Although U.S. President Obama and Cuban President Castro announced their agreement earlier this month to normalize diplomatic relations between their countries, there remain many unresolved disputes. One of the thornier issues is that Cuba nationalized the assets of numerous U.S. companies, and many of those companies registered their losses with the U.S. Foreign Claims Settlement Commission under U.S. law. Among them: IBM World Trade Corporation. Yes, that’s right: under U.S. law, the Cuban government owes IBM payment for the IBM mainframes and other IBM assets that the Cuban government nationalized on January 26, 1961.
To be specific, the U.S. Foreign Claims Settlement Commission determined that IBM is owed $6,449,434 as of January 26, 1961, plus 6% interest compounded annually. If my math is correct, that’s about $135 million in accrued interest to date. IBM’s claim is file number CU-2155. The bulk of that claim is related to “data processing rental machinery” in Cuba that was on lease and partially depreciated but neither paid for nor returned to IBM. (Most customers leased their mainframes and other machines from IBM at that time, and many still do.) IBM’s claim is by no means the largest, but it is among the top 40 largest corporate claims on file. It’s larger than GE’s claim, as an example.
According to Gordon R. Williamson’s memoirs, “IBM Cuba was a large and thriving operation.” Then something strange happened after the 1959 revolution. Starting in late 1959 and through 1960, Cuba’s new communist government nationalized all the Cuban branches of foreign companies except IBM Cuba. “The Castro government and most of the nationalized companies were users of IBM equipment and services and the governmental authorities were concerned about their technical ability to properly operate and service the IBM installations. It reached the point where IBM was actually embarrassed and concerned the IBM company was the only remaining privately owned foreign entity. On the surface it appeared that IBM had entered into some collaborative arrangement with the communists (even though this was certainly not the case).” It turned out that IBM Cuba outlasted even the U.S. Department of State. The U.S. broke diplomatic relations with Cuba on January 3, 1961, yet IBM hung on for a couple more weeks.
IBM Cuba’s main office was located at 171 Calle 23 in Vedado, Havana, Cuba. Calle 23, also known as “La Rampa,” is the main street in Vedado. As best I can tell that office building is now home to the Corporación Financiera Azucarera, S.A. (“ARCAZ”). It also appears that IBM shared the building with a couple other companies including Chrysler. IBM Cuba also had a small satellite office in Santiago de Cuba.
IBM’s FCSC claim substantiates that IBM Cuba had machines on lease in Cuba manufactured as late as 1954. (There may have been newer machines, but as far as I can tell the depreciation discussion in the claim file only lists equipment manufactured through 1954.) IBM introduced its Model B typewriters in 1954, and IBM Cuba certainly leased and/or sold many electric typewriters throughout the country. Some are probably still in service. It’s quite possible an IBM 650 (or several), the world’s first mass-produced computer, made it to Cuba. (All computers back then were “mainframes.”) Certainly the IBM 604 and IBM 407 would have been relatively common workhorses.
I would have to assume that most of that 1950s IBM equipment is now retired with the exception of some IBM electric typewriters and some IBM (now Simplex) time clocks, popular in schools and factories for signaling class periods and shift changes. The outstanding U.S. corporate claims, totaling billions of dollars, also endure.