CSC Lloyds Bank Briefing - June 2008

Campaign News | Saturday, 19 July 2008

United States' extra-territorial legislation and the effects upon UK based companies


Lloyds TSB, Hilton Hotels & Barclays Bank

- United States' extra-territorial legislation and the effects upon UK based companies


Lloyds TSB Bank have written to their business customers who deal with Cuba ordering them to stop trading with Cuban firms or take their business elsewhere. This follows on from similar actions taken by Hilton Hotels and Barclays Bank in 2007 to withdraw services from companies and individuals trading with Cuba. In the cases of Hilton Hotels and Barclays Bank both the companies cited the pressures of US blockade legislation as the reason behind their actions.

The Cuba Solidarity Campaign is calling for:

1. The UK Government to make urgent and robust representations to the relevant US authorities to cease the application of such illegal trade measures.

2. Sustained pressure on Lloyds TSB and Barclays Bank until they unambiguously state in writing that they will not discriminate against British companies who legitimately trade with Cuba.

3. The UK government to invoke existing antidote legislation (as statuted in the 1996 UK Protection of Trading Interests law).

This legislation is designed to counteract the effects of the US Helms-Burton Act. It penalises companies that comply with US extra-territorial legislation over and above UK laws.

Actions required

We would welcome any support from individuals and the trade union movement to help further these aims through lobbying the UK government and the banks concerned. It would be helpful to:

1. Raise these issues at trade union and organisation meetings

2. Write to the Government via Gareth Thomas MP at the BERR (model letter available)

Gareth Thomas MP

Dept. for Business, Enterprise and Regulatory Reform

1 Victoria Street



3. Write to Lloyds TSB and Barclays Banks asking them to confirm in writing that they will not penalise British companies that trade with Cuban individuals, Cuban registered companies and Cuban organisations (model letters available)

Lloyds TSB customers and shareholders can write to: Phil Markey, Relationships Manager, Lloyds Bank, 25 Gresham Street, London, EC2V 7HN.

Barclays customers and shareholders can write to: Marcus Agius, Chairman, 1 Churchill Place, London E14 5HP


Political Background

The United States has applied a blockade against Cuba for 48 years. It has been condemned by 16 consecutive votes in the UN General Assembly. In the most recent 2007 vote, 184 countries, including the UK, voted against it by 184 to 4.

Extra-territorial laws

In 1992 and 1996 the US strengthened the blockade. The Torricelli Law of 1992 made it illegal under US law for US-owned subsidiaries in third countries to trade with Cuba. The 1996 Helms Burton Act made investing in Cuba by foreign companies liable to prosecution in the US.

Such extra-territorial elements were opposed in the EU. In 1996 the European Council introduced regulation EC2271/96 (the 'EU blocking Statue') to offer protection to EU individuals and companies against certain specific extraterritorial legislation, including the US Helms/Burton Act that applies sanctions against Cuba.

Following this the British government passed its own ‘antidote’ law, No. 3171, PROTECTION OF TRADING INTERESTS in 1996.

This legislation makes it possible to penalise companies in the UK that comply with the extra-territorial aspects of US law, thus counteracting the effects of the US legislation. While it is still on the statute book it has never been invoked.

Chronology of Lloyds TSB Bank action

6 June 2008

The Times reports that Lloyds TSB Bank will make a £180 million pound settlement for being in breach of US rules on trading with countries on their “blacklist” including Cuba. The bank indicated that it was setting aside £180 million in the first half of 2008 to cover the settlement.

16 June 2008

The Guardian reports that Lloyds TSB Bank have written to customers who have dealings with Cuba telling them to cut off their links or take their business elsewhere. The letter to customer states “I must advise you to find alternative ways of making payments to your suppliers with Cuban connections.”

16 June 2008

Dr Ian Gibson MP, Chair of the Cuba APPG condemns Lloyds TSB’s actions “We will be taking action against this vindictive political campaign.”

17 June 2008

CSC call on Lloyds TSB customers to write to the bank asking them to explain the press report in the Guardian and clarify what the formal position of Lloyds is with regards to British law and Cuba.

23 June 2008

The Guardian reports that Lloyds TSB, Barclays, the Royal Bank of Scotland and HSBC banks are all complying with the US blockade of Cuba that was condemned in the United Nations by a margin of 184 to 4. The Guardian also noted that none of the major banks were prepared to go on record over their policy towards Cuba.

Chronology of Barclays Bank action

16 April 2007

The Guardian reports that Barclays Bank has told two London-based Cuban organisations to take their business elsewhere despite having healthy bank accounts.

Barclays cite the need to comply with US laws in their press statement:” We operate in a number of jurisdictions around the world and that requires careful monitoring to ensure compliance with different regulations."

25 April 2007

CSC organises a successful lobby at the Barclays Extraordinary Shareholders meeting supported by Trade Unions including Unite, Unison and GMB. Shareholders are given leaflets asking whether they would be opposed to customers closing their Barclay's accounts in protest at Barclays boycott of Cuba.

2 May 2007

Dr Ian Gibson of the APPG on Cuba tables EDM 1408 on US Extra-territorial legislation calling for the UK government to make urgent representations to the relevant US authorities to end such illegal trade measures. (signed by 160 MPs)


That this House expresses concern at the further escalation of extra-territorial legislation imposed by the United States on British businesses, most notably UK Hilton Hotels and Barclays Bank; notes the recent decision of the government of Austria to launch administrative proceedings against an Austrian bank for the violation of European Union rules after the bank cancelled Austrian held accounts of around 100 Cubans after being taken over by US investors; recognises the UK Government's unequivocal vote against any such extra-territorial measures at the United Nations General Assembly; and calls upon the Government to make urgent representations to the relevant US authorities to cease the prosecution of such illegal trade measures.

