Sex and betrayal in the Kwok family who control the biggest RE f

Straits Times: Sun, Apr 01

Even before last week, the Kwok family story had all the juicy ingredients of a Hong Kong TVB drama serial - a dynasty of billionaires, a kidnapping, feuding siblings, a mistress, charges of mental illness, a bitter boardroom coup, a family torn apart. Now add dramatic arrests and allegations of corruption involving the highest levels of government. The Hong Kong media has been in a frenzy since news broke last Thursday of the shock arrest of Thomas and Raymond Kwok, the brothers who run Sun Hung Kai Properties (SHKP), Hong Kong's largest property developer, on suspicion of bribery. Also arrested was a former top government official - identified by the media as former chief secretary Rafael Hui - for alleged 'misconduct in public office'. No charges have been filed and no official details were available about the case. The company's share price took an immediate hit, diving 13 per cent for a loss of US$4.9 billion (S$6 billion) by the close of trading last Friday. Paradoxically, until last week, the Kwok brothers had managed to stay relatively low-key - despite their family history - in a city where tycoons are treated like movie stars. Among Hong Kong's many powerful property tycoons, the family had enjoyed a comparatively untainted reputation. 'Their property projects had a good reputation for quality,' Mr David Webb, a shareholder activist, told the Wall Street Journal. 'And their corporate structure is cleaner than some groups that have multiple different companies in their structure.' An investment banker who used to deal regularly with the company told the Financial Times he always found the brothers 'straightforward' to deal with. Thomas and Raymond Kwok, aged 61 and 60 respectively, were also known for being extremely devoted to their mother and for their evangelical Christian faith. In 2009, the Kwok brothers built a 137m replica of Noah's Ark, with nearly 70 pairs of fibreglass animals, as a theme park 'to promote positive values'. In the 1990s, Thomas pushed successfully to establish a church in the pyramid atrium on the 75th floor of Central Plaza, one of Hong Kong's three tallest buildings. The beginning The company was founded in 1963 by family patriarch Kwok Tak-seng, who rose to prominence by breaking into every facet of the property business, from residential to hotels to industrial development. Born in Zhongshan, in China's Guangdong province, he moved to Hong Kong after World War II. He partnered Mr Fung King-hey and Mr Lee Shau-kee to establish Sun Hung Kai Properties in 1958. Mr Lee, who went on to found Henderson Land Development Co, is now the city's second-richest man behind Mr Li Ka-shing, who helms Cheung Kong Holdings. Like Mr Lee and Mr Li, Mr Kwok went on to make a fortune from the three-decade surge in Hong Kong home prices. 'Just like their major competitors, Sun Hung Kai was in the right industry during the biggest housing demand boom in Hong Kong's history,' Professor Eddie Hui, from the Department of Building and Real Estate at the Hong Kong Polytechnic University, told Bloomberg News. Sun Hung Kai is known for its high-end apartments, which have helped distinguish the company, Prof Hui added. After its listing on the city's stock exchange in 1972, SHKP's stock market value grew to more than US$30 billion, with assets of HK$442 billion (S$72 billion) as of December last year. In market value, SHKP was second only to US mall owner Simon Property Group Inc, the world's biggest with US$44.3 billion. Before last Friday, the Kwoks' 42 per cent stake in SHKP gave them an estimated fortune of US$18.3 billion, ranking them the 27th wealthiest family in the world, according to Forbes Magazine. A death and a kidnapping When the Kwok patriarch died of a heart attack on Oct 30, 1990, at the age of 79, he left behind his wife and three sons. The reins of the Kwok empire passed to eldest son Walter, who became chairman and chief executive. But the family's wealth attracted the notice of Cheung Tze-keung, a prominent gangster nicknamed Big Spender. In 1997, Walter was kidnapped by Cheung, beaten, stripped to his underwear and kept for a week in a wooden box before his family negotiated his freedom. It is said that matriarch Kwong Siu-hing held a secret meeting with Big Spender in a luxury Central apartment as her eldest son languished, half-naked, in the wooden container box in a village