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. 

[Puros Y Vino]

You know what else is criminal? The state of those cigars in the first picture! 😁

[ha_banos]

I asked what's H&F likely to be doing now... Has global distribution stopped?

Based on the most recent developments (as of November 25, 2025), the situation has escalated significantly following the October 14, 2025 coordinated sanctions by the US and UK against Chen Zhi.

Because the UK government has now directly sanctioned Chen Zhi and his network (freezing assets and criminalizing financial dealings), the impact on Hunters & Frankau (H&F)—the exclusive UK distributor—is immediate and severe.

Here is what is happening right now to distribution:

1. Hunters & Frankau: The "Legal Freeze"

As a UK-registered company, Hunters & Frankau is now in a legally perilous position.

 * Payment Paralysis: H&F cannot legally transfer funds to Habanos S.A. if Habanos is deemed to be "owned or controlled" (50% stake) by a sanctioned individual (Chen Zhi). Doing so would be a criminal offense under UK sanctions law.

 * The "Escrow" Scenario: Currently, H&F is likely withholding payments to Habanos S.A. and placing them into a blocked escrow account in London. They will be seeking an emergency license from the UK's Office of Financial Sanctions Implementation (OFSI) to continue importing cigars without violating the law. Until this license is granted, new shipments are likely suspended.

 * Inventory Rationing: Expect H&F to lock down their remaining warehouse stock. They will stop releasing high-value boxes (Cohiba, Trinidad) to retailers to preserve inventory for a potentially long legal winter.

2. The "Chinese Pipeline" Has Broken

Earlier in 2025, reports indicated that the "Chinese entity" behind Habanos (Allied Cigar Corp) had been aggressively moving stock from Europe (specifically depleting Spain's strategic warehouses) to Asian markets.

 * The Reversal: With Chen Zhi now a fugitive and his assets (including crypto and bank accounts) frozen by the US and UK, this Asian distribution channel is likely in chaos. The "priority supply" that was going to China and Hong Kong is now stuck, as the logistics companies and insurers servicing those routes fear US secondary sanctions.

 * Orphaned Stock: There are likely containers of cigars currently "stuck" in transit ports (like Panama or Rotterdam) because no bank will process the shipping payments associated with Allied Cigar Corp.

3. Retail Impact: "The Empty Humidor"

Consumers in the UK and Europe will see the immediate effects:

 * UK (Hunters & Frankau Territory): Expect a "hard stop" on new releases. Retailers like JJ Fox or Davidoff of London will struggle to restock. Prices on the secondary market (auctions, private sales) will spike immediately as collectors realize the official supply tap has been turned off.

 * Spain (Tabacalera): Although Spain acts as a global hub, it is also bound by EU compliance. While the EU hasn't sanctioned Chen Zhi yet (as of Nov 2025), European banks often follow US/UK leads to avoid risk. Spanish distributors may voluntarily freeze dealings to protect their banking relationships.

4. What Habanos S.A. is Doing

Inside Havana, the atmosphere is likely frantic.

 * Seeking a "White Knight": The Cuban government is almost certainly looking to force Allied Cigar Corp to sell its 50% stake to a non-sanctioned entity immediately. They cannot afford to have their primary revenue generator blocked by the US and UK financial systems.

 * Production vs. Export: Factories like El Laguito (Cohiba) may continue rolling, but the finished boxes will pile up in Cuban warehouses because they cannot legally be sold or shipped to their biggest partners (UK, France, Spain) until the ownership structure is "cleaned."

Summary: For the next 3–6 months, the global supply of Cuban cigars will likely effectively halt or trickle to a minimum. Hunters & Frankau is currently paralyzed by UK law, and until Chen Zhi's 50% stake is sold or legally ring-fenced, they cannot conduct business as usual.

[MrBirdman]

11 hours ago, ha_banos said:

I asked what's H&F likely to be doing now... Has global distribution stopped?

Based on the most recent developments (as of November 25, 2025), the situation has escalated significantly following the October 14, 2025 coordinated sanctions by the US and UK against Chen Zhi.

