Thomas Kwok Guilty of Conspiracy With Hong Kong OfficialMichelle Yun
Thomas Kwok, the billionaire co-chairman of Sun Hung Kai Properties Ltd., was convicted of conspiring with Hong Kong’s former No. 2 official to commit misconduct in public office. His younger brother, Raymond Kwok, was cleared of all charges.
Thomas Kwok was found guilty of conspiring to pay HK$8.5 million ($1.1 million) to Rafael Hui from 2005 to 2007 in exchange for favorable treatment for Sun Hung Kai, the world’s second-most valuable real estate company. Hui was convicted on five charges, including conspiracy to accept HK$11.18 million in bribes during the time he was Hong Kong’s chief secretary and later a member of the government’s advisory body.
The nine-member jury deliberated for five days in Hong Kong’s highest-profile graft trial, which lasted 127 days. Thomas Kwok was acquitted of two other charges. Two others were also convicted for their roles in the conspiracy.
“I’m feeling very conflicted,” a red-eyed Raymond Kwok told reporters as he left the court building. He said he’s happy the verdict proved his innocence but “very unhappy” his brother and Thomas Chan, one of the defendants and a Sun Hung Kai executive, were found guilty.
Raymond Kwok walked from the defendant box after the verdicts were delivered and the other men were remanded in custody. A sentencing hearing is scheduled for Monday. Colin Cohen, Thomas Kwok’s lawyer, didn’t have any immediate comment. Each charge carries a penalty of as long as seven years.
Thomas Kwok will resign as chairman, managing director, and executive director of Sun Hung Kai with immediate effect, the company said in a statement after the verdicts. His son, Adam, will be appointed executive director. Both Thomas Kwok and Thomas Chan, who also quit today, will appeal their convictions.
The case focused on whether secret payments, loans and rent-free accommodation of more than HK$35 million to Hui from 2000 to 2009 amounted to bribes and misconduct in public office. Prosecutors argued the case unveiled collusion and abuse of office while the men’s lawyers said Hui had an unwritten consultancy contract which had to be concealed due to disputes within the Kwok family.
The charges against the five men were brought by the Independent Commission Against Corruption, or ICAC.
The case “demonstrated the commission’s determination to uphold Hong Kong’s probity,” the ICAC, the city’s anti-graft agency, said in a statement after the verdicts. It enforces the law “regardless of the background, status and position of the persons involved,” the statement said.
Thomas Kwok had testified payments made to Hui, including a sum that was made into his bank account hours before he was sworn in as chief secretary in 2005, were part of a verbal agreement to pay HK$15 million a year to advise the billionaire brothers and Sun Hung Kai. The deal had to be concealed from their eldest brother Walter, the court was told.
The payments were made to keep Hui “sweet” and he was to be their “eyes and ears” in government, prosecutors said.
Hui testified he didn’t see a conflict of interest when the city’s pension authority, which he led from 2000 to 2003, renewed a lease at a Sun Hung Kai property while he was negotiating his consultancy contract with the Kwoks.
Some payments to Hui were made circuitously with the help of Chan and the other defendant, Francis Kwan, to avoid upsetting Walter Kwok, defense lawyers said. Hui never did Sun Hung Kai any favors, the men’s lawyers have said.
The arrest of Thomas and Raymond Kwok on March 29, 2012, sparked the company’s biggest share plunge in 14 years. The stock tumbled 13 percent the next day to HK$96.50, erasing $4.9 billion in market value. The five men were charged in July that year. The shares rose as much as 3 percent today before being suspended. The stock will resume trading on Monday at 9 a.m.
“The company already has a contingency plan in place,” said Alfred Lau, an analyst at Bocom International Holdings Co., who has a “sell” rating on the stock. “The market may see the results as slightly positive, avoiding some technical sell off, as only one of the chairman is found guilty.”
Both brothers have a net worth of just over $10 billion each, ranking them among Asia’s top 25 richest, according to the Bloomberg Billionaires Index.
The case is Hong Kong Special Administrative Region v Rafael Hui, Thomas Kwok, Raymond Kwok, Thomas Chan and Francis Kwan, HCCC98/2013, in Hong Kong’s High Court.