house in the New Territories. Gangster Cheung got away with the biggest ransom paid in Hong Kong history - HK$600 million or US$77.3 million at current exchange rates - but he was caught and executed by firing squad on the mainland in 1998. Bitter feud splits family Although Walter was freed, all was not well in the Kwok family and a bitter battle for control of the SHKP empire exploded into public view in 2008. The two younger brothers, Thomas and Raymond, and their 79-year-old mother staged a successful coup after claiming Walter was unfit for duty because he was mentally disturbed - claims that Walter denied. But there were reports that the family was actually furious that Walter, a married man, had been conducting a long-running affair and reportedly tried to bring his alleged lover onto the board of SHKP. The woman at the centre of that storm was Ms Ida Tong Kam-hing, a Hong Kong lawyer five years Walter's senior. Walter, now 62, has known her for more than 30 years, from before he married his wife, Wendy. Ms Tong was dubbed 'HK's Camilla' by Hong Kong's tabloid press, who likened the relationship to Prince Charles' secret long-running affair with Camilla Parker- Bowles from before his marriage to Princess Diana. The media painted a picture of a plain-looking, aggressive woman, who had frequent spats with the wives of Walter's two brothers. Hong Kong media reported that, as a young man, Walter broke off his relationship with Ms Tong because his father disapproved of her. But the relationship reportedly bloomed again after his kidnap ordeal. In the course of the nasty public battle, Walter filed a defamation suit against his brothers for allegations he says they made against him in three letters addressed to their mother and to SHKP directors. According to the suit, the letters suggested that Walter suffered from bipolar disorder and was a liar who was unfit for his position. Following a three-month battle played out in newspaper headlines, Walter was eliminated from the family trust and relegated to a non-executive director post. His mother took over as chairman until December last year when Thomas and Raymond became joint chairmen. There is speculation that the current investigation by Hong Kong's Independent Commission Against Corruption (ICAC) may be tied to a court case filed by Walter four years ago in an effort to save his job, the Journal reported. At that time, Walter claimed that he was being forcibly removed as chairman because he wanted to investigate certain matters within the company and improve its corporate governance. One incident he highlighted in a writ of summons filed to the Hong Kong High Court referred to how Thomas Chan, an executive director arrested last week, had allegedly arranged for SHKP to acquire a parcel of land through a middleman at a higher price than the seller had originally offered. The judge ruled then that the issue was a matter for the company to address internally. Walter said last Friday through his spokesman that he had no comment on the arrests. Spokesman Lucy Chan told the Financial Times: 'We hope that people will stop making meaningless speculation in the absence of any evidence.' Since leaving SHKP's executive management, Walter has made several property investments, including a joint venture with SHKP rival Li Ka Shing's Cheung Kong Holdings to develop a residential project. The ICAC also said last Thursday that it had arrested Mr Rafael Hui - a long-time Kwok family friend and once special adviser to SHKP. Nicknamed 'king of strategy', Mr Hui was seen as the most trusted aide to Chief Executive Donald Tsang, who gave him the city's No. 2 job after he was elected in 2005. Mr Hui was secretary for financial services from 1995 to 2000. The 64-year-old veteran civil servant even worked briefly with ICAC's graft-busters during their toughest days in the 1970s. Mr Hui has been described as the 'mastermind' behind Thomas and Raymond and their mother's efforts to take control of the family's business empire - something both SHKP and Mr Hui have denied. Last Friday, Hong Kong's Standard newspaper, quoting unidentified sources, reported that the arrests involved 'a senior government official who allegedly revealed confidential land sales information to a developer in 2003 in exchange for staying in a flat for free for three months'. 'After that, the official rented the flat at a rate lower than the market price.' [e-mail] Source: The Straits Times