The fall out of Taiwan’s wine fraud scandal

As the story of a NT$1 billion wine fraud in Taiwan continues to unfold, Eloise Feilden considers the impact on the industry at large.

Taiwan’s fine wine scene has been buzzing with rumour and gossip in recent months as the facts surrounding a major fraud case continue to unfold.

The legitimacy of some bottles of rare Burgundy, bought predominantly by influential figures from the finance, technology, real estate, and media industries, have been brought into question, prompting investigation into the source of these expensive bottles.

Taiwanese wine companies Top 100 Wine and UMC were named in a tip-off to Taiwan’s media outlet Business Today.

When confronted with the allegations, Huang Huihong, the head of Top 100 Wine, agreed to accept returns. At the same time, he revealed his source — none other than Taiwanese billionaire and former chairman of electronics giant Yageo Corporation, Wood Chen.

Chen has since defended the legitimacy of his collection in the face of this scrutiny (see below). But what is the wider impact on the fine wine scene, both in Taiwan and further afield? And does a case like this bring distrust to other merchants and fine wine firms?

Earlier this week, Crurated, a digital members’ club offering access to fine wines sourced directly from producers, published an open letter addressing the wine fraud in Taiwan.

The platform’s CEO, Alfonso de Gaetano, wrote that the company felt “compelled to address our members and producers to reiterate Crurated’s commitment to transparency, authenticity, and integrity” in light of the unfurling fraud scandal.

“The revelation of NT$1 billion worth of fake wines reportedly linked to Billionaire Wood Chen is a stark reminder of the vulnerabilities within our industry, and the reasoning behind why I set up Crurated in the first place,” de Gaetano wrote.

The CEO, who launched Crurated in 2021, went on to detail the technology used by the platform to ensure authenticity — the likes of Blockchain and NFTs included.

“Crurated is dedicated to connecting collectors with distinguished producers while safeguarding against counterfeit wines,” he said.

One individual wine collector is likely to be under more scrutiny than most as the details of Wood Chen’s alleged wine fraud continue to unfurl — his brother, Pierre Chen.

Pierre Chen, also a prominent wine and art collector, is currently in the process of selling his collection via auction house Sotheby’s; a sale comprising around 25,000 extraordinarily rare bottles and “mythical vintages” which are expected to raise US$50 million overall.

Sotheby’s has already completed the sale of the first three tranches of Pierre Chen’s legendary cellar, breaking numerous world records.

The first sale, The Epicurean’s Atlas: The Encyclopaedic Cellar, was designed to show the breadth, quality and rarity of the cellar and took place in Hong Kong on 24 and 25 November 2023.

The second tranche to go on sale was the auction house’s first ever auction devoted exclusively to Champagne, and achieved €1.35m. The percentage of lots sold for prices above their high estimates was among the highest seen for a wine sale this year.

For the third auction of Pierre Chen’s cellar, Sotheby’s saw its first exclusive single owner Burgundy sale, smashing eight world records and achieving €2m.

The revelation concerning Wood Chen and his alleged links to fraud among Taiwan’s elite is likely to be bad timing for his brother’s collection sale, of which there is still one tranche to be auctioned in November.

the drinks business reached out to Sotheby’s to learn what the impact has been on Pierre Chen’s collection and its understood legitimacy.

A spokesperson from the auction house told db: “We have full confidence in the origin of the bottles we are selling from Pierre Chen’s collection. The wines are sourced from Mr Chen’s dedicated professional storage in the UK and Hong Kong, and have been stored independently throughout their ownership.

“Furthermore, the origin and source of each of the wines that we are offering in our consignment from Pierre is known to us, with most having been previously purchased from the most reputable named single owner sales at Sotheby’s or direct from the domaines and agents themselves.

“Additionally, all the property was inspected in accordance with Sotheby’s industry-leading authenticity procedures, and the most sensitive bottles were subjected to further rigorous inspection by Michael Egan, the world-leading expert on wine authentication. Sotheby’s maintains a world-leading reputation when it comes to provenance and authenticity in the auction industry, and we are confident in our exacting authentication processes.”

Fraud story

Suspicion surrounding Taiwanese billionaire Wood Chen rose after a number of prominent wine collectors had the legitimacy of their wines brought into question.

According to local reports, the scandal began eight months ago when an entrepreneur brought what they thought was a bottle of Premier Cru vineyard Perrières of Burgundy’s Coche-Dury to a dinner with the winery’s exclusive agent. The agent immediately pointed out that the wine might be counterfeit based on its taste and bottle details.

Top 100 Wines was later revealed as the source of the wine, and the merchant traced its origin back to Wood Chen.

According to Vino Joy, an insider revealed that some Burgundy wines, like Dujac’s Grand Cru Chambertin, have only 400-500 bottles distributed worldwide each year, with Taiwan possibly getting just one bottle annually. However, recently in Taiwan, hundreds of bottles of the 2006 vintage alone have surfaced, with one insider boasting 200 bottles and another buying 400 bottles at once.

The 67-year-old billionaire has been offloading his wine collection to friends, either directly or through merchants, since 2019.

Reporters confronted him about the allegations, but he defended his cellar. ‘You cannot conclude that all the wines are fake from one tasting session. Only three or four out of 11 bottles at that tasting session were from my collection, and it’s uncertain if those wines were from me,” he said.

Chen went on to argue that with many wines in a collection, “having some bad ones is normal”.

He said: “My collection is extensive, and it’s impossible for all wines to be perfect. But linking me to selling fake wines is excessive.

“With friends holding tasting sessions five times a week, totalling 200 sessions a year, one cannot assume wines are fake just because they taste similar at one session,” he told reporters. “If wine temperature is too high, the taste can be similar.”

Wood Chen maintains his innocence, though he has reportedly agreed to refund at least one client.