Shares in Hong Kong real-estate giant Sun Hung Kai Properties (新鴻基地產) plunged yesterday after co-chairmen Thomas (郭炳江) and Raymond Kwok (郭炳聯), two of the city’s richest men, were arrested in a major corruption probe.
The stock plunged 15 percent as it resumed trade following the announcement late on Thursday that the billionaire brothers, who head one of Asia’s wealthiest families, had been taken into custody over bribery allegations.
The Independent Commission Against Corruption (ICAC) said two senior executives and a former senior government official had been detained in connection with alleged bribery offenses.
“Another senior executive of the listed company and four others were earlier arrested for their alleged roles in the same case. While inquiries are continuing, no further comments will be made,” the ICAC said.
The commission did not name the suspects, but Sun Hung Kai confirmed the brothers’ arrest in a statement to the Hong Kong stock exchange on Thursday.
“The company has been required to provide certain information with regard to the allegations to the ICAC pursuant to a search warrant pertaining to the company’s premises,” the developer said.
The Kwoks had the full backing of the board and would continue in their current roles as co-chairmen and managing directors, it added.
State-run RTHK television said the territory government’s former No. 2, Rafael Hui, had also been arrested. All three suspects had been released after several hours of questioning, it said.
Hui was a key ally of outgoing Hong Kong Chief Executive Donald Tsang (曾蔭權), who is also facing corruption allegations over favors he has received from some of the territory’s powerful tycoons, including trips on luxury jets and yachts.
Sun Hung Kai is the global financial center’s biggest property developer by market capitalization and the owner of some of the territory’s most prominent landmarks.
Its shares bounced off their early lows, but were still 11.8 percent down at HK$98 in mid-morning trade.
The Kwoks are Hong Kong’s richest real-estate moguls with an estimated family wealth of US$18.3 billion, second only to the city’s richest man, Li Ka-shing (李嘉誠), according to Forbes magazine.
The ICAC arrested senior Sun Hung Kai executive Thomas Chan earlier this month in relation to the same bribery case. He has been released and is reportedly back at work.
No details of the allegations have been released, but the South China Morning Post quoted unnamed sources saying they -included millions of dollars in debts linked to Hui, a luxury apartment and irregularities over land deals.
Credit Suisse said that while the damage to the company’s share price might be exaggerated, the allegations would “seriously damage” the company’s corporate image.
Shares in Sun Hung Kai and two of its units, SmarTone Telecommunications Holdings and SUNeVision Holdings, were suspended from trading in Hong Kong on Thursday pending the release of price-sensitive information.
Blue-chip developer Sun Hung Kai earlier reported an interim net profit of HK$21.13 billion (US$2.72 billion) for the six months to Dec. 31 last year.
Revenue from property sales was HK$21.43 billion and net rental income amounted to HK$5.28 billion.
The group has properties around Asia, including Hong Kong’s Four Seasons Hotel, International Finance Centre and recently developed International Commerce Centre, the city’s tallest building.
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