Kiwi ties to alleged $100m fraud
He once rode high, signing deals with Premier League clubs. Now he's locked up.
A“Taiwanese fugitive” wanted for alleged fraud in China used his New Zealand ties to raise about $100 million from Chinese investors, promising them 36 per cent annual returns from a foreign exchange business.
Chinese authorities have been hunting Blackwell Global founder Michael Chai since 2020 after he allegedly pocketed CN¥112m ($26m) of more than CN¥410m raised from
Chinese investors as the representative of “New Zealand Blackwell Global Investment”, documents sighted by BusinessDesk showed.
Taiwanese national Chai, or Kaw Sing Chai, was arrested in the Philippines in January by authorities acting on an Interpol Red Notice that claimed Chai was wanted in China for “the crime of fraudulent fundraising”.
The news of Chai’s arrest finally hit New Zealand in April after NZX-listed Blackwell Global Holdings Limited informed the market, with independent directors Sean Joyce and Craig Alexander voicing their extreme disappointment “to learn of this development at such late notice”.
Blackwell said Chai had been incarcerated in the Philippines “on matters unrelated to Blackwell Global Holdings Limited” and said it was seeking legal advice. Chai then resigned as a director of the firm.
The 48-year-old also sent notice to the Hong Kong exchange resigning as director of a listed company there, claiming he needed to dedicate more time to his other businesses.
Chai is, in fact, still locked up in the notoriously overcrowded Bureau of Immigration Bicutan Detention Centre in Manila, BusinessDesk understands.
The New Zealand-listed company's chair, Joyce, said it had no knowledge of any alleged fundraising activities in China undertaken by Chai, and the board had never approved any fundraising.
“We have no knowledge of any fundraising activities undertaken by Mr Chai in China or elsewhere.”
Chai’s Cayman Island’s incorporated Blackwell Global Group, which purports to operate a global foreign exchange and crypto trading platform, is a major shareholder of NZXlisted Blackwell Global Holdings Limited, and Chai personally owns 8.29 per cent of the company.
The alleged fraud
Chai was named in official documents as the “Shanghai representative” of New Zealand Blackwell Global Investment.
Authorities in Shanghai allege between January 2015 and August 2018, he and another man, Dong Zhaoqi, raised money from investors for a foreign exchange platform to be operated by the New Zealand-named firm.
Documents sighted by BusinessDesk claimed Chai “colluded” with Zhaoqi as the representative of a company called Shanghai Bobaopei Investment Management, using online platforms and offline stores along with the promise of a 36 per cent interest rate to bait investors into handing over millions,
which was sent to an account designated by Chai.
Chai then allegedly transferred money and, instead of operating a foreign exchange business, took possession of the money before fleeing China in August 2018.
Chinese authorities allege the two men claimed without the approval of financial regulators that Bobaopei had asked Blackwell to operate the trading platform and made oral public statements to that effect to investors.
Zhaoqi has also been arrested.
The NZ Blackwell
At the same time as authorities allege Chai was misleading Chinese investors about a potential foreign exchange business, NZX-listed Blackwell was updating the market about its plans to start a derivative trading platform.
Chai was first linked to the New Zealand company in February 2016 when what was then finance company NZF Group announced it had a new “wholesale investor”, Chai.
Chai invested $125,000 into the firm, with NZF issuing 16,000,000 new shares in return.
By 2017, NZF was now renamed Blackwell and said it was laying the groundwork to file an application for a trading licence from New Zealand’s regulator, the Financial Markets Authority (FMA).
It appointed a new general manager, Howard Wilcox, to oversee the licence application in the first part of 2018.
But in December 2018, four months after Chai allegedly fled China with millions of dollars fleeced from investors, Blackwell told the NZX it was abandoning its pursuit of a licence and derivatives trading operation through its wholly owned subsidiary, Blackwell Global Investments (NZ) Limited.
The Blackwell board said the regulatory landscape for derivative trading operations in New Zealand had become increasingly complex and expensive to comply with, and the investment needed had increased significantly beyond its forecasts.
“The timeframe for the derivatives operation to become cashflow positive were also anticipated to take longer than originally forecast.”
Caymans and Cambodia
Blackwell also has companies in Cambodia, the Bahamas, the United Kingdom, Hong Kong and Cyprus and a head office in Singapore. Blackwell firms had brokerage licences in the UK and Cambodia.
The UK’s regulator, the Financial Conduct Authority, would not comment on whether it investigated Blackwell in the UK.
In 2017, Blackwell Global signed a partnership agreement with English Premier League football club Everton as its official forex and brokerage partner.
It launched Blackwell Global Cambodia in the same year.
Sources in Southeast Asia told BusinessDesk the Everton deal, along with Blackwell’s New Zealand links and licence in the UK, provided respectability for Chai and the Blackwell brand.
The football deal also meant potential investors would be exposed to the Blackwell brand when Everton games were screened.
Cambodia and the Philippines are considered hot spots for organised crime, including investment scams, romance scams and “pig butchering scams”, where investors are enticed into pouring more and more money into the scam.
An Interpol global financial fraud assessment released in March said it was facing an epidemic in the growth of financial fraud.
NZF Group to Blackwell to shell
Before and after Blackwell had intentions to become a trading platform, the NZX-listed company was operating a small finance company.
In early 2021, the company announced it was restructuring its operations and winding down its finance operations after being unable to raise debt or equity.
Since then, the company has effectively been a shell searching for a business to buy or a transaction to complete for a reverse takeover.
It had no staff and reported about $9,212 income in its most recent financial year, with directors Joyce and Anderson being paid $138,000 in directors fees against a $264,717 loss. It had $863,900 cash on hand.
Last month, Blackwell told the NZX its major shareholder, Blackwell Global Group Limited, would forgive $200,000 of bonds owed to it.
The New Zealand company is distancing itself from Chai and its majority shareholder, saying the bond forgiveness would dilute both interests in the NZX firm.
It also planned to change its name and was set to be rebranded as RTO on May 1.
What remains is Blackwell’s oftrepeated stance that it is focused on executing a reverse takeover.
The Philippines and Apec
It is not clear when, if ever, Chai visited New Zealand or how often he communicated with the NZ company. The firm has said in its annual reports that it held quarterly board meetings. It is understood Chai's alternate on the board, Steve Chua, mostly attended.
Joyce didn’t answer questions about when it had last spoken to Chai or how the company had come to be involved with him in 2016.
The NZX said it had no comment on Blackwell or its belated update to the exchange on Chai's arrest.
New Zealand Shareholders' Association chief executive Oliver Mander said boards should have processes in place to pick up when directors were arrested.
Philippines immigration said in January that Chai was picked up as he tried to board a Cathay Pacific flight to Hong Kong at Ninoy Aquino International Airport. Authorities said Chai entered on an Asia Pacific Economic-Cooperation (Apec) business travel card, which allowed “bona fide” businesspeople streamlined travel into Apec countries.
The travel card was issued by Taiwan, BusinessDesk understands. Taiwanese authorities did not respond to requests for comment.