The polar bear rug in the villa.

Guo applied for a permit around 2006 in the name of "developing a casual fishing industry". However, given that the main function of the sea area was for sea farming, his application was denied, the Shenzhen Economic Daily reported.

Apart from illegal use of the sea, safety has been another concern of the authority.

Using the villa for networking with friends, Guo sometimes hosts more than 100 people and arranges fireworks, which could generate structural problems or set fire to neighboring wooden rafts, said officials from the local oceanic supervision authority.

The oceanic supervision authority investigated the floating villa regarding its use of the sea area in January 2008 and held a hearing before imposing a fine on the developer, a subsidiary of Guo's Fashion Group Co, one year later.

The investigators found that the company illegally used a sea area of 15,800 sq m for 15 months. The authority decided to impose a fine of 711,000 yuan and ordered the developer to tear down the building.

However, the fine so far has not been paid because the company said it has no money.

The provincial oceanic administration has sent a special team to investigate the floating palace over the weekend and will announce the result of its investigation to the public soon.