March 20 (Bloomberg) -- Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer by market value, said an executive director was arrested by the city’s anti-corruption body as part of an investigation into alleged bribery.
Sun Hung Kai has set up a panel of three board members to handle the investigation into Thomas Chan Kui-Yuen, the developer said in a statement to the city’s stock exchange yesterday. The shares declined to the lowest in a month.
Chan was in charge of land acquisitions by the $38 billion builder of Hong Kong’s tallest office tower. The company has been run by co-chairmen Thomas and Raymond Kwok since the ouster as chairman in 2008 of their brother Walter, who alleged they opposed his questions over corporate governance matters.
“While the news will likely be negative for stock sentiment, we don’t see much concern unless the allegations were to extend to the company and other senior management,” John Chan, an analyst at Standard Chartered Plc, wrote in a report today.
Sun Hung Kai shares fell 2.4 percent to HK$113, the lowest since Feb. 13, at the local time close. The Hang Seng Property Index, which tracks the city’s seven-biggest builders that include Sun Hung Kai, declined 1.2 percent.
The Independent Commission Against Corruption is investigating a suspected “offense or offenses” related to the city’s Prevention of Bribery Act, Sun Hung Kai said in its statement yesterday without giving further details. ICAC spokesman Alan Tse declined to comment, as did Sun Hung Kai spokeswoman’s Margaret Ng.
Chan, an executive director for Sun Hung Kai since 1987, is responsible for land acquisitions and project planning, according to the company’s latest annual report. His age is given as 65 in the report, which was published in October. He was paid HK$11 million ($1.4 million) in the financial year ended June 2011, the report said.
Walter Kwok alleged in the 2008 court filing that Sun Hung Kai had purchased land at a “much higher” price from a seller introduced by Chan, than was previously offered.
In the 2008 filing, Walter Kwok said his brothers, both vice chairmen at the time, disagreed with his attempts to investigate the circumstances surrounding the purchase of the land in Hong Kong’s New Territories.
The former chairman had in 2008 applied to the court to prevent the board from removing him from office, alleging that his brothers opposed when he questioned whether there was impropriety in the way the company awarded construction contracts, and other corporate governance matters.
In 2010, Walter Kwok, who took over in 1990 after the death of his father and company co-founder Kwok Tak Seng, was ousted as a beneficiary from the family trust through which the family controls Sun Hung Kai.
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Lucy Chan, a spokeswoman for Walter Kwok, said her client will wait for further developments before commenting on the arrest.
Co-founded by Kwok Tak Seng and billionaire Lee Shau-kee in 1963, the company was listed on the Hong Kong stock exchange in 1972. It benefited from a three-decade surge in home prices to become the city’s biggest developer, with a market value of $38 billion.
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. The developer also manages luxury apartment projects such as the Arch in West Kowloon and the Larvotto in the Island South district. It has received awards for best corporate governance in Hong Kong in a poll by Asiamoney magazine, as well as recognitions from Corporate Governance Asia, according to Sun Hung Kai’s website.
The family’s combined wealth of $15.4 billion is third on Forbes magazine’s list of Hong Kong’s richest.
Chan is also a non-executive director of Sunevision Holdings Ltd., a Sun Hung Kai unit listed on Hong Kong’s Growth Enterprise Market.
Hong Kong’s Independent Commission Against Corruption has won convictions against corporate directors including John Terence Hung, a former director of Wharf (Holdings) Ltd., a voting member of the Hong Kong Jockey Club who solicited and accepted bribes in relation to a club membership application.
Last week the former head of surgery at the University of Hong Kong was convicted after the ICAC charged him with false accounting and using university money to cover up a case of embezzlement.
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