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China tycoon controversy deepens
BEIJING, China (CNN) -- The controversy surrounding the governor of North Korea's new capitalist zone is deepening with reports Pyongyang and Beijing have agreed that Chinese tycoon Yang Bin will be sacked from the position. The 39-year-old orchid and property magnate is under house arrest in China with South Korean media reporting he will be sacked as the head of North Korea's Shinuiju City economic enclave. Yang's assistants refused to comment on the reports, telling CNN they had been instructed by police not to talk to the media. Chinese officials also would not comment on any sacking, instead confirming the tycoon was under house arrest in the northeastern city of Shenyang on suspicion of "involvement in various illegal activities." However, the officials were quick to point out that China was not against the establishment of the economic region on the North Korean-Chinese border. If the reports prove to be true, Yang's sacking would question the idea of creating the enclave and possibly sends it back to square one. Observers say both countries are keeping the situation under control through diplomatic channels and may be trying to finesse the crisis by dismissing Yang and replacing him with someone acceptable to both Beijing and Pyongyang. SpotlightThe economic enclave was to have been built and ruled by Yang with the blessing of North Korean leader Kim Jong Il. North Korean officials say the region is being created with the intention of allowing unfettered capitalism to lure international investors. Yang, a Dutch citizen born in China and reported to be the country's second richest man, hit the headlines last month when he was named chief executive of the enclave. He has been in the spotlight ever since. Last Thursday, a day before his arrest, Yang said he was being asked by Shenyang's provincial tax bureau to pay 20 million yuan ($1.2 million) in taxes by October 12. At that time, he said the situation is being worked out and is not a big problem. But the saga didn't end there. More trouble
Yang's Hong Kong listed flower-growing company Euro Asia is also in trouble. The shares were suspended from trading on September 30 and on Wednesday, Hong Kong newspaper The Standard reported the company is being investigated for allegedly inflating sales figures by 21 times over four years, and that accountants Arthur Andersen failed to spot any irregularities. Hong Kong's Securities and Futures Commission would not comment on the report but told CNN, "... if we believe there is suspicious activity we will follow up." It is difficult to predict what is next for Yang. "I don't think Yang Bin's future is very good," Business Week's Asia Correspondent, Mark Clifford, told CNN. "At the very least he's going to pay a lot of money in back taxes. His company looks like it's, if not ruined, at least on the edge of collapse. It's shares are down 80 to 90 percent from their peak earlier this year. He's no longer China's second richest man, as he's been billed. I think he'll be lucky to stay out of jail." Yang may have also worn out his welcome in China, with diplomatic sources quoted as saying the Dutch passport holder may be deported. Equally unclear is the fate of North Korea's bold experiment with capitalism, or its recent, unprecedented flurry of diplomatic activity. -- CNN Correspondent Lisa Barron and CNN Beijing Bureau Chief Jaime FlorCruz contributed to this report
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