Chinese Fugitive's Secret Hold on Cuban Tobacco Business

[El Presidente]

 

 

The criminal network that allowed a Chinese fugitive to control part of the Cuban tobacco business in Asia

A Chinese fugitive, Chen Zhi, infiltrated the Cuban tobacco market, controlling 50% of Habanos S.A. through shell companies. His criminal network used cryptocurrencies and human trafficking to launder money.

• By CiberCuba Editorial Team

 

An individual accused of massive fraud, human trafficking, and laundering billions of dollars managed to covertly control half of the Cuban tobacco empire on a global scale. Astonishingly, this remained undetected for years.

New insights from the specialized outlet PANews have brought to light the intricate web that allowed Chinese businessman Chen Zhi, wanted by both the United States and the United Kingdom, to penetrate the Cuban tobacco industry, ultimately becoming an indirect owner of 50% of Habanos S.A., the company responsible for the worldwide distribution of Cuba's most iconic cigars.

Chen Zhi achieved this through a network of shell companies, cryptocurrencies, and offshore structures described today as "spider-web capitalism 2.0." This transnational model intertwines blockchain technology, tax havens, and human exploitation networks.

While Chen Zhi cultivated an image as a young tycoon in Southeast Asia, his conglomerate Prince Group operated cyber scam networks and gated complexes where thousands of individuals were trafficked, confined, and forced into digital fraud activities.

U.S. authorities estimate that the group amassed billions of dollars through illegal casinos, cryptocurrency operations, and clandestine payment platforms such as HuionePay, which has been identified by FinCEN as one of the largest global money laundering hubs.

This influx of illicit funds eventually intertwined with one of Cuba's commercial jewels: Habanos S.A.

The Rise of Prices in the Asian Cigar Market

PANews' investigation reveals that in 2020, Chen Zhi secured a crucial stake in Allied Cigar Corporation, the firm that controls 50% of Habanos. This was accomplished through companies registered in Hong Kong, the Cayman Islands, and the British Virgin Islands, shifting shares from one name to another to erase visible ownership traces.

However, documents obtained by Swedish authorities and disclosed by specialized outlets pieced together the puzzle: behind Asia Uni Corporation, Instant Alliance, and other obscure entities, Chen Zhi was the constant presence.

The first public indicator emerged in 2021 when Cuban cigar prices in Asia skyrocketed. Previously priced between 4,000 and 5,000 Hong Kong dollars, boxes reached as high as 18,000. Special editions were auctioned for half a million.

Industry sources informed The Standard that the strategy employed in Asia was straightforward: exclusivity, scarcity, and control over sales flow. Under Chen's influence over part of the distribution chain, premium cigars became almost speculative items.

The Human Cost Behind the Luxury

Behind the luxury of a Cohiba Limited Edition smoked in a private lounge in Shanghai lie vastly different stories involving trafficked people, deceived migrants, and workers coerced into labor within fenced compounds in Cambodia, Myanmar, or Laos, according to reports from the U.S. and the U.K.

PANews emphasizes that the wealth used to acquire assets in Hong Kong, fund payment platforms, purchase artwork, or invest in Cuban tobacco originates from this exploitative system, leaving victims across Asia.

The criminal network allowed illicit funds from illegal casinos and Bitcoin mining farms to be consolidated into entirely legitimate businesses like the Cuban cigar industry.

Cuba's Silence and the Uncomfortable Question

Neither Habanos S.A. nor Cubatabaco has publicly commented on Chen Zhi since U.S. authorities sanctioned and formally accused him. The Cuban government has also not addressed how a fugitive entrepreneur ended up indirectly controlling half of the country's most significant tobacco business.

The case becomes even more unsettling considering that China is now the leading market for Cuban cigars, surpassing Europe. For years, part of this market was influenced by a man wanted for orchestrating one of Southeast Asia's most extensive criminal networks.

The United States and the United Kingdom have frozen assets, closed accounts, sanctioned dozens of individuals, and dismantled parts of Chen Zhi's financial network. Yet, the head of the Prince Group remains at large, with his holding continuing operations in Cambodia without apparent repercussions against its leadership.

What is already evident is that the Cuban cigar, a symbol of luxury, tradition, and national pride, has become entangled in a global criminal web mixing illicit wealth, human exploitation, and shadowy operations affecting the tobacco business in Asia.

[JohnS]

After the way that Cuban has conducted business over the years (i.e. not honouring debts and investments on a consistent basis, ultimately leaving their investors short-changed), I'm sadly not surprised that it has come to this. Ironically, it's possible that some of these countries owed money (by Cuba) will now be getting it indirectly back thanks to Chen Zhi's assets been frozen.

[El Presidente]

6 minutes ago, JohnS said:

 Ironically, it's possible that some of these countries owed money (by Cuba) will now be getting it indirectly back thanks to Chen Zhi's assets been frozen.

just to clarify. 

Habanos sa owes no real money. It is a pure marketing JV vehicle. The 50% Cuban shareholder of Habanos sa is Cubatabaco 

Funds seized from Zhi and associated entities, assuming legal avenues are successful, will not go to satisfy Cuban Govt debts. 

An interesting play here is what happens in any JV when a partner/entity is convicted of fraud or enters bankruptcy. There is normally a break clause that ends the JV. Think about that for a moment .....hypothetically the Cuban side could sell the 50% again....and maybe without compensation (subject to what was in the JV agreement). Cuban Govt is thinking 'winner winner chicken dinner!" 

[JohnS]

Thank you for clarifying that Rob. It's easy to think that all business and assets are government-owned in Cuba, but this explanation clears up that confusion.

[El Presidente]

17 minutes ago, JohnS said:

Thank you for clarifying that Rob. It's easy to think that all business and assets are government-owned in Cuba, but this explanation clears up that confusion.

The issue is who controlls/controlled the Asian 50% side of HSA. To what extent was Zhi's ownership/involvement? Is (or when is) the JV in technical breach. What are the break mechanisms. What are the limitations on the JV partner who is found to be in breach of the JV?  

Of course, it should be said, no one has been convicted.