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For most people in Cuba, life on the island has in recent years taken a tragic turn: The economy has collapsed, the poorest Cubans dig food from trash heaps, and many die from lack of medications, while the government’s response has largely amounted to resisting market reforms and blaming the U.S. embargo for the shortages and daily blackouts.
And yet, in the midst of the misery, the Cuban military is riding high: Its bank accounts are stuffed with cash, as much as $18 billion — an amount larger than the international reserves of nations like Costa Rica, Uruguay and Panama, an exclusive Miami Herald investigation shows.
Under Raúl Castro, the nonagenarian retired general who is still the ultimate authority on the island, the Cuban Revolutionary Armed Forces have expanded their hold on the country’s economic lifeline through an umbrella group known as GAESA, short for Grupo de Administración Empresarial S.A. Although Cubans know little about it, GAESA controls dozens of profitable businesses, including a huge chunk of tourism, most of the island’s gas stations and supermarkets, the money-transfer business, currency exchange agencies and the operations at a special development zone on Mariel Bay.
The Cuban government has made every effort to obscure the role of its armed forces in what experts say is the country’s worst economic collapse since its independence, exclusively blaming U.S. sanctions instead. But the wealth amassed by the Cuban military at the expense of the Cuban people is a secret no more.
The Herald reported in December on a rare leak of secret military documents revealing that Gaviota, a GAESA tourism subsidiary that handles 55% of all hotel rooms in the country, was sitting on a $4.3 billion stash. It was the first time financial data from GAESA’s secret account books were made public.
Now, a larger trove of secret accounting documents obtained by the Herald, including several financial statements from 2023 and 2024, shows that the figure was just a fraction of the money in GAESA’s coffers.
The conglomerate generated $2.1 billion in net profits during the first quarter of 2024, according to the documents. Cimex, the group’s largest holding, which handles retail, banking, international trade and several other businesses, was responsible for over half of it, reporting $3.4 billion in revenue and $1.2 billion in earnings as of March last year. The records show that GAESA made significantly more in 2023.
GAESA’s riches are so vast that, even excluding the assets held by Cimex, which accounts for an estimated 40% of the military conglomerate’s revenue, the remaining companies had a total of $18 billion in assets in March 2024 that could be quickly converted into cash. Of those, $14.5 billion was deposited in bank accounts or GAESA’s own financial institutions.
The leaked secret documents provide the most detailed portrayal yet of GAESA’s finances and offer definitive proof of its oversized role in Cuba’s economy.
“This is the first time that detailed financial data of GAESA is available to assess its monopolistic and financial power with numbers. The financial statements confirm GAESA’s enormous influence on the Cuban economy,” said Pavel Vidal, a leading Cuban economist who teaches at Pontificia Universidad Javeriana in Colombia and who reviewed the financial statements at the Herald’s request.
“They have international dollar reserves, and yet the rest of the economy is falling apart,” he added.
A shadow government
That GAESA holds such large dollar reserves, Vidal says, suggests that it has unofficially assumed the role of the country’s central bank in managing international currency reserves, holding large idle dollar deposits. However, it is unclear how that money is used. The conglomerate, which is believed to keep most of its hard currency in its own financial institutions or bank accounts abroad, keeps its accounting books out of reach of government auditors. Some of its companies are registered abroad, including Cimex, which is registered in Panama.
Vidal compared GAESA with “a parallel government that is neither accountable nor responsible” to the national assembly — Cuba’s version of a parliament — nor the country’s auditing arm. When he worked at Cuba’s Central Bank as an analyst, he said, staffers in charge of developing monetary policy and accounting for the country’s monetary assets did not have access to documents from financial institutions that are part of GAESA, such as Banco Financiero Internacional.
GAESA’s books are such a state secret that when Gladys Bejerano, at the time the island’s general comptroller, told the Spanish news agency EFE last year that she could not audit GAESA because it was not under her supervision, she was fired from the post shortly after without explanation.
