5th Avenue, German & Austrian Distributor of Cuban Cigars, Pauses Deliveries Due to Banking Issues
On Friday, 5th Avenue Products Trading GmbH, the distributor of Cuban cigars in Austria and Germany, informed its clients that it was unable to take and deliver new orders due to what the company said were temporary banking restrictions.
A letter sent to retailers from the company cited “ongoing compliance and sanctions review affecting one of our shareholders” (translated). While it did not specify the precise issue, it is almost certainly related to Chen Zhi, a Chinese national, who owns 28.55 percent stake in Habanos S.A. and, indirectly, a smaller stake in 5th Avenue.
Last fall, the U.S. government unveiled an indictment against Chen, related to allegations that he oversaw a massive crypto scam business that was based out of Cambodia. Amongst the alleged crimes are allegations of forced labor, kidnapping and money laundering through the use of pig butchering. Earlier this year, Chen was transferred by the Cambodian government to China, where he faces the death penalty.
While none of the cigar businesses are facing allegations tied to the crypto scheme, Chen acquired billions of dollars of other assets, ranging from multi-million dollar real estate around the world, a large private jet, and a piece of the world’s largest handmade cigar business. In 2020, he was one of three East Asian investors who purchased the handmade cigar businesses that were once owned by Imperial Brands, plc. Included in that sale was the right to be the exclusive 50/50 business partner with the Cuban government in the sales and distribution of Cuban cigars around the world.
Since those allegations were unveiled, some of the Cuban cigar distributors have faced banking-related issues. In late July, the European Union introduced new restrictions on Chen.
Complicating matters is the control of Chen Zhi’s ownership shares in these businesses.
The Eastern Caribbean Supreme Court is overseeing the liquidation of various businesses in the British Virgin Islands owned by Chen. That court appointed Interpath, a restructuring firm with a presence in the British Virgin Islands, to oversee this process. Interpath has taken at least some control of these stakes, though Chen is contesting the liquidation.
Recent financial documents indicate that the Cuban government and Tabacalera/Allied Cigar Corporation S.L.U. own 56 percent of 5th Avenue, meaning, at least as of 2024, Chen owned just under 16 percent of 5th Avenue through his stake in Allied Cigar. Villiger is also a partner in 5th Avenue.
The letter was signed by Christoph A. Puszkar, the managing director for 5th Avenue. A translated version is as follows:
Dear Sir/Madam,
We would like to inform you today about a temporary restriction in our business operations.
In connection with an ongoing compliance and sanctions review affecting one of our shareholders, our banking connections are currently subject to temporary restrictions. This is currently causing limitations in the processing of our ongoing business processes.
For this reason, we are unfortunately unable to accept any new orders or ship any goods until further notice. These measures are necessary to ensure the legal and organizational framework for all parties involved.
They are expressly not related to the quality of our products, our services, or our existing business relationships.
Together with external experts and our partners, we are working with the highest priority on solutions to overcome the existing restrictions as quickly as possible and to resume regular business operations.
We deeply regret any inconvenience and potential delays this may cause and thank you for your understanding and your trust in our company. We will inform you promptly about any significant developments and, in particular, the resumption of regular business activities.
Your usual contacts will, of course, be happy to answer any questions you may have.
Sincerely,
Your 5th Avenue
Christoph A. Puszkar
Managing Director
Charlie Minato
I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. Previously, I started TheCigarFeed, one of the two predecessors blogs of halfwheel. I have written about the cigar industry since 2010, covering everything from product launches to regulation to M&A. Beyond writing, I handle a lot of the behind-the-scenes stuff from weighing cigars to coordinating the tech. Outside of work, I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.