Gome founder Huang Guangyu appeal rejected
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A Beijing court Monday rejected an appeal by China's once richest man, Huang Guangyu, and upheld the 14-year jail sentence handed down to the former chairman of the Hong Kong-listed Gome Electrical Appliance Holding, who was found guilty of bribery, insider trading and illegal operations.
Huang was also fined 800 million yuan ($117 million) by the Beijing High People's Court, which upheld the May conviction.
Huang's wife, Du Juan, who was convicted in May and sentenced to 3.5 years in prison for insider trading, saw her sentence reduced to three years with a three-year reprieve, after paying a 200 million yuan fine. She was released due to the fact that she was only an accomplice, not the main violator, according to the court.
Huang was found guilty of illegally trading stock valued at HK$822 million ($105 million) from September to November 2007 and of manipulating stock trading involving the Shenzhen-listed Beijing Centergate Technologies (Holding) Co to the tune of more than 1.4 billion yuan from April to September 2007. He was also accused of offering bribes totaling 4.56 million yuan to an un-identified number of government officials.
The fall and conviction of Huang has a negative impact on the Chinese market and society as a whole, since it reflects a defection of the legal system, Luo Yuding, deputy director of the School of Finance of Shanghai University of Finance and Economics, told the Global Times.
The unsound market supervision has been manipulated by some entrepreneurs to make a fortune, Luo said, adding that some Chinese entrepreneurs such as Huang, who rose during the reform and opening-up period, have poor knowledge of economics and regulations, which led them to running afoul of laws.
"Huang's conviction sends up an alarm for emerging entrepreneurs over clean conduct, and also for market watchdogs to tighten their supervision," Luo said.
The conviction came as Huang, who also founded Gome, was struggling with the current management team over control of the company, a leading home-appliance retailer in China.
A major shareholder of the company, Huang is demanding the removal of current chairman Chen Xiao, who replaced him after he was arrested in 2008.
Speculations have mounted about the demand after Huang's wife was released and is now able to help Huang oust Chen.
According to Gome, Huang threatened in a letter Friday to terminate contracts between the company and hundreds of stores owned by the jailed tycoon if the current chairman is not sacked, and additional shares may be issued to dilute Huang's 34 percent stake.
Huang owns 381 stores, while the chain has a total of about 1,100 outlets in China, according to Dow Jones Newswires.
Gome dismissed the threat in a statement Monday as an "empty ultimatum," saying it has more "pluses than minuses" for Gome and would enable the company to redeploy resources into more profitable areas.
Zhao Tong, a spokesperson for Gome, told the Global Times Monday that the company has adjusted cooperation with its retailers since Chen took over.
"It won't have a significant impact on the company's business in a long run if Huang decides to end the contracts," Zhao said.
"It does show, however, that Mr. Wong's (Huang) interests clearly diverge from those of Gome and its other shareholders, and he is willing to damage them if he doesn't get what he wants," Zhao said in the statement by Gome to the Hong Kong Stock Exchange Monday.
Huang was a classic example of a high-school dropout who became a tycoon amid China's rapid economic growth since the 1980s.
Huang topped the China Rich List published by the Shanghai-based Hurun Report in 2008 with an estimated income of 43 billion yuan.
Huang resigned as Gome chairman in January 2009, shortly after he was detained in November 2008.
Huang and his wife are still under investigation in Hong Kong, where authorities have frozen their assets.
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