China‘s richest man, Huang Guangyu, who is being investigated for suspected economic crimes, is no stranger to controversy.
Two years ago, local authorities investigated the self-made 39-year-old billionaire in connection with a loan deal involving his investment company, Eagle Property Group. Huang was later cleared of any wrongdoing.
The current probe of Huang, the chairman and controlling shareholder of China’s top electronics retailer GOME — known as China’s Best Buy, the top U.S. electronics chain — throws the spotlight on another Chinese tale of rags-to-riches fame.
Ranked first on Hurun’s China Rich List in 2008, Huang, worth $6.3 billion, was raised in a poor family in China’s Guangdong province. He moved to Beijing in his late teens with his brother and set up a home appliances distribution firm with 30,000 yuan ($4,392), and founded GOME in 1987.
GOME was valued at around $1.8 billion as of November 24 after which trading in the stock was suspended.
The influential Caijing magazine said last week Huang was detained as part of a probe into share price manipulation at SD Jintai, a drugs and medical equipment firm controlled by Huang’s brother, Huang Junqin.
SD Jintai’s stock surged more than eight-fold in 2007. It is still not clear if Huang owns a stake in SD Jintai.
GOME Electrical Appliance Holdings, the company Huang founded, said he is being investigated for suspected economic crimes but the probe is not related to the group, its assets or funds.
By Nerilyn Tenorio and Joseph Chaney, Reuters
Huang Guangyu, chairman of GOME Electrical Appliances Holding Ltd., gestures during an interview at Reuters China Century Summit in Beijing September 7, 2006.(Jason Lee/Reuters)
“Doing business in China is very complicated. Having a good relationship with everyone, with the government in particular, is a major key to success,” said Castor Pang, a strategist at stock brokerage Sun Hung Kai Financial in Hong Kong.
“It’s very difficult to say, though, that people have to deal with corruption to climb the ladder. In China, businessmen need to deal under the table to make things move faster, to get things done via short-cuts.”
China’s stock regulator has been battling with limited success to curb stock manipulation, insider trading and poor corporate disclosure that have plagued the Chinese market.
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