At a cleverly choreographed event in Hong Kong on April 26, the island nation of Samoa was given a vision of its future: the epicenter of cryptocurrency and stock trading in the South Pacific.
Chinese officials and businessmen delivered speeches (their resumes were projected on a giant screen at the luxurious St. Regis Hotel) as they celebrated the official launch of the Samoa Digital Asset Exchange, Samoa Stock Exchange, and Oceania Blockchain Special Economic Zone.
A sprinkling of Westerners with a background in the financial industry came forward as advisers. A CTO, presidents, COO, and bright, generically abstract logos for each of the companies were also revealed.
Mulipola Anarosa Ale Molioo, Samoa's finance minister, spoke and posed for photos. The Samoan coat of arms, which represents the authority of the state and is intended for official use only, was pasted and projected throughout the venue.
But just over a month later, after photos of the Chinese event circulated online and caused disbelief in Samoa, Prime Minister Fiame Naomi Mata'afa was on damage control footing.
The Samoan government had not given any endorsement or approval to the companies, which were only proposals, a statement from his office said.
The cryptocurrency episode was not the only controversy over poor governance and lack of transparency that Fiame was wrestling with.
Days later, he botched the first direct flights between China and Samoa after criticism from the cabinet minister. Laauli Leuatea Schmidtparticipation of Samoa Royal Tours.
Together with a Hong Kong travel company, it handled tours in Samoa for the influx of Chinese visitors that began in late May. Samoa Royal Tours registered as a company in Samoa in April and its shareholder was one of Laauli's daughters, Rosary Leilua.
BenarNews found that Laauli, one of Samoa's most powerful politicians, is also linked to the effort to turn Samoa into a South Pacific crypto-finance hub and that Chinese tourism and cryptocurrency businesses overlap in other ways. Chinese businessmen involved in the effort to bring more Chinese tourists to Samoa also hold key positions in the stock market and cryptocurrency companies.
BenarNews and affiliated news organization Radio Free Asia reviewed the Samoan Company Register and other corporate records, information in Chinese-language media reports and financial databases, and photos of the launch in Hong Kong.
โI think I have no obligation to respond to your request,โ Laauli said in response to a list of his connections to the exchanges compiled by BenarNews. "You can report whatever you want about the issues you requested."
Samoa's economy is small and its financial system is underdeveloped.
Cryptocurrency and stock market companies could pose financial and reputational risks for the country and could also run counter to the government's goal of making the financial system more accessible. According to the Asian Development Bank, less than half of people have bank accounts and onerous loan collateral requirements inhibit business lending.
Home to some 200,000 people, Samoa also has a Chinese debt burden that ranks second only to Tonga among Pacific island nations when measured as a proportion of total national debt.
Fiame canceled a Chinese port project in 2021 to avoid further borrowing from the Chinese government. Through aid, infrastructure, and loans, Beijing has become a major force in the Pacific region over the past decades.
Call for the minister's resignation
Opposition politicians have called for the resignation of Laauli, who is a co-founder of Samoa's current ruling Fiame party and a senior chief. A chief rank is a requirement to run for public office in Samoa.
Cryptocurrencies are virtual currencies like Bitcoin that use encryption and dispersal over a computer network to supposedly bypass control by a central authority and prevent counterfeiting.
Proponents say they will usurp fiat currency created by central banks, but they have also been associated with crime, extreme asset price volatility, and exorbitant energy use for electronic mining of new cryptocurrencies.
Numerous cryptocurrency exchanges collapsed in a chain reaction last year sparked by hacking and liquidity crises. Blockchain is the distributed database for recording cryptocurrency transactions.
The companies holding Hong Kong as Samoa's financial future are registered in Samoa and appear to have been largely dormant until a series of name, director and shareholder changes between 2019 and 2022.
A council of village chiefs that includes Sasina, Laauli village, and of which he is a leading member, became a shareholder in the three companies in the last quarter of 2022, Samoan Companies Registry documents show. . Meanwhile, the Laauli constituency office is the registered address of the companies.
The council, Alii ma Faipule Fagaee Sasina Letui in Samoan, became a shareholder in the Blockchain Oceania Special Economic Zone in November 2022 when shares held by Laauli's daughter Isadora Schmidt were transferred to it, a document from Isadora Schmidt shows. stake.
Isadora Schmidt is the contact person on business registration documents for the Samoa Digital Asset Exchange and Oceania Blockchain Special Economic Zone, as well as the director of the blockchain economic zone. She did not respond to a request for comment.
Alii ma Faipule Fagaee Sasina Letui became a shareholder of the Samoa Stock Exchange and Samoa Digital Assets Exchange in December last year when shares held by Lussil Tuala, the wife of the Authority's chief executive, were transferred to her. Gambling Control of Samoa.
Several Chinese domiciled in Hong Kong, Shenzhen, Fujian and Auckland, New Zealand, are among the shareholders and directors. It is not clear if they are genuine owners or nominee shareholders.
Another shareholder of the three companies is China Yun Dat Investments. It is registered in the British Virgin Islands, which allows companies to keep proprietary information secret.
CPP presence at blockchain launch
The Hong Kong launch of the Oceania Blockchain Special Economic Zone and its sister companies had the appearance of official endorsement by the Chinese government.
The ceremony was attended by two members of the Hong Kong Legislative Council and two members of the Chinese People's Political Consultative Conference, which plays a coordinating role in the ruling Chinese Communist Party's "United Front" work, which includes covert campaigns of foreign influence. .
Chen Gen, who was announced at the event as joint chairman of the Oceania Blockchain Special Economic Zone, is a major figure in Chinese state-adjacent organizations such as the overseas Chinese chambers of commerce and the Chinese Academy of Administrative Sciences.
Chen, according to a Chinese media report, accompanied Laauli on a 2018 tour of Henan province.
More recently, Chen, in his capacity as CEO of the Hainan Overseas China Chamber of Commerce and other functions, helped facilitate the now canceled direct flights from Hainan to Samoa and organized a business delegation for the first flight, Chinese media reports show.
In addition to Laauli, other high-profile Samoans connected to the exchanges include Siaki Tuala, chief executive of the Samoa Gambling Control Authority, and Lussil Tuala.
They said their law firm had provided administration services for the companies. They had temporarily acted as nominee directors and shareholders, they said, while company founders finalized partners for their venture.
Lussil Tuala, in response to questions, said: โMr. Tuala and I had agreed to be listed only as nominee directors and initial subscribing shareholders at the time of incorporation of the companies when requested by these clients given their longstanding relationship with Mr. Tuala as their former attorney.โ
They said they had no financial interest in the blockchain economic zone or exchange companies. They did not respond to questions about the Samoan-registered companies they jointly own with China Yun Dat Investments and one of the directors of the Samoa Stock Exchange.
The cryptocurrency hub, for now, seems to have been relegated to nothing more than colorful logos and frustrated ambitions.
The Samoan government said it would work with international financial organizations to carry out a feasibility study to identify all risks, including to the country's reputation.
"The intention of this study," he said, "is to look at whether or not such an initiative will be beneficial to Samoa."
Mary Zhao, a researcher at Radio Free Asia, contributed to this report.