Because the UK government has now directly sanctioned Chen Zhi and his network (freezing assets and criminalizing financial dealings), the impact on Hunters & Frankau (H&F)—the exclusive UK distributor—is immediate and severe.

Here is what is happening right now to distribution:

1. Hunters & Frankau: The "Legal Freeze"

As a UK-registered company, Hunters & Frankau is now in a legally perilous position.

 * Payment Paralysis: H&F cannot legally transfer funds to Habanos S.A. if Habanos is deemed to be "owned or controlled" (50% stake) by a sanctioned individual (Chen Zhi). Doing so would be a criminal offense under UK sanctions law.

 * The "Escrow" Scenario: Currently, H&F is likely withholding payments to Habanos S.A. and placing them into a blocked escrow account in London. They will be seeking an emergency license from the UK's Office of Financial Sanctions Implementation (OFSI) to continue importing cigars without violating the law. Until this license is granted, new shipments are likely suspended.

 * Inventory Rationing: Expect H&F to lock down their remaining warehouse stock. They will stop releasing high-value boxes (Cohiba, Trinidad) to retailers to preserve inventory for a potentially long legal winter.

2. The "Chinese Pipeline" Has Broken

Earlier in 2025, reports indicated that the "Chinese entity" behind Habanos (Allied Cigar Corp) had been aggressively moving stock from Europe (specifically depleting Spain's strategic warehouses) to Asian markets.

 * The Reversal: With Chen Zhi now a fugitive and his assets (including crypto and bank accounts) frozen by the US and UK, this Asian distribution channel is likely in chaos. The "priority supply" that was going to China and Hong Kong is now stuck, as the logistics companies and insurers servicing those routes fear US secondary sanctions.

 * Orphaned Stock: There are likely containers of cigars currently "stuck" in transit ports (like Panama or Rotterdam) because no bank will process the shipping payments associated with Allied Cigar Corp.

3. Retail Impact: "The Empty Humidor"

Consumers in the UK and Europe will see the immediate effects:

 * UK (Hunters & Frankau Territory): Expect a "hard stop" on new releases. Retailers like JJ Fox or Davidoff of London will struggle to restock. Prices on the secondary market (auctions, private sales) will spike immediately as collectors realize the official supply tap has been turned off.

 * Spain (Tabacalera): Although Spain acts as a global hub, it is also bound by EU compliance. While the EU hasn't sanctioned Chen Zhi yet (as of Nov 2025), European banks often follow US/UK leads to avoid risk. Spanish distributors may voluntarily freeze dealings to protect their banking relationships.

4. What Habanos S.A. is Doing

Inside Havana, the atmosphere is likely frantic.

 * Seeking a "White Knight": The Cuban government is almost certainly looking to force Allied Cigar Corp to sell its 50% stake to a non-sanctioned entity immediately. They cannot afford to have their primary revenue generator blocked by the US and UK financial systems.

 * Production vs. Export: Factories like El Laguito (Cohiba) may continue rolling, but the finished boxes will pile up in Cuban warehouses because they cannot legally be sold or shipped to their biggest partners (UK, France, Spain) until the ownership structure is "cleaned."

Summary: For the next 3–6 months, the global supply of Cuban cigars will likely effectively halt or trickle to a minimum. Hunters & Frankau is currently paralyzed by UK law, and until Chen Zhi's 50% stake is sold or legally ring-fenced, they cannot conduct business as usual.

Can you please clarify - is this an AI answer? If not, what’s the source?

[MrBirdman]

6 hours ago, El Presidente said:

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?  

Hard to say since the governing law is presumably Cuban and I don’t know any Cuban lawyers. Typically in the US or UK, unless there are statutory impediments, a breakup clause is written as an option for the non-breaching party. They aren’t obligated to exercise it. If they do, the customarily would buy out the other party at FMV or a predetermined formulation.  Even if he isn’t technically in breach of the terms you’d normally find here (bankruptcy, felony, etc), fraud is a good catch all. I’m sure Cuba can put together plenty of evidence that Zhi conspired to divert cigars through the back door, defrauding HSA. So they should be able to get grounds for termination easily enough.

