March 29 (Bloomberg) -- Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer by market value, was suspended from trading as Cable TV reported this afternoon that billionaire co-chairmen Thomas and Raymond Kwok were asked to assist in an investigation by the city’s anti-graft body.
Raymond Kwok was shown entering the Independent Commission Against Corruption’s headquarters in the city’s Central business district in footage broadcasted by Cable TV. Kwok didn’t speak to reporters. Sun Hung Kai suspended trading of its stock earlier today, pending the release of a statement.
“This will have a negative impact on the shares when trading resumes,” said Adrian Ngan, Hong Kong-based analyst at Citic Securities International Co. “The extent of the impact will depend on whether charges are really being made.”
Sun Hung Kai Executive Director Thomas Chan Kui-Yuen, who was in charge of land acquisitions by the $37 billion builder of Hong Kong’s tallest office tower, was arrested by the body, the company said in a March 19 statement. The developer has been run by Thomas and Raymond since the ouster as chairman in 2008 of their brother Walter, who alleged they opposed his questions over corporate governance matters.
Margaret Ng, a spokeswoman for Sun Hung Kai, declined to comment, as did Alan Tse, spokesman for ICAC.
Rafael Hui, a former consultant to the company, also has been asked to help in the probe, Cable TV said today, without citing anyone. Hui was chief secretary for Hong Kong from 2005 to 2007, as well as being secretary for financial services from 1995 to 2000.
Hui resigned as an independent director of AIA Group Ltd. “to attend to other commitments,” the insurance company said in a statement today.
The shares have dropped 4.1 percent since the company announced Chan’s arrest on March 19, compared with the 2.6 percent drop in the Hang Seng Property Index, which tracks the city’s seven-biggest builders including Sun Hung Kai. The stock fell 1.5 percent to HK$111.10 before it was suspended.
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.
Sun Hung Kai said in the March 19 statement that it set up a panel of three board members to handle the investigation.
Former Chairman Walter Kwok, the elder brother of Thomas, 59, and Raymond, 58, had in 2008 applied to the court 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. Their ages are cited in the company’s latest annual report.
The Kwok family’s combined wealth of $15.4 billion is third on Forbes Magazine’s list of Hong Kong’s richest.
Walter Kwok, 60, became chairman in 1990 after his father’s death before being ousted from the family’s trust that controls Sun Hung Kai in 2010. He’s since set up his own property fund.
Listed on the Hong Kong stock exchange in 1972, Sun Hung Kai benefited from a three-decade surge in home prices to become the city’s biggest developer. Under Walter Kwok, the company’s value had ballooned 10-fold, while assets rose to HK$442 billion as of December 2011.
Hong Kong, a former British colony returned to Chinese rule in 1997, is the world’s most expensive place to buy a home according to Savills Plc. Home prices in the city have surged more than 70 percent since early 2009 on record low mortgage rates and a lack of new supply.
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.
Kwok Tak Seng co-founded the company with billionaire Lee Shau-kee, who now controls Henderson Land Development Co. and is the city’s second-richest man, and Fung King Hei in 1963. The city’s richest man is Li Ka-shing, chairman of Cheung Kong (Holdings) Ltd., Hong Kong’s second-biggest developer by value.
Sun Hung Kai’s profit excluding property revaluation gains or losses for the six months to Dec. 31 climbed to HK$11.8 billion from HK$10.4 billion a year earlier.