* HK's corruption watchdog charges Sun Hung Kai's Kwoks
* Former Hong Kong civil service chief Hui also charged
* Hui ordered to surrender travel documents
* Case exposes cozy ties between tycoons and officials
* Two executives named deputy managing directors
By Alex Frew McMillan and Twinnie Siu
HONG KONG, July 13 Thomas and Raymond Kwok, the
billionaire co-chairmen of Sun Hung Kai Properties,
and Rafael Hui, Hong Kong's former No.2 public official, were
charged Friday in a bribery investigation surrounding Asia's
The Sun Hung Kai probe, Hong Kong's biggest corruption case
since its anti-graft agency was formed nearly 40 years ago,
involves one of Asia's most powerful families and the world's
second-largest property company with a market capitalisation of
The charges involve payments and unsecured loans of more
than $4 million and come amid other investigations of government
officials and a turbulent political transition that has set off
waves of protests from Hong Kong citizens angry about a host of
issues including cronyism and cozy ties between government
officials and the city's tycoons.
Friday's charges came a day after the anti-graft agency
arrested Hong Kong's development secretary on suspicion of
corruption, dealing a fresh blow to the city's new leader, Leung
Two others have also been charged in the Sun Hung Kai case.
Thomas Chan, the Sun Hung Kai board member in charge of land
purchases, and Francis Kwan, a former banker, were charged by
the city's Independent Commission Against Corruption. Kwan is a
former chief operation officer of the Hong Kong Futures
A total of eight charges were filed against the five men,
who appeared before a Hong Kong judge on Friday and said they
understood the charges, including conspiracy to offer advantages
to a public servant and misconduct in public office.
Hui, who was calm throughout the half-hour proceeding, was
named in each of the eight charges in connection with alleged
payments and unsecured loans totalling about HK$34 million
Raymond Kwok delivered a statement on the courthouse steps,
saying "I firmly believe I haven't done anything wrong. The Hong
Kong judicial system is very fair. I will do my best to defend
myself against those accusations. My goal is to prove my
Thomas Kwok declined to comment and Thomas Chan also
The magistrate hearing the case ordered Hui and Kwan to
surrender their travel documents and remain in Hong Kong. Public
prosecutor Kevin Zervos said Kwan was "a flight risk."
All five were released on bail and ordered not to contact a
list of prosecution witnesses given to the court. The case was
then adjourned until Oct. 12.
The ICAC said the alleged offences took place between 2000
and 2009, with six linked to Hui's tenure as Hong Kong's chief
secretary. Hui faces two misconduct charges alleging he accepted
rent-free use of two flats while head of Hong Kong's retirement
authority and two unsecured loans.
He is also alleged to have accepted payments to "wilfully
misconduct himself" to be "favorably disposed" to Raymond and
Thomas Kwok and their interests and to Thomas Chan, according to
Reuters reported in April the ICAC was investigating
payments to Hui, before and after his official role, in relation
to Sun Hung Kai.
Hui and Thomas Kwok face a joint charge of conspiracy to
commit misconduct in public office, while Hui and Raymond Kwok
faces a similar charge.
Hui, Thomas Kwok, Chan and Kwan are also charged with one
count of conspiracy to commit misconduct in public office,
alleging they conspired together for Hui to receive a series of
payments from Thomas Kwok, Chan and Kwan.
Shares of Sun Hung Kai, Asia's most widely held property
stock, fell 0.7 percent at the open, but were up 0.5 percent
when trading was suspended. The shares have slumped 14 percent
since the March arrests. Trading in Sun Hung Kai units SmarTone
Telecommunications Holdings Ltd and SUNeVision
Holdings Ltd, was also suspended on Thursday.
Sun Hung Kai has applied for permission to restart trading
UNCERTAIN CORPORATE FUTURE
The Kwoks have remained in their roles at Sun Hung Kai and
have maintained their innocence since the case first came to
light in March. The legal process in such a high-profile
prosecution may take as long as seven years with appeals likely
on either side.
The company has repeatedly said it has contingency plans in
place should the co-chairmen be unable to continue with their
The company said late on Friday that it has named its head
of residential sales, Victor Lui, and its head of project
management, Mike Wong, as deputy managing directors, to assist
Raymond and Thomas Kwok in discharging their duties. It also
named Thomas's son, Adam, 29, and Raymond's son Edward, 31, as
alternate board members to their fathers.
The family-run company is governed by a trust that controls
43 percent of the company's shares and which is overseen by the
Kwoks' 83-year-old mother, Kwong Siu-hing, who retired as
chairwoman last December after brokering Thomas and Raymond's
ascent to the top of the company. They run day-to-day affairs
and oversee a 12-man executive committee.
Also involved in the case but not charged on Friday is
Walter Kwok, the family's elder brother, who was ousted as
chairman of Sun Hung Kai Properties in 2008 and is estranged
from his brothers. He was arrested at the end of May.
Walter, kidnapped and held for ransom in the late 1990s,
lost a power struggle to his brothers and had to cede control of
the company's top role. Sources close to the family say Walter's
return to the company is not an option and he rarely
participates in board meetings.
The family-run company is unlikely to bring in outside top
management to replace the Kwoks, although it brought in outsider
Patrick Chan in 2009 from Hang Seng Bank as chief financial
officer. The company is known for its deep bench of middle
"The market has gradually built up more confidence that it
has priced in this issue," said Alfred Lau, a property analyst
at Bocom International. "This will remain an overhang for the
company for the longer term until the case is settled."
SENTINELS OF HONG KONG
Sun Hung Kai is the world's second-largest property company.
It and rival Cheung Kong (Holdings) dominate Hong
Kong's home-building and office-development industries.
With revenue of HK$62.6 billion ($8.1 billion) in the fiscal
year ended in June 2011, the property arm makes half its money
from building new apartments, with the rest from renting office
and retail property. It pays $1 million in tax to the Hong Kong
government each year.
The Kwoks, valued by Forbes magazine at $18.3 billion before
their arrests, rank locally in wealth only behind Asia's richest
man, Li Ka-shing, founder Cheung Kong.
Sun Hung Kai developed the city's two tallest buildings, the
International Finance Centre and the International Commerce
Centre, which stand like sentinels on either side of Victoria
Harbour. The conglomerate, founded by the Kwok brothers' father,
also has businesses in the city's bus and waste disposal