Ethics vs. sustainability – Where will Cuba accusations lead CMA CGM business?

French container shipping major CMA CGM is facing accusations in the USA for what has been described as “illegal” dealings with Cuba.

The world’s third-largest carrier has been accused of shipping cargo from several US ports to Cuba via Jamaica and operating warehouses in Cuba.

In late July 2021, a number of plaintiffs filed a collective lawsuit against the French giant and its subsidiaries in the United States District Court – Southern District of Florida, a document seen by Offshore Energy – Green Marine shows.

The Libertad Act

Specifically, the plaintiffs bring this action to recover damages and interest under the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 against CMA CGM “for trafficking a property which was confiscated by the Cuban Government on or after January 1, 1959, and as to which plaintiffs own claims”.

Also known as the Helms-Burton Act, the act has several goals, including to “protect United States nationals against confiscatory takings and the wrongful trafficking in property confiscated by the Castro regime.”

Back in 1960, Cuba decided to confiscate on behalf of the state without any compensation the property of the Blanco Rosell Siblings. The property included the siblings’ wholly-owned company Maritima Mariel SA and the 70-year concession held by the company to develop docks, warehouses and port facilities on Mariel Bay, a deepwater harbor located on the north coast of Cuba.

What is more, the property included the Blanco Rosell Siblings’ wholly-owned companies Central San Ramón and Compañía Azucarera Mariel S.A., including their land holdings on the southeast, south and west sides of Mariel Bay.

As informed, CMA CGM is the 41st company sued using the abovementioned Libertad Act.

Why is CMA CGM being sued?

As stated in the text of the lawsuit, “CMA CGM has trafficked and continues to traffic in the confiscated property, the claims in which are owned by plaintiffs, since the opening of the Port of Mariel, more than 6 years ago”.

Referring to the International Maritime Organization (IMO), the plaintiffs said that vessels operated by CMA CGM “have repeatedly trafficked” in the confiscated property by calling at the Terminal de Contenedores del Mariel (TCM) which is part of the Port of Mariel within the Mariel Special Economic Zone (ZEDM) and within the Bay of Mariel.

Some of the vessels that called Mariel on multiple occasions between 2019 and 2021 include CMA CGM Ventania, Contship Pro, Contship Ray, JPO Aries and others.

While calling at the container terminal in question, CMA CGM has been accused of engaging in commercially beneficial transactions and other commercial activities with the container terminal, Almacenes Universales S.A (AUSA) and the ZEDM.

CMA CGM allegedly acted as the carrier for at least 602 cargo shipments from various US ports to the Port of Mariel. The practice involved carrying the containers to Kingston, Jamaica, offloading and loading them onto other vessels bound for Mariel.

CMA CGM in Cuba

CMA CGM established its presence in Cuba in 2015 when it sealed an agreement with the Cuban government to operate a logistics platform in Mariel.

Back then, CMA CGM, through its subsidiary CEVA Logistics (CMA CGM LOG in Cuba) reached an agreement with Cuban state-controlled logistics company AUSA to operate and develop a logistics platform at the Port of Mariel and operate a 17-hectare logistics platform with AUSA, occupying land confiscated by Cuba from the Blanco Rosell Siblings.

The logistics platform known as Carilog remains operational.

Having been present in Cuba since 2000, CMA CGM is one of only a few international shipping companies to call the country, next to Maersk, Crowley Maritime, BBC Chartering and others.

Maersk – the world’s largest container shipping company — also became entangled in a lawsuit over Cuba business earlier this year, joining Crowley and Seaboard.

Claim for damages

The lawsuit says that CMA CGM failed to obtain permission from the plaintiffs to operate in the confiscated property.

Furthermore, the company has been accused of making a profit from its operations in Cuba, doing monetary harm to the plaintiffs.

“When in the Port of Mariel, the container ships call at and/or otherwise use, benefit, and profit from the Container Terminal in the ZEDM including the ZEDM’s ports, docks, warehouses, and facilities. Defendants also engage in commercially beneficial activities using or otherwise benefitting from the ZEDM and plaintiffs’ confiscated property.”

When Offshore Energy – Green Marine approached CMA CGM for a comment on the matter, the company replied:

“The complaint received by CMA CGM (America) LLC is currently under review.”

“CMA CGM will fully cooperate with all relevant authorities and defend itself accordingly. We will not make any further comment regarding an ongoing case.“

If convicted, CMA CGM will be obliged to pay money damages to the plaintiffs. The amount sought for the damages has not been disclosed.

What does business ethics have to do with sustainability?

CMA CGM’s sustainability strategy clearly shows that the company strives to position itself among leaders in the energy transition race. However, the above accusations seem to be in contrast with this sustainability strategy which also embeds ethical business practices.

In the 2020 CMA CGM Sustainable Development Report, the company outlines it is committed “to promote responsible international trade through strict compliance with applicable laws and regulations and by encouraging our (its) suppliers and customers to adopt best practices”.

The end goal of the company’s business strategy is to become carbon neutral by 2050 by switching ten per cent of its energy supply to alternative fuels by 2023 and achieving carbon neutrality by 2050.

The company has put the transition to LNG as marine fuel at the center of its ambitious target as it plans to own a fleet of 32 LNG-powered containerships by the end of 2022. In addition, the company sees biofuels as a possible way to accelerate the decarbonization of transport and logistics.

One of the main pillars of CMA CGM’s sustainability strategy is “Acting for responsible trade”, as the company wants to be exemplary in its business.

At a time when businesses re-evaluate how they do business, profits are no longer the most important factor of success. Sustainable business practices are actually defining business success and attracting new clients.

The biggest industry players such as CMA CGM influence other companies with their business approach, thereby setting industry norms.

If the dealings in Cuba prove to be illicit, they would represent a stain on CMA CGM’s promising sustainable business strategy.