Madrid/The bank accounts of Tabacalera, a private partner of the Cuban State in Habanos SA, remain frozen in Spain as a result of European sanctions against the Chinese-Cambodian businessman Chen Zhi. The company now needs authorization from the General Directorate of the Treasury to make payments, a situation that even delayed the payroll of its workers.
The information was revealed this Saturday by the specialized French publication L’Amateur de Cigare and internal company communications. According to these sources, each Tabacalera disbursement destined for suppliers, service providers or current expenses must previously receive approval from the Treasury, which depends on the Spanish Ministry of Economy.
The European Union sanctioned Chen Zhi on July 30 for his responsibility in a network of scam centers in Cambodia linked to human trafficking, illegal detention, torture and forced labor. According to Brussels, the conglomerate Prince Holding Group, controlled by the businessman, participated in the exploitation of people forced to commit digital fraud.
Half of Habanos SA belongs to ITI Cigars, a Spanish company controlled entirely by Tabacalera, while the other 50% remains in the hands of the Cuban state-owned Cubatabaco.
In early August, Tabacalera informed its employees that the freezing of accounts was the most serious consequence of the sanctions imposed by the European Union on Chen Zhi on July 30. The company then warned of possible delays in some operations and, shortly after, Human Resources confirmed a delay in the payment of salaries. In a subsequent communication he explained that he had obtained the necessary authorizations from the Treasury to unblock the payrolls.
The scope of the problem transcends the Spanish company itself. Half of Habanos SA belongs to ITI Cigars, a Spanish company controlled entirely by Tabacalera, while the other 50% remains in the hands of the Cuban state-owned Cubatabaco.
That structure comes from the sale, in 2020, of Imperial Brands’ premium cigar business. Allied Cigar Corporation paid 1,040 million euros for international operations outside the United States, a portfolio that included a 50% stake in Habanos SA and a good part of the global Cuban cigar marketing network.
Chen Zhi later entered the network and indirectly controlled 57.1% of Allied Cigar. Its shareholding weight turned international sanctions into a direct problem for Tabacalera and the companies linked to it.
Meanwhile, the Habanos commercial network is accumulating difficulties in several markets on the continent
The new crisis comes just a few months after the company seemed to have stabilized its situation. In May, Tabacalera emerged from the pre-bankruptcy process – a procedure prior to bankruptcy – in Spain after obtaining temporary licenses from the authorities of the United States and the United Kingdom that allowed it to continue operating despite the sanctions adopted in those countries against Chen Zhi.
The US authorization extends until 2028 and the British one until 2031. Both allowed the relationship with banks, suppliers and clients to be partially normalized, but do not cover the measures subsequently adopted by Brussels. Tabacalera is now trying to obtain an equivalent solution at the European level.
Meanwhile, the Habanos commercial network is accumulating difficulties in several markets on the continent. In Germany, Fifth Avenue Products Trading GmbH, exclusive distributor for that country, Austria and Poland, was placed under provisional insolvency administration on September 9 by a decision of the Waldshut-Tiengen court.
The strategy of strongly raising the prices of brands such as Cohiba and Trinidad to place them in the ultra-luxury segment had disastrous consequences.
Days earlier, Fifth Avenue had announced the temporary suspension of new orders and shipments due to banking restrictions related to sanctions against one of its shareholders. In Sweden, Elite Trading Scandinavia is in liquidation after previously losing its distribution license amid questions over its links to Chen Zhi.
Instead, Tabacalera continues to supply cigars to distributors, according to an investigation by L’Amateur de Cigare at various points of sale.
The businessman, currently detained in China, was for years practically unknown to the majority of cigar consumers despite his weight within the business structure. Recent research has reconstructed its influence on the business and strategy of sharply raise prices of brands such as Cohiba and Trinidad to place them in the ultra-luxury segment, with disastrous consequences for cigar sales in several markets.
