• Monday, October 05, 2015

Sohu probes source of billionaire Chen Guangbiao's wealth

Staff Reporter 2014-01-02 16:40 (GMT+8)
Chen Guangbiao shows off his "room of cash," made from 16 tonnes of RMB100 bills, in Nanjing, Dec. 24, 2013. (Photo/CNS)

Chen Guangbiao shows off his "room of cash," made from 16 tonnes of RMB100 bills, in Nanjing, Dec. 24, 2013. (Photo/CNS)

Chinese tycoon Chen Guangbiao, known for his attention-seeking charitable endeavors including literally throwing cash at people, recently made headlines after releasing a photo of himself surrounded by an estimated 1.4 billion yuan (US$231 million) in RMB100 bills. The photo has lead Chinese web portal Sohu to launch an investigation into his wealth.

Chen said that he surrounded himself with 16 tonnes of banknotes on Dec. 24 so that people could learn about and actively take part in the country's third nationwide economic census, which began on Jan. 1.

It took 20 people five hours to stack three walls and a block used as a table with bricks of bank notes, according to Chen, who said he has nothing to hide and that anyone is welcome to probe his wealth.

Chen's remarks caught Sohu's attention on how he made so much money, even though he has complained to reporters about the difficulties his recycling company faces in winning government contracts — which, he says, has rendered him a subcontractor earning a smaller margin.

Citing a report published by the China Business Journal in May 2011, Sohu stated that Chen's company, Jiangsu Huangpu Recycling Resources, posted losses of around 4.3 million yuan (US$710,000) in 2008 and around 17 million yuan (US$2.8 million) in 2009. However, in a report published by Guangzhou's Southern Metropolitan Daily, Chen was quoted as saying in 2010 that his company recorded sales of 10.3 billion yuan (US$1.7 billion) and net profit of over 400 million yuan (US$66.1 million).

Chen once said that 95% of his company's business stemmed from sub-contracting, which was usually at a margin of 4%, but a company source said it is unlikely that Jiangsu Huangpu Recycling Resources could have earned even 100 million yuan (US$16.5 million) in profit.

Chen's fortunes turned after he was named as the country's top philanthropist, which helped his company win more government contracts, according to the Sohu report. Meanwhile, during an event in Wuhan in central China's Hubei province in November 2009, the eccentric entrepreneur told reporters that 60% of his business resulted from his charity work.

One of the big contracts awarded to Chen's company, according to Sohu, was the removal of the curtain walls at China Central Television's building in Beijing after a fire in 2009 when the state broadcaster's headquarters were under construction.

Sohu concluded that Chen's charity work has thus helped him build relations with government officials and allowed his company to win an increasing number of contracts. Sohu questioned however the donations Chen claims to have made, as records showed that the money was usually jointly donated along with other companies or individuals rather than by Chen himself.

A source told Sohu that Chen may have even procured officials' schedules to ensure that he would be seen carrying out relief work with them during the aftermath of the 7.9-magnitude earthquake that hit southwest China's Sichuan province in 2008.

Who`s who »
Hu Maoyuan (胡茂元)

Hu Maoyuan is CEO of SAIC Motor Corporation and also the party secretary of the state-run automaker. He was named one of the China Economic Leaders of the Year by state broadcaster CCTV in 2004. ...