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Tuesday, 8 October, 2002, 07:46 GMT 08:46 UK
China confirms tycoon's arrest
Chinese businessman Yang Bin gets into his car after a dinner at his Holland Village development in Shenyang, China, Monday Sept. 30, 2002.
Yang Bin is reported to be one of China's richest men
China has confirmed that it has placed a Chinese-born tycoon appointed by North Korea to run a controversial free trade zone under house arrest.

"Chinese authorities, acting in accordance with the law, have put [Yang Bin] under arrest," a Foreign Ministry spokes said, adding he was suspected of "various illegal activities".

A spokesman for Mr Yang said on Monday he had not heard from him since he was taken from his home in the northern city of Shenyang before dawn on Friday, apparently over tax evasion allegations.

The BBC's Rupert Wingfield-Hayes in Beijing says there is speculation China is expressing its anger that it was not consulted about Mr Yang's North Korean appointment.

North Korea announced two weeks ago that it was setting up a capitalist-style economic zone at Sinuiju, on the border with China.

Regional observers were surprised when the North Korean leader Kim Jong-il appointed Mr Yang to take charge of the zone.

Mr Yang, a Chinese-born Dutch citizen, is reported to be one of China's richest men.

Diplomatic sources in Beijing on Friday told South Korea's Yonhap news agency the arrest was linked to tax evasion, stock dealings and illegal real estate development.

Adverse comment

Mr Yang has faced a tide of press allegations regarding his business affairs, mostly from newspapers in South Korea and Hong Kong.

Holland Village in Shenyang
Mr Yang built a Dutch village theme park in China
On Thursday, speaking at his head office in Shenyang, Mr Yang said his firm was in talks with local officials about his tax affairs.

He denied the talks involved his Hong Kong listed firm Euro-Asia Agriculture (Holdings).

Mr Yang said the discussions covered "mostly construction and real-estate taxes" from the Euro-Asia Group's investments in tourism and property.

He said the amount owed totalled about 10m Yuan ($1.2m).

Mr Yang said his group has until 12 October to pay the tax arrears.

Mr Yang was born in China but left to study in Holland in the mid-1980s and took Dutch citizenship.

He made his fortune farming orchids in China using European agricultural technology.

His corporate headquarters in Shenyang has a Dutch theme, with windmills and a reproduction of Amsterdam's railway station.

Mr Yang says North Korean officials appointed him to run the Sinuiju enclave because they have grown to trust him during dealings over his investments in the poverty-stricken country's agricultural system.

North Korea created the Sinuiju Special Administrative Region on the border with China in September to attract foreign investment and emulate trade zones which kicked off China's economic reforms in the early-1980s.

Nuclear tensions

Inside North Korea

Divided peninsula

See also:

01 Oct 02 | Business
23 Sep 02 | Business
22 Aug 02 | Business
09 Aug 02 | Asia-Pacific
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