China’s 2nd richest man disappears,Is It Economic Factor?

November 24, 2008

BEIJING: China’s second richest businessman, Huang Guangyu, has vanished with even it’s own company, Gome Electrical Appliances Holdings Ltd., unable to throw any light on his whereabouts. Initial reports suggested he may have been arrested but there is widespread speculation in the industry that he may have vanished to avoid arrest on charges of corruption.

The company on Monday told the Hong Kong stock exchange

that it has not received any notice or legal documents from any regulatory, governmental or judicial authority in China concerning charges of corruption against Huang, the company chairman.

The company said it was making “necessary enquiries” to try to find out what had happened to its controlling shareholder, who has not been in touch with the firm’s senior officials for several days now. There was no official word on whether he has been arrested. The confusion over his actual condition remained even as the government run Xinhua news agency quoting the “local media” to say that Huang is under police investigation instead of coming with an official version of the event.

He was ranked the second richest man in China by Forbes while Hurun Rich list with personal wealth worth $6.14 billion.

Informed sources said the old Huang, who holds major stakes in several Chinese companies and is a big player in the property market, is hugely influential in political quarters as well.

“Any decision to investigate his affairs must have come from the very top in the Chinese leadership. If he has indeed escaped before he was arrested, it would result in serious loss of face. The police will do whatever is necessary to track him down in that case,” a well informed source told TNN.

The Chinese media reported that Huang was being questioned by police for alleged share price manipulation linked to Shandong Jintai Group Co, a Shanghai listed pharmaceutical company believed to be controlled by his brother, Huang Jinshi. Trading in this company was suspended in Shanghai on Monday.

Huang was earlier questioned in 2006 over allegations of financial irregularities involving the use of a loan to speculate in the property market.

The self-made 39-year old magnet has been a source of inspiration to millions in China. He rose from his humble beginning as the son of a farmer and a school drop-out to establish a chain of more than 800 retail stores under the brand name of Gome. He had started life as a peddler bringing along a bag of radios, batteries and other gadgets from factories in his native Guangdong province to Beijing at the age of 16.

Investigations concerning his businesses include a probe into Eagle Property, which is indirectly owned by Huang, for illegally borrowing $190 million from the Bank of China. The China’s State Administration of Taxation is also investigating Gome to find out if it has hid sales to avoid paying taxes. Gome claimed the probe was a “normal examination” of its value-added tax payments and nothing unusual was uncovered.

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