The fall and arrest of Mr. Yang

UPDATE 2 (2003-9-7): The BBC reports that Mr. Yang has lost his appeal:

A business tycoon once listed as China’s second richest man has lost an appeal against his 18-year sentence for fraud.

Yang Bin, known as China’s flower king, was found guilty in July of a string of economic crimes including bribery and illegal land use.

The High People’s Court of Liaoning province on Sunday also upheld fines against him and his companies totalling 8.3m yuan ($1m), said the official Xinhua news agency.

Yang is one of a number of high-profile businessmen to have fallen foul of the law in China over the last year.

Before his fall from grace, he was one of China’s most flamboyant businessmen, and was named by North Korea to head a free-market experimental zone across from the Chinese border.

Border arrest

A Dutch citizen, he built a business empire growing tulips amid the industrial decay of north-east China and by 2001 had a fortune close to $1bn.

However, much of Yang’s wealth had, it turned out, been based not on flowers but on illegal property development.

In what may have been a last bid to avoid prosecution, he accepted an offer from the North Korean government to run a new free trade zone inside the Stalinist state.

But last October, as he prepared to cross the border, Chinese police moved in and took him away.

UPDATE 1 (2003-7-14): Mr. Yang has been sentenced to 18 years by a Chinese court. According to the BBC:

A business tycoon once listed as the second richest man in China has been sentenced to 18 years in prison for fraud.
Yang Bin, known as China’s flower king, was found guilty of a string of economic crimes including bribery and illegal land use.

He is one of a number of high-profile businessmen to have fallen foul of the law in China in recent months.

Before his fall from grace, Yang Bin was one of China’s most flamboyant businessmen, and was named by North Korea to head a free-market experimental zone across from the Chinese border.

A Dutch citizen, he built a business empire growing tulips amid the industrial decay of north-east China.

By 2001 he was listed as China’s second richest man, with a fortune close to $1bn.

But with fame came suspicion and soon a government investigation.

Much of Yang’s wealth had, it turned out, been based not on flowers but on illegal property development.

False receipts were used to get his company listed on the stock market. As his empire began to crumble around him, Yang made what may have been a last bid to avoid prosecution.

He accepted an offer from the North Korean government to run a new free trade zone inside the Stalinist state.

But last October, as he prepared to cross the border, Chinese police moved in and took him away.

A spokesman for Yang, chairman of Hong Kong-listed Euro-Asia Agricultural (Holdings), said he planned to appeal.

Read the full story here:
China’s ‘orchid king’ gets 18 years
BBC
2003-7-14

ORIGINAL POST (2002-10-4): According to the Washington Post, Mr. Yang has been arrested.

Chinese sources, including journalists, said police detained Yang Bin, a 39 year old multimillionaire and flower mogul, on suspicion of tax evasion in the northern Chinese city of Shenyang.

A Chinese source said that the move did not mean China opposed North Korea’s fledgling efforts to reform its economy.  China, he said, was simply against the choice of Yang Bin to head the effort.

Nonetheless, Chinese economists said Yang’s detention constitutes an embarrassment for Kim Jong Il and could threaten reform efforts.

Within the last few days, Chinese journalists say, China’s Ministry of Propaganda has issued three circulars banning China’s press from in depth coverage of Yang.  Analysts in China say they believe this means Beijing is uncomfortable with his new status in North Korea.

The Sinuiju region draws its inspiration from the special economic zones that china established in the 1980s .

Yang said any foreigner could travel to Sinuiju without a visa as long as they had a a visa to return to China (as of Sept 30).  But those plans hit a roadblock on Thursday when North Korean authorities declined to allow foreign correspondents travel with Yang to the Zone.  Yang’s problems then started snowballing when an impromptu news conference he called to explain the visa restrictions was declared “illegal” by Chinese police.

Yang’s shares have been suspended from the Hong Kong Stock Exchange because the company has not made sufficient disclosures.

Yang has been reticent about how he got the North Korean appointment–one of the stranger events in Pyongyang’s checkered attempts to open to the outside world.  In an interview with a Chinese magazine, he said that he had been “Sharing my agricultural technology with the people of North Korea “for more than a year” and that “my selfless help won the trust of the Korean people.”

Yang struck up a friendship with Kim Jong-il several years ago.  Yang took his corporate jet to Pyongyang and worked hard to cultivate Kim.  Kim traveled to Shenyang to meet Yang.  Yang offered to donate greenhouses to North Korea which is desperate for ways to grow food, and Kim accepted.

Some Chinese economists and officials have privately criticized North Korea’s choice of Yang, saying he is emblematic of a type of Chinese businessman who amasses fortunes making use of connections and legal loopholes.

Yang has said he hoped to turn Sinuiju into a trading and manufacturing and trading hub.  Chinese cources, however, said that so far Yang has been approached only by developers looking to turn the area into a gambling and entertainment enclave for Chinese tourists.  Gambling is illegal in China.

Source:
The Fall of Mr. Yang
Washington Post
2002-10-4
Page A25

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