CHINA JAILS ONE OF ITS BILLIONAIRES PENDING PROSECUTION

More music to my ears; founder of Gome Electronics, Huang Guangyu languishes in jail somewhere in China awaiting trial for bribery, corruption and share manipulation. From humble beginnings he built Gome into the largest retail electronics chain in China. In 2006, he was forced to sell off 25% of his holdings in the Hong Kong publicly listed company. That divestment doubled his net worth to US$2.5 billion. In 2007 he rose to become China’s richest man as per the respected Hurun Institute, having amassed an estimated US$6.3 billion fortune.

Ever since then, it has been a downward spiral for him. The silly bugger should have cut and run when he pocketed the money from the initial sale of his stock. For the last three years the government has been gunning after him. There is no doubt, that to build such an empire in China in such a short space of time, it wasn’t about being at the right place at the right time with the right product, it was about his ability to satisfy bureaucracy ahead of his competition. He must have been as smooth talking as “Kenny Boy” Lay of Enron was with Capital Hill for all those years as he grew his tiny natural gas company into an industrial behemoth

Apparently of late he was paying off the “wrong people” or not paying enough to the “right” people with the result that he and his wife came under the watchful eye of senior Communist Party officials. Firstly fifteen months ago the Hong Kong Stock Exchange halted trading Gome shares because of a claim of stock price manipulation. Three months ago, Guangyu failed to turn up for work and hasn’t been seen since. Just last week it was announced he and his wife were being held in a jail “somewhere in China” awaiting prosecution!

The one thing that even makes me happier; apparently the greedy bastards on Wall Street have always had a love affair for their billionaire mates in China and invest heavily in their high profile public companies. From Morgan Stanley down many companies and individuals are stuck with Gome stock that is now sale proof. Of course they were buying Gome up large to on-sell it to unsuspecting fools such as me, because they know Chinese companies are part of the Chinese bubble that will burst sooner or later.

Tags: China, Gome Electronics, Hong Kong