Things get much more complicated though when dealing with a breaching party who can’t legally sell their share. That complication reaches rather ridiculous levels when the non-breaching party is also listed as a state-sponsor of terror with worthless credit. Unless HSA has the capital to buy Zhi out, they may just have to ride this out. If the asset is eventually seized and legally disposed of, they can try to find the money then (heavens knows how the seizing government will handle it if they don’t). 

Ultimately, it’s all a clusterf*** no matter which way you slice it. HSA is governed by Cuban law and they can basically do what they want. But if they just confiscate his share without paying him for it, they can’t resell it for very much, can they? Not to mention buying stolen goods could create its own issues, even if they were stolen from a thief.

Behind our veil of ignorance on the contractual relationship and 1000 other unknowns, my advice would be to either find the cash to buy him out or find another buyer themselves. Send the holding company a check wrapped around a BHK with the memo “It’s been real.” 

Legal issues aside, HSA has enough PR problems as it is. I for one am not giving Habanos a damn cent while there’s any chance it could land in this scumbag’s pocket. 

[helix]

Who is the real scumbag ? 

[ha_banos]

3 hours ago, MrBirdman said:

Can you please clarify - is this an AI answer? If not, what’s the source?

Yes I asked AI. I've no idea what the international law is like. And given the UK has sanctioned CZ and H&F are a UK company then what's going on? Surely not BAU due to the 50% shareholding link.

What a mess...

Unveiling Chen Zhi's Crime Network: A Tangled Web of Global Finance

Nov 24, 2025

https://www.markets.com/news/unveiling-chen-zhi-crime-network-global-financial-web-2641-en

[Fugu]

On 11/26/2025 at 2:54 AM, MrBirdman said:

Can you please clarify - is this an AI answer? If not, what’s the source?

Haha, was about to ask the same. Complete chatbot-hallucination.

Chen Z. is the sole proprietor of an entity owning part of an entity that owns part of an entity (partially owned by CZ again) that owns 50 percent of HSA (or something along those lines of stacked shells). Not that simple to untangle. On paper, I don’t see any immediate legal effect on neither production nor international distribution. It’s not CZ who (directly) owns the 50% share. If those parters could furnish prima facie evidence that they were duped by him, too? So, is there even a JV technical breach? Remains to be seen.

In any case, and factually, this certainly is a complete mess. The damage is being done. Extremely bad and, at the very least, extremely bad publicity. Really couldn’t be much worse.

Now with heir last JV deal having gone totally sideways this time (several reasons) the Cubans should quickly see that 1. they get rid of their current Habanos partner, and that 2. their production side (Tabacuba) gets its house set in order.

On 11/26/2025 at 5:59 AM, ha_banos said:

And given the UK has sanctioned CZ and H&F are a UK company then what's going on?

Sanctioning CZ doesn’t directly mean a legal consequence for HSA imports.

But happy to be proven wrong on this one!

[El Presidente]

1 hour ago, Fugu said:

Extremely bad and, at the very least, extremely bad publicity. Really couldn’t be much worse.

I mean...........it not like they were found out to be rolling export cigars in prisons 

It hasn't been their best six months PR wise 

[Fugu]

Indeed, what I was implying with

1 hour ago, Fugu said:

that 2. their production side (Tabacuba) gets its house set in order.

… and - who knows - perhaps not totally unrelated… 😉

[MrBirdman]

34 minutes ago, Fugu said:

… and - who knows - perhaps not totally unrelated… 😉

As I’ve said elsewhere in the forum, I don’t think it’s merely a coincidence that prison labor showed up shortly after Habanos acquired a partner whose empire was built - literally - on slave labor. 

[NYGuido]

28 minutes ago, MrBirdman said:

As I’ve said elsewhere in the forum, I don’t think it’s merely a coincidence that prison labor showed up shortly after Habanos acquired a partner whose empire was built - literally - on slave labor. 

EXACTLY. He rode in on his high horse, saw an opportunity and a willing accomplice, and exported his business model.

