Thomas Kwok (郭炳江) and Raymond Kwok (郭炳聯), joint chairmen of Sun Hung Kai Properties (新鴻基地產), Asia’s biggest developer, appeared briefly yesterday at Hong Kong’s anti-corruption agency to renew their bail as part of a graft investigation that has gripped the former British colony and sapped shareholder confidence in the conglomerate.
Rafael Hui (許仕仁), a former head of Hong Kong’s civil service, also reported to the Independent Commission Against Corruption (ICAC), leaving after a short stay.
More than US$7 billion has been wiped off the company’s market value since the billionaire Kwok brothers were arrested in late March. Their estranged brother, Walter Kwok (郭炳湘), was arrested earlier this month, widening a probe that has also netted Thomas Chan (陳鉅源), the board member in charge of land purchases, and Hui, Hong Kong’s chief secretary from 2005 to 2007 and a friend of the Kwoks since childhood.
Raymond Kwok arrived at the agency in the back of a black limousine wagon, looking stern. The cars of all three men were mobbed by TV crews and photographers trying to catch a glimpse of those involved in the ICAC’s highest-profile case since its founding in 1974.
All three renewed bail, one source with direct knowledge of the proceedings said. Chan and Walter Kwok were also expected to appear at the ICAC later yesterday. No charges have been laid by the ICAC, and shareholders say Sun Hung Kai, which owns the International Commerce Center, the city’s tallest building and home to Morgan Stanley, Deutsche Bank and the Ritz Carlton, has lacked transparency over the probe.
“The longer it goes on, the longer it drags on the stock, and potentially wears on the business itself,” said Tim Gibson, head of property equities in Asia for Henderson Global Investors, a fund manager that runs US$800 million in Asia real-estate stocks, including Sun Hung Kai. “It’s a distraction we could do without.”
The scandal has raised questions about the close ties between the clubby tycoon-dominated economy and the government.
The ICAC, which has said it is investigating suspected bribery and misconduct in public office, has the option of extending bail, charging those arrested or letting them go with an option to rearrest them at a later date.
Sun Hung Kai, which counts Hong Kong telecom, bus and waste management units as part of its empire, was worth US$37 billion before news of the March 29 arrests. The stock lost US$5 billion the next day and has continued to lose steam, sinking to a seven-month closing low on May 18.
Sun Hung Kai shares were up 0.51 percent yesterday, compared with the benchmark Hang Seng index, which was up 0.47 percent.
The three Kwok brothers have said they have done nothing wrong, and Thomas and Raymond insist it is business as usual at the family conglomerate. They have declined further comment, citing the investigation.
The Kwoks are preparing for a seven-year legal fight, according to one source familiar with their planning, who did not want to be identified.
One mutual fund investor said disclosure from Sun Hung Kai and investigators had been “grossly inadequate,” adding the company had done little other than set up an internal committee to handle the investigation.
“Their actions to date haven’t given minority shareholders a lot of comfort that they are dealing with it as seriously and aggressively as they could if it wasn’t the family,” said the investor, who did not want to be named.