At the same time, the financial documents obtained by the Herald show the ongoing economic crisis on the island has not totally spared the military’s riches. By August last year, non-Cimex companies listed only $14 billion in current assets and $9.3 billion deposited in banks, meaning that in five months, GAESA had burned through $5 billion, likely due to a dramatic decline in tourism revenue.
In recent years, GAESA has been heavily investing in building luxury hotels for a moribund tourism industry, effectively squeezing the state out of the funds it could use to invest in health care, energy and food.
The fact that the Communist Party and the civilian branches of the government — both led on paper by the country’s handpicked president, Miguel Díaz-Canel — cannot make GAESA turn over money to cover the most urgent needs of Cubans speaks volumes about the political power amassed by the armed forces in recent years under Castro. And the secret financial information confirms the notion that the Cuban military has become a shadow government in control of the island’s most valuable resources.
Ultimately, the secret documents expose the lack of transparency involving the dealings made by those at the top of the communist regime in Havana and the hollowness of their calls for the population “to resist” scarcities that they secretly have the resources to alleviate. They also demonstrate what many economists, dissidents, exiles and Cubans on the island have been arguing for some time: that the Cuban government has been falsely blaming the U.S. embargo as the sole cause of the island’s impoverishment.
Cuba’s Comptroller General, Miriam Marbán González, did not respond to a request for comment about the figures in the documents obtained by the Herald. The Foreign Ministry also did not immediately reply to questions sent by the Herald.
Secret financial statements
The Herald obtained 22 financial statements from GAESA’s internal accounting system for March and August of 2024.
The spreadsheets include the conglomerate’s consolidated balance sheet and income statement, along with other financial forms that account for assets, liabilities, cash flow, investment expenses, inventory, sales and earnings. Some of the forms follow a similar format to the ones used by other Cuban state enterprises and even include a “Ministry of Finances and Prices” heading.
The statements are minutely detailed, suggesting the military keeps a close eye on its finances. Two spreadsheets titled “Balance de Datos” (Data Balance) for March and August 2024 have 688 rows of detailed information about 25 companies in the conglomerate, grouped into three categories: state enterprises, “international economic associations” and “mipymes,” the Spanish acronym for micro, small and medium enterprises. Some of the companies mentioned have not been previously identified as part of GAESA.
Some of the statements include sales and profits data for March and August 2023 for comparison purposes. The 2023 information reflects the activities of the entire conglomerate, including Cimex, the island’s largest commercial corporation.
However, Cimex data is not included in the 2024 financials, possibly due to accounting delays caused by a “cybersecurity incident” in January 2024 that shut down the company’s digital systems for several months. Still, the Herald obtained another key document: a PowerPoint presentation prepared for an April 2024 meeting of Cimex’s top managers that compared the company’s performance in March 2024 to its annual plans.
Because Cuba’s economy is partially run in dollars and GAESA has revenue streams and expenses in both the local peso currency and dollars — for example, it sells gasoline, handles foreign remittances and runs stores in dollars — the documents show the conglomerate employs a dual accounting system that tracks operations on each currency separately. All dollar figures reported by the Herald originally appear as such in the spreadsheets and are additional to amounts reported in pesos.
After reviewing the data obtained by the Herald, Vidal said the documents “confirm that approximately 40% of the economy operates under different rules than the rest, with very little transparency, no oversight from civil institutions, and a high degree of independence from the agencies responsible for managing the economy.”
This “duality of powers,” he added, explains why hotel construction continues while agriculture and manufacturing industries are in ruins, and food production has fallen dramatically.
Having a military business group controlling so much of the economy, Vidal said, does not encourage competition, efficiency or innovation, nor does it favor economic development. GAESA’s “excessive power and lack of transparency allow political and military elites to use it as a mechanism to extract revenue from society and make corruption easier,” he added.
The records show that the military holds on to the dollars tightly, financing much of its operations and investments with the local peso and keeping most of its substantial foreign currency revenue in the bank — a highly conservative strategy that is behind the ongoing crisis.
