Cover story, issue 396 Dec 1 2008
Translated by Liu Peng
Original article: [Chinese]

One of China's most well-known businessmen was being investigated for at seven kinds of financial crime, including manipulation of share prices and money laundering, sources close to the probe told the Economic Observer.

Investigators believe that Huang Guangyu, chairman and founder of GOME Electrical Appliance Holdings, China's top electrical appliance retailer, may have illegally invested in and moved assets worth RMB 70 billion, the sources said.

Huang's suspected illicit activities spanned five separate cases over a period of years.

They included offering bribes to Ministry of Commerce officials both when GOME sought to go public in Hong Kong in 2004 and when he purchased Yongle, another well-known Chinese household electrical appliance retailer, in early 2007. After listing abroad, GOME required approval from the Ministry before it could purchase the mainland-based Yongle.

Investigators believe he may have manipulated the share prices of listed firm Sanlian Commercial Corporate, a Shandong-based electric appliances retailer, and Beijing Centergate Technology Holdings (BCTH), a conglomerate invested in high-tech, real estate, finance and other industries in China.

Sources from China's Securities Regulatory Commission (CSRC) also confirmed that Huang and his investment firm, Beijing Pengrun Investment Company, were suspected of crimes related to the restructuring of Sanlian and an asset replacement deal with BCTH.

He was also suspected of laundering money for the purchase of the Shandong Jintai, a pharmaceuticals group controlled by his elder brother, which had received special treatment by the Shanghai Stock Exchange after three consecutive years of losing money.

Finally, investigators suspect he evaded taxes by transferring assets to overseas shell companies, and moved assets through underground private banks. 

In a break from common practice, the investigation into all of these matters was being spearheaded by the Beijing public security bureau, under directive by the economic crime unit of the Public Security Ministry. Cases involving share manipulation are usually investigated by the CSRC, according to sources close to police's special investigation team. 

Two years ago, Huang was suspected of involvement with RMB 1.3 billion worth of illegal loans, but the investigation stalled in early 2007. The case had yet to be officially closed, the above sources added. 
 

Huang, 39, founded his company in 1987 and has built it into the largest Chinese electric appliances retailer over the past two decades. He has been named the richest person in China for three consecutive years since 2006 by the Hurun Report, which has compiled lists of China's wealthiest.

Huang Junqin, Huang's older brother and chairman of Beijing Xinhengji Group, and Xu Zhongmin, BCTH's chairman, were also under investigation, according to Xinhua News Agency.