[MrBirdman]

10 hours ago, Fugu said:

Indeed, what I was implying with

… and - who knows - perhaps not totally unrelated… 😉

They have two significant ethical hurdles which a lot of potential buyers understandably can’t get over. Whatever their prices, I’d resume purchasing from Habanos if they clearly and publicly dumped both prison labor and Zhi. I know, I know, crap in one, wish in the other and all that…

Even I gave up on rereading my earlier long post, and I think a lot of it is probably irrelevant anyway. Cuba stole plenty of cigar related assets in the past. They already know he’s stolen from them. If they put out a release to that effect - about a guy who is accused of stealing tens of billions of dollars from people across the world - it would be the most publicly credible statement by the Cuban government since the revolution.

The problem isn't legal; it’s that I doubt Habanos really cares much about this publicity, and they might be looking at the upside. CZ does not have any vehicle for disposing of his stake, and is an internationally wanted man sanctioned by a number of powerful countries. If the story posted previously on the forum about him earning $250M USD in dividends since 2021 had even a shred of truth to it, why would HSA offshore any earnings until this is settled? And if he never took a brass cent out of Cuba, at least he’ll probably be too busy to worry about demanding business changes. With how much his position has weakened, they could even put a firm stop to his stealing premiums before they enter the distribution chain. 

Tldr: Cuba can dump CZ if they want. I just think they prefer not to.

[MrFolgers]

Modern day Bond villian type stuff. What a scumbag 

[1LegLance]

All I know is that if the 50% share of Habanos got floated the UAE (or someone in that area) would snap it up fast. And if not, then we can put together a FOH group buy of epic size to buy Habanos ourselves

 

[ThePolskiOgorki]

When the dust settles on this debacle I imagine there will be yet another significant price hike. I sure wish back in 2013-2015 when the Canadian Peso was on par or close to the USD that I bought more cigars. Maybe sprinkle a dozen bitcoin in there too. 🙁

[Marco_011t556]

It’s a deadlock. No buyer will pay the money to a “suspected” crimina, so how are they going to buy that share? If the buyer didn’t receive the money, they are not willing to dispose their share.

Maybe Cuba (or a neutral country) creates a custody fund, the equity fund transferred (say from UAE), and Chen is willing to keep the consideration in that custody fund, and also willing to transfer the share, then it would be fine, lol. Or else, Cuba creates another Habanos simultaneously, independent of the Prince group, to sell cigars before the group is fully convicted.

 

[Fugu]

23 hours ago, MrBirdman said:

As I’ve said elsewhere in the forum, I don’t think it’s merely a coincidence that prison labor showed up shortly after Habanos acquired a partner whose empire was built - literally - on slave labor. 

Yeah, but do we know how far back this practice really goes? Conceivable, but I haven’t so far seen any evidence for such a temporal coincidence *). Yet it’s a thought that suggests itself.

That being said, and I’ve mentioned it before, basically there’s nothing wrong or to condemn about prisoner-labour. What’s to condemn is forced labour or exploitative labour. What’s actually happening under Tabacuba’s directive is unclear as of yet (to me). The NGO-report was posing more questions than providing answers in that regard. Anyone’s heard about follow-ups there?

*) Edit: Thought added - and even if so, it would simply fall in line with the pandemic and the following drain of work-force. So, the sheer state of the situation might’ve brought the Cubans to figure “that one” out all by themselves…

[Montezüma]

I hope The Kirb gets to interview Chen in prison. "What do you think makes Cuban cigars so very special?"

Would be epic to see the episode shot at Guantanamo.

[Dlowil]

“His criminal network used cryptocurrencies and human trafficking to launder money.”

Using an illegal avenue to launder already illegal money is an interesting strategy to say the least. May as well wash his dirty clothes in a muddy puddle.

[ha_banos]

Its not clear if these centres are linked to Chen Zhi etc, but here's some recent crackdowns. Perhaps due to the sanctions and publicity?

https://www.theguardian.com/technology/2025/dec/02/scam-state-multi-billion-dollar-industry-south-east-asia

 

The Prince Group said it “categorically rejects” claims the company or its chairman have engaged in any unlawful activity. In Myanmar, scam centres have become a key financial flow for armed groups. In the Philippines, ex-mayor Alice Guo, who ran a massive scam centre while in office, has just been sentenced to life in prison.