Billionaire HK property tycoons charged in bribery case
UPDATED @ 03:59:05 PM 13-07-2012
HONG KONG, July 13 — Thomas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai Properties, and Rafael Hui, Hong Kong’s former No.2 public official, were charged today in a bribery investigation surrounding Asia’s largest developer.
The Sun Hung Kai probe, Hong Kong’s biggest corruption case since its anti-graft agency was formed nearly 40 years ago, involves one of Asia’s most powerful families and the world’s second-largest property company with a market capitalisation of US$32 billion (RM96 billion).
The charges come amid other investigations of government officials and a turbulent political transition that has set off waves of protests from citizens angry about a host of issues including cronyism and cosy ties between government officials and the city’s tycoons.
Today’s charges came a day after the anti-graft agency arrested Hong Kong’s development secretary on suspicion of corruption, dealing a fresh blow to the city’s new leader, Leung Chun-ying.
Two others have also been charged in the Sun Hung Kai case. Thomas Chan, the Sun Hung Kai board member in charge of land purchases, and Francis Kwan, a former banker, were charged by the city’s Independent Commission Against Corruption. Kwan is a friend of Hui’s, sources have told Reuters, and a former chief operation officer of the Hong Kong Futures Exchange.
A total of eight charges were filed against the five men, including conspiracy to offer advantages to a public servant and misconduct in public office.
Hui, Thomas and Raymond Kwok and Thomas Chan all appeared at a Hong Kong court to hear formal charges this afternoon. It was not immediately clear if Francis Kwan appeared.
Thomas Kwok declined to comment to Reuters, while a smiling Thomas Chan also declined comment at the packed courthouse.
The ICAC said the offences took place between 2000 and 2009. Hui faces two misconduct charges alleging he accepted the rent-free use of two flats and two unsecured loans, one for the sum of HK$1.5 million. He is also alleged to have received two other payments, one for HK$5 million and another for HK$4.125 million.
Reuters reported in April that the ICAC was looking into payments to Hui, before and after his official role, in relation to Sun Hung Kai.
Hui and Thomas Kwok face a joint charge of conspiracy to commit misconduct in public office, while Hui and Raymond Kwok face a similar conspiracy charge.
Hui, Thomas Kwok, Chan and Kwan are also charged with one count of conspiracy to commit misconduct in public office, alleging they conspired together for Hui to receive a series of payments from Thomas Kwok, Chan and Kwan.
Thomas Kwok’s lawyer declined to comment while lawyers representing the other four could not immediately be reached for comment.
Shares of Sun Hung Kai, Asia’s most widely held property stock, fell 0.7 per cent at the open, but were up 0.5 per cent when trading was suspended. The shares have slumped 14 per cent since the March arrests. Trading in Sun
Hung Kai units SmarTone Telecommunications Holdings Ltd and SUNeVision Holdings Ltd, was also suspended yesterday.
Uncertain corporate future
The company has repeatedly said it has a contingency plan in place should the co-chairman be unable to continue with their duties, but has declined to say what that is.
A spokeswoman for Sun Hung Kai declined to comment today on potential succession plans.
The family-run company is governed by a trust that controls 43 per cent of the company’s shares, overseen by the brothers’ 83-year-old mother, who was rushed to a local hospital last month for an emergency yet to be identified. She has since left and has recovered, a company source told Reuters.
With the charges now official, the future leadership of the company is in question. The mother, Kwong Siu-hing, has overseen the operation for decades.
Also involved in the case but not charged today is Walter Kwok, the family’s elder brother, who was ousted as chairman of Sun Hung Kai Properties in 2008 and is estranged from his brothers. He was arrested at the end of May. Walter, kidnapped and held for ransom in the late 1990s, lost a power struggle to his brothers and had to cede control of the company’s top rank. Walter, should he remain clear of charges, could return to his prior post.
The South China Morning Post reported in April that the board could also tap a retired former executive director, Michael Wong Yick-kam, in a caretaker role while the company is in transition.
“The market has gradually built up more confidence that it has priced in this issue,” said Alfred Lau, a property analyst at Bocom International. “This will remain an overhang for the company for the longer term until the case is settled.”
Lau also said that the impact of the case could stretch beyond the company, as charges involving land grants “might bring more concern to the industry.”
Sentinels of Hong Kong
Sun Hung Kai is the world’s second-largest property company. It and rival Cheung Kong (Holdings) dominate Hong Kong’s home-building and office-development industries.
With revenue of HK$62.6 billion in the fiscal year ended in June 2011, the property arm makes half its money from building new apartments, with the rest from renting office and retail property. It pays US$1 million in tax to the Hong Kong government each year. Sun Hung Kai recently expanded the executive committee that oversees the company to 12 members, from seven.
The Kwoks, valued by Forbes magazine at US$18.3 billion before the arrests, rank locally in wealth only behind Asia’s richest man, Li Ka-shing, founder of rival developer Cheung Kong.
Sun Hung Kai developed the city’s two tallest buildings, the International Finance Centre and the International Commerce Centre, which stand like sentinels on either side of Victoria Harbour. The conglomerate, founded by the Kwok brothers’ father, also has businesses in the city’s bus and trash systems. — Reuters