The eye-popping dollar figures in the statements contrast with everything else happening on an impoverished island, where people spend much of their time without electricity and many still depend on meager food rations to survive. The average monthly wage of a state worker in Cuba last year was 5,839 pesos, equivalent to approximately $16. Pensioners earn even less, averaging 1,999 pesos, or roughly $5.
The military’s political power
Experts trying to understand how the island’s future might look in a political transition see the Cuban military as a major contender that has secured control over the country’s key assets.
The birth of GAESA goes back to the early 1990s, rooted en previous efforts by Fidel Castro’s aides to create an obscure network of offshore companies to skirt the U.S. embargo and other businesses to get their hands on U.S. dollars. But when Raúl Castro, who was in charge of the military for more than five decades, replaced his brother Fidel in 2006, military officers began taking more control of the economy under the argument that they were more efficient than bureaucrats.
GAESA expanded even further in 2016 when it took over the Banco Financiero Internacional as well as Habaguanex, a corporation that Fidel Castro favored with a special license to run hotels, shops and restaurants in Old Havana.
GAESA’s operations are overseen by the military’s secretive Department V, which appears mentioned in some of the financial statements obtained by the Herald. Raúl Castro also ensured GAESA remained under the direct control of the Castro family. For several years, until his sudden death in 2022, Gen. Luis Alberto Rodríguez López-Calleja — Raúl Castro’s former son-in-law and the father of two of his grandchildren — headed the conglomerate.
Since Rodríguez’s death, however, GAESA has been led by Brig. Gen. Ania Guillermina Lastres Morera, an official who climbed the military career ladder with no known direct connections to the Castro family. She was deputy chief of Department V and was formerly GAESA’s vice president.
U.S. is watching
In recent years, U.S. policymakers have been paying closer attention to the Cuban military power play.
During the first Trump administration, Marco Rubio, at the time a U.S. senator from Florida, spearheaded a push to sanction GAESA, which was added to a Treasury Department blacklist of sanctioned companies. The State Department also created a list of restricted companies and properties linked to GAESA, which prohibits U.S. businesses and nationals from any dealings with them.
In his Senate confirmation hearing to become Secretary of State earlier this year, Rubio highlighted the role of GAESA’s in Cuba’s ongoing crisis. “The problem in Cuba, he said, is that “despite being a communist regime … GAESA … owns everything that makes money in Cuba.
“And while you have electrical blackouts and you have all these other problems economically in Cuba, GAESA is sitting on billions of dollars that they’ve generated for their permanency,” he added, citing earlier Herald reporting.
Rubio recently expanded the list of banned military-controlled entities in Cuba, and regulations stemming from a recent presidential memo are expected to impose secondary sanctions on foreign companies dealing with them.
“GAESA is the financial foundation for the Cuban regime and should be treated as such,” a senior State Department official said. “Evidence of secret dollar reserves held by GAESA, while the Cuban people lack basic needs, serves as further evidence that President Trump’s actions to strengthen the U.S. policy towards the Cuban people was of the utmost importance.”
How big is GAESA?
While experts have long known that GAESA controls large portions of the island’s economy, the records obtained by the Herald provide for the first time a clearer picture of its heft on the island’s GDP, the measure of all the goods and services produced in a country.
Working with the 2023 financial data obtained by the Herald and official Cuban government data, Vidal conservatively estimated that GAESA’s gross profits in 2023 were equivalent to around 40% of Cuba’s official GDP of 869 billion pesos that year.
In specific areas where GAESA has a significant presence, like tourism, construction, transportation or finance, its share is likely higher, Vidal noted. And if compared with what the government collects in taxes, GAESA’s revenue in 2023 was 3.2 times the state’s revenue.
“There is no precedent for this,” Vidal said. “I haven’t been able to come up with a similar example of a conglomerate that has such a large participation in a country’s economy. GAESA’s share of Cuba’s GDP exceeds the percentage attributed to state-controlled oil companies in Latin America, such as Ecopetrol in Colombia, Petrobras in Brazil, or even PDVSA in Venezuela.”
