for that sector.
"Wait, that has to be a typo, right? How could the socialist Gaviota empire achieve a profit margin almost four times higher than the same sectors in the rest of the world? Easy: Because the communist government of Cuba dictated all wages, the empire was able to pay hotel workers...wait for it...$11 a month.
Starting to see how cunningly it all worked?
The hotel investment arm of GAESA ("Inmobiliaria Almest") has assets of 56.5 BILLION Cuban pesos. But despite these vast assets, it still received 668 million from the government, and paid just 2 MILLION in taxes. So from a citizen standpoint it's a money hole, eating 666 million MORE than it paid. Totally normal for state-owned, state-run entities in Cuba.
In 2016 GAESA took over Habaguanex, the company that managed over 300 tourist facilities in Old Havana. "Stroke of a pen," eh?
A GAESA company called CIMEX owns more than 41 companies operating supermarkets, 668 gas stations, currency exchange shops, and more. The leaked documents revealed astonishing figures: $3.4 billion in revenue and $1.2 billion in profits. For the math-challenged that's a profit margin of over 35%. Astonishing.
In 2016, GAESA took control of the Banco Financiero Internacional, which processed 95% of the country's import/export transactions.
In short, GAESA was designed by Raúl Castro to enable his family to control the wealth of Cuba.
How GAESA captured every dollar Cubans overseas sent back to their family
Many Cubans living overseas abroad send money to their family in Cuba. GAESA encourages this, because it keeps the dollars, exchanging them for a special government currency called "Freely Convertible Currency."
When remittances collapsed by 70% in 2020 compared to 2019, GAESA opened over 85 stores that only accept dollars. Prices are up to four times higher than a Walmart in the U.S, with profit margins exceeding 240%.
The design was brilliant in its wickedness: every dollar sent to Cuban families from relatives living abroad ultimately ends up in the accounts of GAESA. Meanwhile the communist government was asking international forums to pressure the U.S. to lift the embargo "because the Cuban people are suffering."
GAESA not only owns and operates hotels, it also has foreign partners that pay GAESA a fee to operate its hotels.
Meliá Hotels International (Spain) is the largest foreign operator in Cuba, with between 33 and 38 Gaviota hotels under management contracts of 25-30 years. Iberostar operates 20 hotels and is building a 42-story skyscraper costing €200 million. Blue Diamond Resorts (Canada) manages 36 properties and more than 10,000 rooms.
Empty hotels, hospitals without medicine
The leaked documents show that between 2021 and 2023, a bit under 3% of all government investment went to agriculture. Health care got two percent. By far the biggest use of government funds was spent on hotel construction--36%.
Over 15 years GAESA invested $24.2 billion in hotels —nearly 14 times more than the $1.75 billion allocated to public health.
But hotel investment isn't just a matter of insane priorities. Instead, building more hotels is a money laundering mechanism, with inflated contracts awarded to companies owned by the conglomerate. Cuba is full of nearly empty hotels, and yet the conglomerate keeps building more. Whether any new hotel makes a profit is irrelevant, because the main goal has already been achieved.
The leaked documents reveal that despite its vast profits, in 2024 GAESA paid just 920 million pesos in tax--while somehow receiving 9.26 billion pesos from the state budget as "investment"--ten times what it paid in taxes.
When Comptroller Gladys Bejerano was asked about this, she publicly stated she had no jurisdiction over GAESA--and was soon fired.
Last October--with shortages of everything growing worse--the regime proposed a "fiscal and monetary adjustment to reduce inflation and the deficit." But the proposal doesn't mention GAESA--an entity that controls 40% of GDP. So any sacrifice will be borne by ordinary Cubans, not by the generals.
You may have heard that Cuba has run short of oil to power electrical generation. Economist Emilio Morales and Juan Antonio Blanco found that in 2024 and 2025, 60% of the oil Cuba was getting from Venezuela wasn't used either for electricity generation or transportation, but instead was re-exported to Asian markets by a GAESA company called Cubametales. The money from those sales ended up in bank accounts in tax havens.
To transport that oil, for more than a decade GAESA operated a at least nine tankers, registered under shell companies in Cyprus, Panama, and Liberia to evade international sanctions.
In February of this year [2026], after Venezuela stopped shipping oil to Cuba following Maduro's extradition to the U.S, Cuba's nine international airports were forced to close due to a lack of jet fuel. This temporarily cut tourism—GAESA's biggest revenue stream. Air Canada suspended flights to Cuba until May--significant because Canadians are Cuba's top tourist group.
In the streets of Cuba garbage accumulates, because the garbage trucks have no fuel. Hospitals are operating at half capacity. And GAESA, the conglomerate that has amassed more money than the state, has not contributed a single cent to alleviate the crisis. Instead the Cuban government gives the conglomerate ten times more money than the latter pays in taxes on its vast income.
This is the story that the Cuban dictatorship does not want American voters to know--the story of a military conglomerate that seized the economy of an entire nation, that gets more money from the regime than it pays in taxes. A cartel that sold the oil that should have provided light to Cuban homes, and that sent its executives to operate offshore businesses with diplomatic immunity while the population lived with 18-hour blackouts.
Those were decisions made by the owners of GAESA—capitalist decisions made by an elite that claimed to be socialist.
posted by SF at
2:27 PM
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