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.
Photo: Reuters
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.
Analysts’ ratings on Sun Hung Kai stock have all been negative since the arrests of the firm’s co-chairmen. “Strong Buy” and “Buy” recommendations have dropped to eight from 18 two months ago, and the number of “Strong Sell” and “Sell” notices has more than doubled to five. “Hold” ratings have jumped to 10 from four.
Sun Hung Kai’s net income is forecast to more than halve in the year to the end of the month, to HK$21.13 billion (US$2.72 billion), according to a mean estimate on Thomson Reuters StarMine. Full-year results are due in September.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure