May 18, 2010 / 2:45 PM / 9 years ago

China's one-time richest man jailed for 14 years

BEIJING (Reuters) - China’s one-time richest man and the founder of a major retail chain was jailed for 14 years on Tuesday for bribery, insider trading and illegal business dealings, state media reported.

Huang Guangyu, chairman of GOME Electrical Appliances Holding Ltd., attends a news conference in Hong Kong August 17, 2006. REUTERS/Bobby Yip

Huang Guangyu was also fined 600 million yuan ($88 million) and had another 200 million yuan worth of property confiscated, the official Xinhua News Agency said, citing a court statement.

His two firms, Gome Electrical Appliances Holdings Ltd and Pengrun, were fined 5 million yuan ($735,000) and 1.2 million yuan respectively for paying bribes.

In a statement sent by email, Gome said it would review its legal position in coming days.

“GOME respects the court’s judgment,” the company said.

It said the fine, if executed, would “not materially affect the company’s business operations or financial position”.

“The court’s decision eliminated most of the uncertainties that have been surrounding GOME,” it said.

Huang’s wife, Du Juan, was sentenced to three-and-a-half years in prison and fined 200 million yuan for insider trading. The couple have 10 days to lodge an appeal, Xinhua said.

Huang, who made his fortune by founding and building up GOME — dubbed by local media as China’s Best Buy — was detained in November 2008 during a police investigation of stock market manipulation allegations.

The investigation gradually grew wider, ensnaring government officials and police who had been assigned to fight financial crime.

The court statement said he bribed or got others to bribe five government officials with 4.56 million yuan in cash and properties from 2006 to 2008, Xinhua said.

Huang, who is in his early 40s and had a net worth of $6.3 billion in 2008, was ranked first on Hurun’s China Rich List for that year. He built his fortune from humble beginnings, having been raised in a poor family in Guangdong province.

Huang moved to Beijing in his late teens with his brother and set up a home appliances distribution firm with 30,000 yuan ($4,400) and founded GOME in 1987.

GOME has been trying to separate itself from Huang, changing its logo, appointing a new chairman and selling a nearly 25 percent stake to U.S. private equity firm Bain Capital in a $418 million deal last June.

By the end of 2009, Huang still held roughly one third of GOME’s total outstanding shares, worth $1.9 billion, according to Thomson One Analytics. ($1=6.827 Yuan)

Reporting by Huang Yan, Lucy Hornby and Michael Wei; Editing by Ken Wills and Nick Macfie

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