According to the August 20214 balance sheet, Gaesa had an additional 234 billion Cuban pesos in assets, excluding those attributed to Cimex. At the official exchange rate used by state enterprises, which equates one dollar to 24 pesos, those assets would be equivalent to an additional $9.8 billion.
A source familiar with GAESA’s operations, who asked for anonymity out of fear of government retaliation, said the conglomerate uses the one-dollar-to 24-pesos rate for its activities. That’s the same rate Vidal used to estimate the conglomerate’s share of the GDP.
However, the government’s official rate overestimates the value of the peso, which has been losing value dramatically in recent years. In the informal street dollar market, where one dollar is worth around 370 pesos, the 234 billion pesos would be equivalent to just $632 million.
Among non-Cimex companies, three had the highest dollar bank deposits as of March last year, according to the records: GAESA’s flagship tourism company, Gaviota, with $8.5 billion; TRD Caribe, a national hard-currency store chain, with $3.4 billion; and Almacenes Universales, which handles Mariel port operations and logistics at the special development zone, with $1.6 billion.
Nevertheless, Cuban officials have repeatedly told the Cuban people, the United Nations, foreign creditors and even allies that U.S. sanctions prevent them from paying for essentials such as milk for children, medicines, and maintenance for the country’s crumbling energy and telecommunications infrastructure, or making good on foreign debt payments.
As the energy grid collapsed again in March, Díaz-Canel told a gathering of left-leaning activists and journalists that his government was not responsible for the debacle.
“The problems we have today are not due to mismanagement by the Cuban government as the empire wants to present it,” he said, referring to the United States. “We simply have not had the money for years to maintain the thermoelectric plants to make the repairs.”
The strategy has proven successful in securing donations from foreign governments, subsidies from allies, improved payment terms from creditors and even debt forgiveness. Yet the documents obtained by the Herald show the military has billions of dollars to cover the country’s most vital expenses, including the $43 million needed annually to guarantee access to 63 priority medications that have been in short supply in Cuban pharmacies and the $250 million required annually to operate and maintain the country’s electrical grid.
Economic decline also hit the military
At the same time, the spreadsheets also reveal the extent to which even military-owned companies have been losing billions of dollars.
In 2023, the Cuban economy shrank by 1.9% according to government figures, and the country’s GDP was still 10% down from pre-COVID-19 levels. Still, the entire military conglomerate, including Cimex, generated $17 billion in sales and $7.2 billion in net profit during the first eight months of 2023, according to an income statement comparing year-over-year performance.
The numbers for 2024 look remarkably worse. By August 2024, GAESA companies — not including those run by Cimex — reported $5.6 billion in net sales and $2 billion in earnings, a 67% decrease in sales and a 72% decrease in profits compared to the same period in 2023.
The fact that the 2024 statements do not include Cimex’s accounts cannot alone explain the steep decline. In particular, the record shows that the military’s big bet on tourism — continuing to build new hotels despite very low occupancy rates — has turned disastrous.
By 2023, tourism revenue had shrunk by about 62% compared to 2019, according to data published by Cuba’s National Office of Statistics and Information. Still, 37% of all government investments went to tourism and hotels last year, according to official figures, 11 times higher than investments in public health and education. But it has been a staggeringly losing bet: The number of tourists declined 9.6% from 2023, the worst performance in 17 years, excluding the COVID pandemic years.
That is reflected in the financials of Gaviota, the military’s tourism arm, which shows the company lost $5.8 billion in just five months in 2024.
In March of that year, the company showed deposits of $8.5 billion – about half held in unidentified bank accounts, the rest at RAFIN S.A., a financial institution owned by GAESA. Five months later, the money Gaviota held at RAFIN had vanished, and the tourism company reported only $2.7 billion in the bank.
There is a chance that the military may have simply moved the missing dollars abroad or used them to finance other investments without explanation in the records. But the collapse of tourism on the island makes for a reasonable explanation for at least some of Gaviota’s losses.
