N. Korea Zone Chief Charged

A Chinese entrepreneur who was supposed to oversee a fledgling capitalist enclave in North Korea has been charged with offering bribes, faking contracts and committing other “commercial crimes” in China, state media reported Wednesday.

Flower magnate Yang Bin, once named the second-richest man in China by Forbes magazine, had been under detention at his home in Shenyang in northeastern China since early October on suspicion of economic misdeeds. On Wednesday, he was formally placed under arrest there, where his company, Euro-Asia Agricultural Holdings Co., is based, the New China News Agency said.

Yang is accused of running shady investment schemes, offering illegal payoffs, drawing up fraudulent contracts and occupying land illegally, the news agency reported.

Although his arrest was not unexpected, it throws into doubt a plan by North Korea, China’s neighbor and close ally, to experiment with market-oriented reforms in the city of Sinuiju, on the border with China. In a move that surprised observers two months ago, North Korea announced the creation of a special economic zone in Sinuiju and then tapped the flamboyant Yang, 39, to head the enclave.

Yang, who holds Chinese and Dutch citizenship, set to the task of running Sinuiju with the same verve that helped him build an orchid-exporting business into a multimillion-dollar corporation. Apparently without consulting either Beijing or the North Korean leadership, he promised to bring in foreign experts to help administer the free-market zone and declared that anyone with a foreign passport could immediately begin crossing freely into and out of Sinuiju.

Those would have been astounding changes for North Korea, which remains an insular, Stalinist state, but none of them came to pass. Instead, Yang was bundled off by Chinese police for questioning.

He has not been seen in public since his Oct. 4 detention. The Chinese government later said Yang was under a form of “house supervision” while authorities conducted an investigation into his dealings.

Before his detention, Yang acknowledged owing $1.2 million in back taxes, but he told reporters that he was on the verge of settling the matter.

In addition to his own fate, that of his company now seems uncertain. The firm’s main telephone line in Shenyang has been disconnected. Euro-Asia owes money to creditors. It was not clear what would happen to a quirky, Dutch-themed real estate development -- complete with canals like those in Amsterdam -- that Yang had been building in Shenyang.

Yang’s case is one of a string of high-profile official probes into the dealings of some of China’s wealthiest businesspeople, which some analysts say is a populist effort by the Communist regime to appear on the side of ordinary, hard-working Chinese. Disenchantment is widespread over the widening income gap between highfliers such as Yang and workers who have lost their jobs or farmers who find themselves eking out a meager existence.

In addition to Yang, a well-known Chinese actress and a businessman who heads one of China’s biggest auto makers have been under investigation. The auto executive, Yang Rong, fled China for Los Angeles.