14 June 2007

In a letter from Marcus Agius, Barclays Chairman, states that

" Barclays does not have, and never has had, a policy outside the US of closing all Cuban customers' accounts. We are not doing so - nor have we been asked by the US to do so".

4 September 2007

However, a letter from the Ministerial Response Team (Laura Hanoman) Department for Business, Enterprise and Regulatory Reform (BERR), states:

" Officials from the BERR and the Foreign and Commonwealth office have met with representatives of Barclays bank to discuss this issue. The situation is complex and I do have some sympathy with Barclays bank and other businesses that find themselves caught between conflicting legal requirements particularly when businesses find that by complying with US law they will break UK/EU law and vice versa"

It is strange therefore that while Barclays deny that there is even an issue, the Government are expressing their 'sympathy' with the company over the pressures being exerted from the US.

18 September 2007

The Cuba Solidarity Campaign writes to Gareth Thomas MP the joint Minister for the BERR and DFID, with responsibility in this area, asking for an urgent meeting to discuss these issues.

October 2007

The Cuban Government raises the question of Hilton Hotels, international banks and the extraterritorial effects of the blockade at the United Nations as part of their report on resolution 61/11 on the US blockade debate.

"Intensification of the extraterritorial application of the blockade in recent years has been marked by an irrational persecution of Cuba's trading and financial transactions, involving reprisals against businessmen, banks and other financial institutions with relations with Cuba. The constant hounding of businessmen and the threats and sanctions against foreign investors reflect Washington's contempt for the rights and attributes of the sovereignty of other nations."

The report goes on to state:

"More than 20 banks in third countries have bowed to US extraterritorial pressures. Their executives have been obliged to accept these impositions and withdraw services provided to Cuban nationals and firms, for fear of severe reprisals by the Bush administration."

March 2008

A delegation from the Cuba Solidarity Campaign meets with Gareth Thomas MP, Minister with responsibility at the BERR. The frank but friendly discussions centered on ways that the UK could help promote trading opportunities for the UK and Cuban companies. The Minister reiterated his Government’s desire to see UK trade with Cuba develop and that he would put this in writing formally. We are still awaiting this statement.

Cuba Solidarity Campaign analysis

CSC welcomes moves by BERR to raise the issue within the EU, together with the statements from the FCO that it is investigating attempts to impose extra-territorial legislation in the UK. However, we believe that the government is purely doing the minimum required in the face of public scrutiny.

There is much more that they could do to protect British sovereignty and business interests:

1. Invoke the 1996 UK legislation that exists and punish any company which complies with US extra-territorial legislation. This would send out a clear signal to other companies facing similar dilemmas that UK laws are sovereign.

2. Make public and robust representations to the US authorities to cease the prosecution of such illegal trade measures

Companies such as Virgin airlines which fly to Cuba, British holiday companies and business wishing to offer services to Cuban nationals or trade with Cuba may yet fall foul of this legislation unless firm action is taken today to enforce UK sovereignty.

It is clear that the US has intensified its pressure on the international financial sector to restrict contact with Cuba and Cuban companies. More than 20 banks in third countries have already bowed to US pressure to restrict their business with Cuba and Cuban companies.

Surely the UK Government's first job is to uphold UK law. It is also to defend UK interests. This is particularly so when we are talking about a foreign Government trying to obstruct the perfectly legal business between UK and Cuban companies.

The world again condemned the blockade at the United Nations on 30 October 2007. The UK Government voted against the extraterritorial nature of the blockade as it has done every year since 1996

We welcome the UK vote but it is clearly not enough. The UK Government must take action to uphold UK law and defend British companies who want to trade with Cuba. A delegation from CSC met with Gareth Thomas MP, Minister with responsibility for this area in March 2008. The Minister indicated that he would put in writing the Government’s desire to see trade with Cuba increased. This is still to be forthcoming.

Trade Unions such as Unison, GMB and Unite have all called for the British Government to take urgent action on the issue of extra territorial measures and the effects on UK companies. We would urge other unions and the TUC to keep up the campaign to demand that the UK Government to take clear action on this issue.

Precedents for foreign governments penalising companies that abide with US extra-territorial legislation

Austria. BAWAG Bank, April-May 2007

27 April 2007

The Austrian government announces it will charge BAWAG (the country’s 5th largest bank) with violating European Union rules after the bank cancels the accounts of around 100 Cubans.

BAWAG states this is due to U.S. sanctions against Cuba preventing a potential US investor, Cerberus, from buying into the BAWAG bank while it maintained Cuban bank accounts.

Austrian Foreign Minister, Ursula Plassnik, tells Austria's parliament that BAWAG has violated EU rules against implementing the U.S. Cuban sanctions on European soil, and that she has therefore launched proceedings against BAWAG. Plassnik states:

"U.S. law is not applicable in Austria. We are not the 51st of the United States."

"Neither the EU nor the U.N. have implemented a general economic or contact embargo against Iran or Cuba."

"We have started the necessary steps to launch administrative proceedings (against BAWAG),"

4 May 2007

BAWAG issues a statement saying it has decided to reverse policy and apologises to the 100 affected Cuban customers for the “problems and irritations” that it caused.

Mexico, Sheraton Hotels, March 2006

In March 2006 the Mexican government fines the Sheraton Maria Isabel hotel in Mexico City around £60,000 for expelling 16 Cuban guests. The Mexican Foreign Ministry says the fine is for violating the national act to Protect Trade and Investment from Foreign Norms that Contravene International Law passed October 1996 in order to oppose the Helms-Burton extra-territorial law.

| top | back | home |
Share on FacebookTweet this