Wong Kwong Yu poses in a Gome store in Beijing in 2006
There's no better way to say you've arrived in China than to be named on one of the country's rich lists. Of course, such an honor can also be an indicator that you will soon disappear for a long, long time. In recent years the rankings of China's wealthiest have included several prominent tycoons who have later been jailed on fraud and corruption charges.
The latest candidate for such a fall is Wong Kwong Yu, 39, the chairman of mainland electronics retailing giant Gome. Wong, named by the Hurun Report last month as China's richest man with an estimated net worth of $6.3 billion, was detained last week on suspicion of fraud, Chinese media reported. According to a report in the financial magazine Caijing, Wong (his name is also spelled Huang Guangyu) is being investigated for manipulating the share prices of Shanghai-listed Shandong Jintai Group, a medical company controlled by his brother, Wong Chung-yam. (See pictures of what money can buy.)
Shares of the Hong Kong-listed Gome Electrical Appliances Holding were suspended Monday, after the company announced that it was unable to verify the reports of Wong's detention. The company announced Gome "is making necessary enquires for the purpose of verifying the allegations." Shandong Jintai shares were also suspended.
In 2006, the government launched an investigation into loan fraud charges brough against Wong. A year later, Gome announced that the investigation was completed, and its founder was never charged. His recent troubles make him the latest high-profile tycoon to run afoul of authorities. The ranks of recent years' rich lists read like a police blotter. In 2003 Yang Bin, an agribusiness and real estate tycoon once named the mainland's second-richest man, was convicted of tax evasion and sentenced to 18 years in prison. Gu Chujun, once head of a leading appliance company, was ranked China's 20th richest businessperson by Forbes in 2001. In January, he was convicted of falsifying corporate reports and sentenced to a 12-year prison term. And Zhou Zhengyi, a Shanghai-based real estate developer named China's 11th richest person by Forbes in 2002, was arrested the following year on corruption charges. He served three years in prison, and was then sentenced to an additional 16-year term for bribery and fraud. (See pictures of China on the wild side.)
The high-profile convictions indicate that China is still struggling to move beyond its unruly early days of privatization. The prosecutions are "a reflection of the cowboy capitalism, the relatively unregulated capitalism that exists in China," says David Zweig, a China scholar at the Hong Kong University of Science and Technology. "Many capitalist in China made their money either through their relationship with government officials or in somewhat shady deals." For those wealthy few, staying on top can prove more difficult than getting there.