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China's richest man thrown into spotlight amid probe
Sun Nov 30, 2008 1:52am EST
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By Nerilyn Tenorio and Joseph Chaney
HONG KONG (Reuters) - 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.
"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.
Huang is well known for his distaste of ostentation and -- a relatively young man in the pantheon of self-made Chinese entrepreneurs -- is legendary for keeping grueling work hours, according to GOME executives who have worked with him directly.
"I don't know much about his personal dealings, but he's an aggressive guy and I have absolute respect for him as a business man," a source close to the company told Reuters on Friday.
"I would suspect it has more to do with his personal dealings. He is in on property, retail and also the capital markets," added the source, who did not want to be named given the sensitive nature of the matter. Continued...
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