Will Northern Europe soon be deprived of Cuban cigars?

Elite Trading Scandinavia AB, a subsidiary of Habanos SA in Sweden, has until December 10 to prove that it has no connection with Cambodian businessman Chen Zhi, who is being prosecuted by US authorities for cyber fraud.

Wherever he is, Chen Zhi, the Cambodian businessman of Chinese origin, is watching the empire he built in about ten years crumble like a house of cards. In addition to his flight, the charges brought by US authorities since October 15 for wire fraud, money laundering, forced labor, and sexual blackmail have triggered a wave of investigations and seizures in several Asian countries (Singapore, Hong Kong, South Korea, and recently Thailand). And the shockwave could now spread to Northern Europe and directly disrupt the distribution of Cuban cigars there.

According to the Swedish blog Cigarrklubben, which had already published the organizational chart linking Chen Zhi to Elite Trading Scandinavia AB (the new name since the summer of Habanos Nordic), the distributor of Cuban cigars in Northern Europe, struggling to provide the authorities with the necessary documents to continue its business, has requested and obtained a grace period which runs until this Wednesday, December 10.

Meanwhile, according to the Swedish blog, the Gothenburg authorities confirmed they were aware of the legal proceedings against Chen Zhi, stating that these accusations “affect the assessment of his personal and financial fitness.” By December 10, the distributor must provide documents proving that its shareholder has no criminal record or tax debts. Otherwise, Elite Trading Scandinavia AB could lose its authorization to distribute Cuban cigars in Sweden and Northern Europe in the following weeks.

Sleight of hand

Given the string of revelations since Chen Zhi’s indictment, it’s difficult to see how Elite Trading Scandinavia AB could possibly provide such documents. Unless, of course, they were to find a workaround by using another distributor with no financial ties to Habanos S.A. – which would be unprecedented.

Until now, while Elite Trading Scandinavia AB still handles cigar imports, distribution is already partly managed by another company: The Premium Company Nordic AB, created in 2006 by Stefan Praetorius, the former external CEO of Elite Trading. A source at Elite Trading indicates that this arrangement was dictated by banking difficulties that preceded the Chen Zhi affair, as transactions with Cuba are always subject to very close scrutiny by European banks.

When contacted by L’Amateur, Swedish authorities declined to comment on the situation or the progress of their investigation. Neither did Tabacalera (which owns 50% of Habanos SA and in which Chen Zhi is a shareholder). The FBI and the US Treasury Department also did not respond to our requests and, for the time being, appear to be uninterested in the Cuban dimension of the Cambodian businessman’s shady dealings.

Régis Besko