HONG KONG – Shares in Hong Kong real estate giant Sun Hung Kai Properties plunged Friday, March 30, after co-chairmen Thomas and Raymond Kwok, 2 of the city’s richest men, were arrested in a major corruption probe.
The stock plunged 15% as it resumed trade following the announcement late Thursday, March 29, that the billionaire brothers, who head one of Asia’s wealthiest families, had been taken into custody over bribery allegations.
The Independent Commission Against Corruption (ICAC) said 2 senior executives and a former senior government official had been detained in connection with alleged bribery offenxes.
“Another senior executive of the listed company and four others were earlier arrested for their alleged roles in the same case. While enquiries are continuing, no further comments will be made,” it said.
The commission did not name the suspects but Sun Hung Kai confirmed the brothers’ arrest in a statement to the Hong Kong stock exchange Thursday.
“The company has been required to provide certain information with regard to the allegations to the ICAC pursuant to a search warrant pertaining to the company’s premises,” the developer said.
The Kwoks had the full backing of the board and would continue in their current roles as co-chairmen and managing directors, it added.
State-run RTHK television said the city government’s former No. 2, Rafael Hui, had also been arrested. All 3 suspects had been released after several hours of questioning, it said.
Hui was a key ally of outgoing Chief Executive Donald Tsang, who is also facing corruption allegations over favors he has received from some of the city’s powerful tycoons, including trips on luxury jets and yachts.
Sun Hung Kai is the global financial centre’s biggest property developer by market capitalisation and the owner of some of the southern city’s most prominent landmarks.
Its shares bounced off their early lows but were still 11.8% down at HK$98.00 in mid-morning trade.
The Kwoks are Hong Kong’s richest real estate moguls with an estimated family wealth of $18.3 billion, 2nd only to the city’s richest man, Li Ka-shing, according to Forbes magazine.
The ICAC arrested senior Sun Hung Kai executive Thomas Chan earlier this month in relation to the same bribery case. He has been released and is reportedly back at work.
No details of the allegations have been released, but the South China Morning Post quoted unnamed sources saying they included millions of dollars in debts linked to Hui, a luxury apartment and irregularities over land deals.
Credit Suisse said that while the damage to the company’s share price might be exaggerated, the allegations would “seriously damage” the company’s corporate image.
Shares in Sun Hung Kai and two of its units, SmarTone Telecommunications Holdings and SUNeVision Holdings, were suspended from trading in Hong Kong on Thursday pending the release of price-sensitive information.
Blue-chip developer Sun Hung Kai earlier reported an interim net profit of $2.72 billion for the 6 months to December 31, 2011.
Revenue from property sales was HK$21.43 billion, and net rental income amounted to HK$5.28 billion.
The group has properties around Asia, including Hong Kong’s Four Seasons Hotel, International Finance Centre and recently developed International Commerce Centre, the city’s tallest building.
“Maintaining high standards of corporate governance is always an integral part of the group’s business philosophy,” it said in the earnings report. – Agence France-Presse