Sweet memory: Julio Lobo, the sugar king of Havana

This is more than just the story of Julio Lobo, formerly Cuba's wealthiest man, to Che Guevara, one of the most improbable and best-looking central bank governors in history.

The Sugar King of Havana: The Rise and Fall of Julio Lobo, Cuba's Last Tycoon
John Paul Rathbone

Loss permeates these pages like the scent of over-ripe guavas on a steamy Caribbean afternoon. The loss of Cuba, a paradise for so many of a certain class, forced by Fidel Castro to seek a new life elsewhere. The loss of the fortune that once belonged to Julio Lobo, formerly the nation's wealthiest man, to Che Guevara, one of the most improbable and best-looking central bank governors in history. Even the lost youth of the author's mother, who enjoyed a glamorous and carefree life in Havana in the 1950s, friend to one of Lobo's daughters, before she too was forced to flee and bring up her children in Kensington.

More than anything, though, John Paul Rathbone's book is the story of sugar, a commodity once as sought after as salt in the Middle Ages, or oil today. It also a reminder that, even in the age of information economies, vast amounts of money can always be made by things that come from the ground, particularly if you can control or corner the markets.

Cuba's relationship with sugar began in 1762 when the British captured Havana and began importing both slaves and the technical know-how to cultivate vast fields of sugar cane. For two and a half centuries, sugar has remained a cornerstone of both the nation's economy and its identity. As Rathbone points out: "To separate sugar from Cuba ... one might as well chop away the arterial system of a body and imagine that it could somehow survive."

Lobo was Cuba's last great tycoon, pre-eminent when the country was the world's largest sugar producer. His story began when his father Heriberto brought him to the island at the turn of the 20th century, along with his mother, Virginia, and sister, Leonor. The family were on the run from Venezuela, having been, somewhat prophetically, thrown out of the country by a dictator by the name of Castro.

In 1899 an army marched on Caracas, seizing power from the Ignacio Andrade and installing Cipriano Castro (no relation to Cuba's Fidel) as supreme military commander. Heriberto was at the time the manager of Banco de Venezuela. Once in power, Castro ordered him to open the national vaults to the government. Heriberto refused, was thrown in jail for 30 days and then deported.

After his arrival in Cuba, Heriberto joined the North American Trust bank and on the death of its manager from yellow fever, was appointed to the top job. Inevitably he ended up financing the sugar trade, before joining a trading company that became known as Galban Lobo. He and Virginia built a beautiful house, had two more children, and even managed to exact some revenge on Cipriano Castro. Thirteen years later, now deposed and in exile, the erstwhile Venezuelan premier arrived in Havana, trying to drum up support for a counter-revolution. Virginia rushed to his hotel and attacked him with her parasol.

Young Julio inherited his father's business acumen, ambition and humour, along with his mother's temper. After an early education at the Jesuit school Colegio de La Salle, he was sent to a boarding school in New York. Aged 16, he attended Columbia University, where he fenced, hung out with other Cubans, and studied maths, literature and philosophy. He had acquired a passion for Napoleon and was developing his own sweet tooth, speaking poetically of the scent of his home coutry's biggest cash crop: "Once that perfume invades your nostrils, it permeates your whole body. You will never be able to get rid of it. Such was my case."

By the time he returned to Havana in the autumn of 1919. Cuba was in the middle of a sugar rush. Old mills were being expanded and new ones built. Lobo was inundated with job offers, but finally accepted an offer from his father's company at the princely sum of $1,000 a month, five per cent of profits and the ability to sign off on major deals. The sugar price kept fermenting, up to 12 cents a pound by the end of March, 18 by April, by mid-May to 20.5.

But just as oil did in 2008, the market abruptly crashed. By Christmas, the price stood at less than four cents a pound. This was an early lesson for Lobo of the crop's volatility, a situation not helped by government meddling such as the imposition of quotas.

As you might expect from a former Reuters man in Venezuela and the current Latin American editor of the Financial Times, Rathbone is strong on Lobo's attempts to corner the sugar market. The problem is that such manoeuvres, particularly 70 years later, are not particularly gripping. And when he tries to relate just what Lobo did on a daily basis, he falls into trap of woolly speculation: "It takes a man of rare qualities to rise above such a fray. But at his trading desk, Lobo floated above the market noise even as he sat in the thick of it, feeling its vibrations and flows, his mind the gnomic center of a trading operation that leaned with and sometimes directed the market traffic."

Rathbone's other problem is that Lobo is not especially charismatic. True, Lobo became very rich, a Soros or Buffett of his time. But making money does not always make good copy. There is talk that he once had perfume sprayed into his swimming pool to impress a Hollywood actress he was wooing: a rare extravagance for a man who claimed frugality as a great virtue. This was why, Lobo said, he didn't own a yacht.

Instead he worked very hard. This was the sole reason for his success, not luck, charm or mystical vision. His life could be described thus: made a lot of money out of sugar trading and owning mills; married and divorced; married and divorced again; had two children who hated each other; was shot, but survived; lost his hair, then his fortune and fled Cuba; made another fortune, then lost that, too. Just as it's said that every political life ends in failure, so the same could be said of most traders.

But Rathbone has grander aims than the simple chronicling of Lobo's life. He also wants to tell the story of Cuba, particularly the nation pre-revolution. To do this, he intersperses his own travelogues with smatterings of family history. These diversions, while occasionally entertaining, rarely add up to much more than the sum of their parts.

The story only revives when Lobo is at centre stage, especially near the end of his life, when things turn out very badly indeed. The great sugar trader, capable of putting a "short squeeze" on Wall Street's finest, found himself summoned to the Central Bank by Che Guevara, its new governor.

A day later, his assets nationalised, Lobo left Cuba with just one suitcase and whatever he could fit into his trouser pockets. He was hardly penniless, he still owned a trading company on Wall Street and some property in Florida, but he was no longer the richest man in the region.

This was not enough to satisfy him. Like his hero Napoleon, he hurried to his own Waterloo. In 1964, the price of sugar halved, and Lobo was long. He lost $6 million and declared Chapter 11 protection, while vowing to pay his creditors, something he failed to do.

Later, he fled to Franco's Spain, where he ended his days miserably, writing letters to old friends and lovers, mourning his collection of Napoleonic memorabilia, before dying on a Sunday in January 1983. He was buried in the crypt of the Almudena Cathedral in Madrid, his body wrapped in a Cuban flag.

Now the Cuban sugar industry is equally moribund. According to Rathbone, two-thirds of the mills have closed, while the country's production stands at a mere fraction of what it once was. In fact, it seems that the only thing about Cuba thriving today is the nostalgia of its exiles - and now that of their children.

Rupert Wright is assistant business editor at The National.