Chinese police have confirmed that they are holding the country’s richest man - the head of its largest electronics retailer - for investigation over possible economic crimes.

No other details have emerged about the questioning of Huang Guangyu, chairman of Gome Electrical Applicances and among China’s first billionaires with a personal wealth of £4.0 billion. Gome said it understood that the 39-year-old tycoon was being investigated for his personal activities and the company was not linked to any suspicious transactions.

The chief financial officer of the Hong Kong-listed Gome has also been taken in for questioning. The company has appointed its chief executive officer as acting chairman in the absence of Mr Huang, who was detained 10 days ago.

The authoritative Chinese business magazine, Caijing, said Mr Huang was suspected of insider trading in connection with wild fluctuations in the price of a company controlled by his brother and listed on the Shanghai stock market.

However, China’s securities watchdog said the reasons for the investigation were far more complicated than stock price manipulation. One newspaper said Mr Huang was suspected of money laundering, tax evasion and obtaining illegal loans. It would be the second time he has been detained on suspicion of obtaining illegal loans. He was released and cleared in early 2007.

The influential Southern Weekend ran a two-page article speculating on the reasons behind Mr Huang’s apparent fall from grace. It cited his dwindling interest in his core electronics business since its listing in Hong Kong in 2004 resulted in a multiplication of his personal wealth and inspired his interest in the capital markets.

The businessman was already no stranger to risk. The son of poor peasants from the southern port city of Shantou, he left home to make his fortune in northern China and transformed a street stall selling watches and radios into a nationwide empire today of 1,300 stores.

One of the most outstanding questions on Mr Huang is how he made the leap into the big-time. Many of China’s successful new breed of entrepreneurs are so reluctant to clear up the mystery that this moment in the career of a tycoon is now popularly known as “original sin”.

In a system where connections are crucial but credit is rarely available to small businessmen, few of China’s nouveau-riche entrepreneurs are believed to have succeeded without some shady dealing in their past. Whether the “original sin” ever comes to light often depends on their skill in keeping on the right side of the government and maintaining good relations with Party officials.

Since 2004, Mr Huang has spent increasing amounts of his time dabbling in the capital markets and shifting assets among shell companies to expand his fortune, Southern Weekend said. Quoting sources close to the investigations, it said Mr Huang’s disappearance could be related to a corruption investigation into a Commerce Bureau official who was detained in September and was known to be a close associate of the tycoon.

So little information has been available about the disappearance of the man listed as China’s wealthiest this year on the Hurun Rich List that even the state Xinhua news agency commented that the media should be kept informed. “In the face of many rumours, related departments could only media questions with ‘we’ve not received notification’, which has indeed made many people feel lost.”

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