Sun Hung Kai Co-Heads to Face Graft Charges, RTHK Reports
Stock Chart for Sun Hung Kai Properties Ltd (16)
The billionaire co-chairmen of Hong Kong’s biggest property developer will face bribery-related charges, public broadcaster Radio Television Hong Kong reported as Thomas and Raymond Kwok returned to the headquarters of the city’s anti-graft agency three months after being arrested.
The brothers left the Independent Commission Against Corruption today without commenting, while shares of Sun Hung Kai Properties Ltd. (16) were halted from trading. The Kwoks and Hong Kong’s former No. 2 official Rafael Hui will appear in court this afternoon on charges linked to bribery and misconduct in public office, RTHK reported, without saying where it got the information.
The case may add pressure on Hong Kong’s Chief Executive Leung Chun-ying, who took office July 1, to address public concerns on the conduct of government officials. His development secretary resigned yesterday after the Apple Daily newspaper reported he had misused government’s housing allowances. Leung himself is being accused of misleading the public about illegal structures built at his home.
“Hong Kong’s reputation as a corruption free environment is already tainted,” said Billy Mak, a professor of finance and decision making at the Hong Kong Baptist University. “The government will still need to do something to restore investors’ confidence in the market here.”
The Kwoks have previously denied wrongdoing and Sun Hung Kai spokeswoman Margaret Ng today declined to comment. The company said it suspended its shares from trading pending a price-sensitive announcement.
Colin Cohen, a lawyer for Thomas Kwok, declined to comment. A lawyer for Raymond Kwok didn’t immediately return an e-mail requesting a comment. Hui declined to comment to reporters when he left ICAC today.
Sun Hung Kai, Hong Kong’s biggest developer by value, has fallen 14 percent since the March 29 arrests, compared with a 3.1 percent decline in the Hang Seng Property Index. Brokerages including Citigroup Inc. and Barclays Plc have cut their recommendations on Sun Hung Kai’s stock since the Kwoks’ arrest. Goldman Sachs Group Inc. suspended its ratings.
Standard & Poor’s changed the outlook on the developer’s A+ credit rating to negative after the arrest, saying that ICAC’s probe “may weaken the stability of its management and reputation of the company.” Moody’s Investors Service also changed the company’s A1 outlook to negative from stable.
Sun Hung Kai built and runs the 118-floor International Commerce Centre, which at 484 meters (1,588 feet) is Hong Kong’s tallest building, as well as the International Finance Centre complexes in Hong Kong and Shanghai.
Sun Hung Kai has said the brothers, who are out on bail, will continue to run the company, and the arrests won’t affect normal business operations.
Sun Hung Kai has been run by Thomas Kwok, 60 according to the latest company reports, and Raymond Kwok, 59, since the ouster as chairman in 2008 of their elder brother Walter. Walter is still a non-executive director.
Walter Kwok applied to the High Court in 2008 to prevent the board from removing him from office, alleging that his brothers opposed his inquiries into impropriety in the way the company awarded construction contracts, and other corporate governance issues.
He was arrested in May as part of the probe. Walter Kwok wasn’t seen at the ICAC today.
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