Though Cimex does not appear on the financial statements from 2024, the PowerPoint presentation obtained by the Herald reveals that the company lost 30% of its expected dollar earnings in the first quarter of 2024. In that period, Cimex reported only $1.2 billion in net profits, $500 million less than what the company expected. Its wholesale trade business, carried out in dollars, fell 63% from expectations, and exports were down 37%.
The significant drop in GAESA’s 2024 revenue helps explain why the military has aggressively pushed to limit the growth of the island’s small but significant private sector, attempting to restrict private wholesalers and importers that it perceives as competitors. It also helps to explain other recent unpopular measures, such as a price hike on internet data packages for cell phones, which fueled protests by university students but increased dollar sales for ETECSA, the country’s telecom company. ETECSA is partly owned by RAFIN S.A, GAESA’s financial institution.
No taxes on profits
If GAESA’s businesses provide the government with the dollars needed to pay for services and goods for the population, there is no evidence of such activity in the conglomerate’s own accounting books. Instead, the statements suggest that GAESA’s money is mostly retained in the military’s coffers.
The leaked documents expose a striking fact: GAESA companies pay zero taxes on their dollar sales and no taxes on profits in either foreign or peso currencies. None of the documents show that GAESA paid any taxes on operations carried out in dollars.
GAESA’s consolidated balance sheet for August 2024 shows that what it owed to the government’s budget — 920 million pesos — was less than 1% of the total net sales in pesos it had reported in that period — 100 billion pesos.
In fact, the conglomerate received from the government 10 times what it owed in taxes at that point last year, 9.2 billion pesos, reported as “state investment/public sector.” Taxes paid by Cimex do not appear in the statements.
Ultimately, it is not known how much of the tax money reported in the forms ends up in government accounts — because all taxes paid by GAESA go directly to a previously unknown tax entity named the Tax Administration Office of the Revolutionary Armed Forces, the source knowledgeable about GAESA’s operations said.
The Herald could not find any public information about this office.
Lack of transparency
One surprising detail in the financial statements, which an accountant also reviewed at the Herald’s request, is that the financial statements underreported the conglomerate’s net worth, specifically regarding its dollar holdings.
For example, the August 2024 statements show that the conglomerate, excluding Cimex, had $2 billion in net worth, the same figure reported as profits in the forms. But if the typical formula to calculate a company’s net worth — assets minus liabilities — is applied, then GAESA had approximately $13 billion in addition to 28 billion pesos.
Another startling finding is that even if GAESA uses the $1-equals-24-pesos exchange rate for its operations, the accounting system adds amounts in both currencies together to report total figures in pesos in every category, basically using a 1:1 exchange rate that obscures the company’s real dollar resources.
It is not known whether GAESA is using these accounting maneuvers to conceal its dollar holdings from other branches of the government, tax authorities or the National Office of Statistics and Information. Given GAESA’s economic heft, experts believe it is likely that some version of its financials is reported to the statistics office.
While most state companies must provide their balance sheets and other forms to ministries, local governments and the national statistics office, the ministries of the Revolutionary Armed Forces and the Interior — which is in charge of state security — are exempt from doing so.
Two government resolutions establishing how state companies pay taxes and report their finances include the same language: “The Ministries of the Revolutionary Armed Forces and the Interior adapt compliance with the provisions of this resolution to their specific needs.”
After reviewing some of the figures obtained by the Herald, Mauricio de Miranda Parrondo, another Cuban economist who teaches at Pontificia Javeriana University in Colombia, expressed concern that the lack of transparency surrounding GAESA’s activities might conceal corruption.
“It has long been evident that GAESA not only constitutes a financial empire parallel to the country’s economy and not part of it, but rather constitutes a power in itself that is unaccountable to the country’s institutions or to the country itself,” he said.
“What guarantee is there that, if a systemic change occurs in Cuba, the resources that appear to be under the control of this entity can be prevented from being plundered from the public treasury?” de Miranda Parrondo said. “These are resources of the Cuban people and must be under their control.”
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