China’s richest man in police detention?
Billionaire Huang Guangyu disappears … Possibly in police detention
Duncan Mavin, Financial Post Published: Monday, November 24, 2008
HONG KONG – The fate of China’s richest man, billionaire Huang Guangyu, was shrouded in mystery Monday, with local media reporting the well-known businessman is being held by police in connection with possible securities fraud.
Billionaire businessman Guangyu is in many ways the physical embodiment of China’s economic miracle of the last three decades. Starting out 21 years ago with just a single stall by a Beijing roadside, the entrepreneur from a humble background built one of China’s biggest companies, home appliance retailer Gome Electrical Appliances Holdings Ltd.
Along the way, Mr. Huang also amassed a personal fortune of as much as US$6-billion, making him China’s richest individual.
State-run Xinhua News said the entrepreneur is “under police investigation for stock market manipulation.” Other reports say he is being questioned in relation to illegal trading in a Shanghai-listed medicine maker controlled by his brother.
Meanwhile, there are widespread rumours in Beijing that Mr. Huang’s wife and one of Gome’s top financial officers have fled the country to avoid detention.
The uncertainty surrounding Mr. Huang’s disappearance was not cleared up by a simple statement on Gome’s website that the company “is not in a position to confirm the accuracy of [the local media reports,]” and “is making necessary enquiries for the purpose of verifying the allegations.”
The Hong Kong-listed company also put a sudden halt on trading in its shares until further notice.
According to China Daily news, police in Beijing have said the case is “under the direct charge of the Ministry of Public Security.” The MPS is the Chinese government’s main police authority and domestic security agency.
Mr. Huang is a well-known figure in China, where he is popularly referred to as “the Price Butcher.” At just 39 years old, he has already built Gome into a formidable, national retail presence.
“In its sector, Gome is the top brand in China,” said an investment banker in Beijing. “It’s a solid company.”
As of June this year, the company had 828 stores in 198 Chinese cities, selling everything from Dell computers to Apple iPods. According to the company’s own estimates, it enjoys a 12% share of the China’s electrical retail market. Its latest earnings report indicates profits topped 1.6-billion yuan (US$235-million) in the first nine months of this year, an increase of more than 111% on 2007.
So far, there has been no word from Mr. Huang himself and some reports say he has been missing since last Wednesday. The entrepreneur was also investigated by police two years ago in connection with irregularities connected to a real estate deal.
A spokesperson for Gome did not return a call requesting comment regarding the fate of its chairman and founder.