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Tycoon said to be under probe

(Shanghai Daily)
Updated: 2006-10-31 11:18
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Huang Guangyu, China's second-wealthiest person and chairman of Gome Electrical Appliances Holdings, is under investigation for allegedly receiving 1.3 billion yuan (US$165 million) in illegal loans, Caijing Magazine reported yesterday.

Huang, 37, and older brother Huang Junqin, borrowed the money from the Bank of China's Beijing branch more than 10 years ago to start their businesses and have yet to repay the funds, Caijing said, citing preliminary state probe results.

Officials at Gome declined comment yesterday but said the company may issue a clarifying statement later. BOC's Beijing branch was not available for comment.

China's Ministry of Public Security initiated the investigation before the October 1 National Day holiday and froze the assets of Huang Junqin, the Beijing-based magazine said.

The case has implicated 29 people and 39 enterprises affiliated with the Huang brothers, Caijing said. Most of the borrowed funds had been siphoned off for investment in overseas stocks and futures, it said.

The China Banking Regulatory Commission, the country's banking watchdog, is also involved in the probe, Caijing said.

"Although the Huang brothers have amassed enough capital via their investment gains in real-estate projects to settle the debt, they didn't pay back the loans," a source involved in the investigation told the magazine.

Niu Zhongguang, former head of BOC's Beijing branch, was arrested on the eve of the National Day holiday, Caijing said. Du Juan, Huang Guangyu's wife and Gome's executive director, worked at the branch in the 1990s as a loan officer, it said.

Huang Guangyu was ranked second on British researcher Hoogewerf's rich list this month, with personal wealth of US$2.5 billion, up US$800 million from a year earlier.