Sanctioned Chen Zhi’s Hong Kong firms rocked by resignations and frozen assets

Recently sanctioned Chinese-born Cambodian businessman Chen Zhi has been linked to a network of entities in Hong Kong, with the move triggering regulatory measures and prompting auditors and directors to quit those firms. Company documents reviewed by the Post reveal an interconnected group of firms sharing directors and addresses tied to Chen, luxury real estate and previously appointed international business figures, raising questions about the depth of his operations in Hong Kong and the potential exposure of associated entities. Hong Kong police have frozen HK$2.75 billion (US$353 million) in assets, including cash, stocks and funds, believed to be the proceeds of crime from his cross-jurisdictional telecoms fraud and money-laundering network. The US Department of the Treasury designated Chen’s Prince Group network as a “transnational criminal organisation” in mid-October, alleging that the group runs a criminal enterprise through online investment scams such as “pig butchering”, human trafficking, torture, money laundering and illegal online gambling. Chen remained the controlling shareholder of two sanctioned Hong Kong‑listed firms, Geotech Holdings and Khoon Group, as of Friday. Geotech Holdings stated in mid‑October that it expected no “material adverse impact” on operations, noting that Chen had no role in the group. Grant Thornton, however, resigned as Geotech’s auditor with effect from November 21 last year, citing US sanctions on Chen, a former executive director and the controlling shareholder, according to another company filing. With effect from October 27 last year, Lok Kar‑kin resigned as an executive director of Geotech. Khoon Group said that none of its directors were involved and that its business was principally in Singapore. With effect from November 4 last year, Khoon Group also recorded a series of resignations and appointments, including its chairman and chief executive. RSM Hong Kong said it would also not seek reappointment as Khoon Group’s auditor, citing sanctions imposed against Chen, a controlling shareholder of the group. But legal experts warned that such denials and moves might not shield these firms from the fallout. Basil Hwang, managing partner of law firm Hauzen LLP, said that “coordinated” action by the United States, United Kingdom, Hong Kong and Singapore against Prince Group showed that “global cooperation on anti-money-laundering enforcement is active and alive”. “Companies anywhere in the world implicated in assisting or facilitating the Prince Group’s alleged illegal activities can therefore expect that they will come under scrutiny and should prepare to face challenges to their ability to bank, obtain insurance or otherwise participate in the global financial system,” Hwang said. Xiang Fangliang, executive director and partner at Shanghai BeautyValley Law Firm, warned that even if a company claimed no direct role in any violations, the way US and UK sanctions work would, in practice, cut off its access to banking, financing and insurance in Hong Kong. These sanctions bite through US dollar clearing touchpoints, the threat of secondary sanctions and the increasingly proactive risk controls and restrictive clauses adopted by financial institutions, he said. “Although Hong Kong regulators do not recognise the legal force of [foreign] sanctions, financial institutions often voluntarily take restrictive measures based on risk management, compliance requirements and considerations,” Xiang said. Geotech’s filings reveal operational links to other sanctioned entities. A 2019 filing showed Geotech’s sanctioned subsidiary, Nova Management Services, provided property‑leasing and consultancy services to sanctioned Cheer Capital, the owner of the Tsim Sha Tsui commercial building at 68 Kimberley Road. Geotech’s interim results also listed bank deposits held with Prince Bank Plc, another sanctioned entity controlled by Chen. Beyond the listed firms, registry documents show a pattern of shared addresses, directors and offshore shareholders. At least four sanctioned Hong Kong companies owned by the sanctioned British Virgin Islands firm Praise Marble Limited operate from Tower II, Metroplaza in Kwai Chung. Nova Management Services acted as company secretary for at least five sanctioned local entities. Hwang noted that while such associations were “not automatically unlawful”, they triggered enhanced due diligence and reporting obligations under Hong Kong’s anti-money-laundering laws. “Given the pervasiveness of nominee arrangements in money-laundering operations, these companies that share addresses, directors or service providers with Chen … could be suspected of being associated with him,” he said. Hwang added that such links frequently resulted in “reputational damage and practical restrictions on banking relationships”. Xiang described shared addresses and directors as a “dangerous red flag” that placed these firms under a regulatory microscope, creating a presumption that they operated under the same control network. “Unless these companies can provide strong, verifiable evidence to prove their complete independence … their normal operating capabilities will suffer a devastating blow,” he warned, adding that they risked being treated with the same severity as the sanctioned entities themselves. One company connected to this network, Asia Uni Corporation Limited, appointed high‑profile international directors just months before the sanctions. An organisation chart from Elite Trading Scandinavia submitted to municipal authorities in Gothenburg, Sweden, showed that Asia Uni was indirectly controlled by Chen via three layers of firms based in either the British Virgin Islands or the Cayman Islands. Asia Uni’s links to Chen’s network also involved its former director, Sheng Haoran, who is also the sole director of Cheer Capital, which owns the building at 68 Kimberley Road. Sheng resigned as director of Asia Uni on October 17, according to the company’s filing. Asia Uni appointed Fouad Fahmi Darwish and Ravinder Singh Thakran as directors in August. Darwish is the chief executive and managing director of Palms Sports PJSC, a sports management firm listed in Abu Dhabi. Thakran was the founder and managing partner of Singapore‑based Turmeric Capital, former LVMH Asia group chairman and founder of L Capital Asia. Chen’s network has also been linked to ultra‑luxury Hong Kong property. Documents from Hong Kong’s Land Registry show Giant Victory Holdings, a sanctioned British Virgin Islands firm, bought House 1 at Mount Nicholson on The Peak in early 2017 for HK$1.08 billion, excluding 30 per cent, or HK$324 million, in extra stamp duties for using a corporate buyer. Sanctioned individuals include Zhou Yun, identified by the US Department of the Treasury as Chen’s financial assistant. She was linked to at least 13 sanctioned firms, including a group of companies beginning with “Mighty Divine” that operated from 68 Kimberley Road. Zhou’s “Mighty Divine” group faced regulatory action, with Hong Kong’s Securities and Futures Commission suspending the licences of Mighty Divine Securities and Mighty Divine Investment Management. Mighty Divine Securities has already suspended trading since October 17. The Insurance Authority also imposed restrictions on Mighty Divine Insurance Brokers with effect from October 28. Hwang of Hauzen LLP said: “I would expect that there should be ongoing regulatory investigations against the entities in this group.” He expected regulators to coordinate in seizing further assets suspected of being criminal proceeds. “Liquidation of these entities by way of winding up is possible, initiated either by creditors … or else following regulatory enforcement efforts and proceedings,” he said. The company secretary for at least four sanctioned firms, including Zhou Yun’s Mighty Divine (HK) and Sun & Sun, resigned the day after US sanctions were announced. Xiang of Shanghai BeautyValley Law Firm warned that institutions providing audit, legal or company secretarial services to the intermediaries involved might be investigated for dereliction of duty and could face professional practice penalties.

Sanctioned Chen Zhi’s Hong Kong firms rocked by resignations and frozen assets

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Police freeze HK$2.75 billion in assets tied to tycoon amid probes into alleged telecoms fraud, money laundering and ‘pig butchering’ scams

Police freeze HK$2.75 billion in assets tied to tycoon amid probes into alleged telecoms fraud, money laundering and ‘pig butchering’ scams