Thomas and Raymond Kwok were detained by the Independent Commission Against Corruption, Sun Hung Kai said late yesterday. Rafael Hui, a former No. 2 official in the government, was also arrested, according to a person with knowledge of the matter who asked not to be identified because of the ongoing probe.
The arrests mark one of the highest-level investigations in the ICAC’s 38-year history and come four days after a Hong Kong leadership election in which close ties between government and business emerged as a key campaign theme. Current Chief Executive Donald Tsang is being probed separately by the ICAC for accepting trips on the yachts and planes of tycoons.
“This will no doubt further strengthen the impression among the public that there is a collusion between business and government,” said Shiu Lik-king, a lecturer of public policy at the Chinese University of Hong Kong. “Politics is all about perception. Once the public think you’ve done it, it won’t matter even if you’re not convicted at the end.”
Sun Hung Kai fell 1.5 percent to HK$111.10 before it was suspended yesterday. The stock has dropped 4.1 percent since the company said March 19 Executive Director Thomas Chan Kui-Yuen was arrested by the ICAC. The stock will resume trading today.
Thomas and Raymond were detained in connection with a probe into offenses suspected to have been committed under the Prevention of Bribery Ordinance, the company said. They will keep running the developer, and the arrests won’t affect the normal business operations, Sun Hung Kai said.
Eight People Arrested
Hui, 64, who was chief secretary from 2005 to 2007, resigned as an independent director of AIA Group Ltd. (1299) “to attend to other commitments,” the insurance company said in a statement yesterday. In his more than three decades in government, Hui served as secretary for financial services and set up the city’s public pension fund before being appointed as the city’s No. 2 official.
The ICAC said it arrested two executives and a former senior government official for suspected corruption, without identifying anybody. Five other people were arrested earlier for their alleged role in the case, it said yesterday.
Raymond Kwok was shown entering the ICAC headquarters in footage broadcasted by Cable TV yesterday.
Margaret Ng, a spokeswoman for Sun Hung Kai, declined to comment, as did Alan Tse, a spokesman for the ICAC.
Family Business
Sun Hung Kai has been run by Thomas Kwok, 59, and Raymond Kwok, 58, since the ouster as chairman in 2008 of their elder brother Walter.
Walter Kwok 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.
In the election for the city’s next chief executive, candidate and former chief secretary Henry Tang lost public support after admitting knowledge of a basement built without planning permission under a luxury home his wife owns. Thousands of people took to the streets in early March to demand that Chief Executive Tsang quit after it emerged he had taken trips on yachts and planes of his tycoon friends.
Chief Executive-elect Leung Chun-ying, chosen by a panel of 1,193 on March 25, has promised measures to close the wealth gap and reduce home prices. Savills Plc said the price of an apartment in Hong Kong is almost two times higher than in London, which placed second on the property broker’s list of most expensive places to buy a home.
1970s Corruption
The ICAC was formed in 1974 after protests erupted in the city when a chief police superintendent fled while under investigation for possessing HK$4.3 million ($550,000) of assets. The officer, Peter Godber, was extradited from England in 1975, and was sent to jail for four years for conspiracy and accepting bribes, according to the commission’s website.
The agency also uncovered corruption among senior officials in the city’s legal department and the government property agency since its formation. It prosecuted 275 people last year, with 235 convicted according to its website.
Chan, an executive director for Sun Hung Kai since 1987, was arrested by the ICAC, the company said in a March 19 statement. Chan, 65, according to the developer’s annual report, is responsible for land acquisitions and project planning.
To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net
To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net; Hwee Ann Tan at hatan@bloomberg.net
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