Investigations into arrested GOME billionaire pull down top officials in Guangdong, Zhejiang and central government

Published in Chinaworker, May 6, 2009

China’s “richest man”

Power struggle in Guangdong?

 

China’s number two anti-corruption official arrested for corruption
Wednesday, 6 May 2009.
Investigations into arrested GOME billionaire pull down top officials in Guangdong, Zhejiang and central government

According to a South China Morning Post and the mainland’s Caijiing Magazine website, the top anti-corruption watchdog for Zejiang Province and most recently party boss of Guangdong,Wang Huayuan, was arrested along with other high ranking figures in the national and local security apparatus in investigations connected with the case against Huang Guang Yu, chairman of Gome Electrical Appliance Holdings, the mainland’s largest retailer of electrical appliances. In the tradition of China’s corrupt political-business elite, when pressure was put on Huang he “squealed”, implicationg a wide number of well placed security and political leaders.

 

China’s “richest man”

China’s “richest man” Huang Guang Yu, known as Wong Kwong Yu in Hong Kong, was the Chairman of GOME Group, which is the largest consumer electronics retailer in China. He had a net worth of US$1.7 billion as of 2005, according to Forbes magazine’s world’s richest people ranking. In 2005 Time magazine called Huang the “richest man in China”. In 2006, Huang was forced by regulations to sell off 25% of GOME Group, making his net worth US$2.5 billion, according to some sources. His ambitious goals include “making Gome one of the 500 largest companies in the world by 2008”. According to a list by the Hurun Institute Huang is currently listed as the richest person in Mainland China, his net worth having increased to an estimated $6.3 billion, as of 2008. In November of 2008 Huang was charged with stock market manipulation and other economic crimes in Beijing. The police have not provided details.As the investigation has progressed, the authorities have uncovered the involvement of morend more businessmen and officials. Two months after the arrest of Huang, Zheng Shaodong, the assistant minister of public security of Guandong and head of that ministry’s economic crimes investigation bureau, and his chief deputy, Xiang Huaizhu were arrested. In the middle of April  even bigger fish were caught .Chen Shaoji, a high ranking member of the Guandong party was arrested.  Chen was the chairman of the Guangdong committee of the Chinese People’s Political Consultive Conference.  In an ironic twist Wang Huayuan, supposedly a chief corruption fighter, was also arrested. Wang Huayuan, 61, was the former party boss of Guangdong. As Caijing Magazine says, he held “the most senior position within the most affluent part of China”. In 2006, Wang was appointed to the position of party chief of Zhejiang province, also one of China’s wealthiest provinces.

According to Caijing, Chen Shaoji and Wang Huayuan have developed a close relationship within Guangdong’s political and security apparatus.dating from 1996 when they met within “official circles”. At the time, Wang Huayuan was appointed to the position of vice party-chief of Guangdong Province, and Chen Shaoji served as the chairman of the Guangdong Province Politics and Law Commission and head of the provincial Public Security Bureau. Journalists believe their “relationship to criminal matters” is very deep, especially in connection with Lian Chao, a key figure in the corrupt and highly lucrative Hong Kong and Macau gambling industry. Lian Chao, a gangster figure. is  believed to have extensive close personal relationships with many mainland officials, taking them on cruises on his luxury yacht. Lian  in turn is suspected of assisting the former chairman of Gome, Huang, to engage in money-laundering, and was placed in criminal custody by Chinese police at the end

Lian  in turn is suspected of assisting the former chairman of Gome, Huang, to engage in money-laundering, and was placed in criminal custody by Chinese police at the end of 2008. Caijing says that Wang Hua-yuan and Chen Shaoji were possibly involved in the protection of Lian Chao’s illegal activities, including smuggling, money-laundering, and even triad-run businesses.

Power struggle in Guangdong?

Sources in Beijing believe that Chen himself had taken full advantage of his positions in Guangdong. His  family is believed to have amassed billions of yuan within the past decade. There is speculation that the arrest of Chen may be due to intricate political maneuvering by Wang Yang, the current party boss of Guangdong, in an effort to strengthen his own political and economic power. Wang is known to favor increasing the role of high-tech industry in Guangdong and phasing out lower-tech labour intensive industry, a move strongly opposed by many in Guangdong’s business and party elite. His plans and influence would be furthered by the removal of Chen, although opinion is divided on whether he had a direct hand in this.

As part of the ever widening case against former Gome chairman Huang Guang Yu increasing numbers of other highly placed officials are also being implicated. These include the nation’s top crime and corruption fighters including the former vice-head of the National Public Security Bureau, Zheng Shao-dong, the former head of the Economic Crimes Investigation Bureau, Xiang Huai-zhu, and the head of the Investigations Bureau of the State Administration of Foreign Exchange, Xu Man-gang. It remains to be seen if the ruling group in Beijing will allow these investigations to widen.