Hong Kong's feudal lords

PUBLISHED : Monday, 14 June, 2004, 12:00am
UPDATED : Monday, 14 June, 2004, 12:00am

The presumptions of several of Hong Kong's most prominent businessmen never cease to astonish. The high-profile 'business' critics of more democracy, those who insist that Hong Kong people are insufficiently educated, that it would lead to a welfare state and a 'free lunch' for the indigent, are people whose own contributions to wealth creation require examination.

They have three characteristics. First, they are mainly from the property sector.

Second, they mostly inherited their wealth. Starting life with a few billion from daddy is not the best qualification for making sweeping statements about welfare and its recipients.

Third, their public companies mostly have a habit of shuffling assets around between each other, and between themselves and the private ones.

In short, their wealth-creation abilities are suspect.

Take Ronnie Chan Chi-chung, chairman of Hang Lung, the lead figure in the Hong Kong Development Forum, the new anti-democrat business and professional group. Mr Chan used to boast of his American citizenship. He is chairman of the local branch of the Asia Society, but the US constitution, 200 years of 'one man, one vote', now gets in the way of Chinese patriotism. Under his father, Hang Lung was more prominent commercially than today. Mr Chan's most recent prominent contribution to business was not in Hong Kong but in the US, where hundreds of thousands of Enron shareholders lost billions of dollars as a result of the fraudulent activities by some senior management of the company.

There is no suggestion that Mr Chan was in any way aware of, or responsible for, manipulations of the accounts and creation of phony profits, nor that he was himself involved in, or had any knowledge of, the frauds. But as a non-executive director on the board of Enron, he did have oversight responsibilities on behalf of the shareholders. This was especially so as he was on the board's audit and finance committees.

David Webb, the shareholder activist and board member of Hong Kong Exchanges and Clearing, has challenged the independence of most of the 'independent non-executive directors' of Hang Lung Properties. He has pointed out that three of the five are also directors of its parent company and one is a former employee and managing director. They were thus, claims Mr Webb, unable to give impartial advice to shareholders on key issues such as the connected party transactions which have arisen with Hang Lung group asset shuffles.

New World Development managing director Henry Cheng Kar-shun is the son of Cheng Yu-tung, who parlayed prominence in gold trading into a property empire. Like other second-generation tycoons, the son may have over-reached himself. New World underperformed for almost a decade as it struggled with a huge debt burden.

Wharf chairman Peter Woo Kwong-ching's prominence in the business community comes from his marriage to a daughter of Y.K. Pao and inheritance of management of the property and retail side of the Pao empire. Wharf is a competently run group and Mr Woo is performing some public service at the Trade Development Council. But he, too, seems unable to resist private-public asset shuffles - most recently one involving Wheelock, City Super and Joyce Boutique.

Then there is Chief Executive Tung Chee-hwa, whose inheritance had to be rescued by money from Beijing, some unusually forgiving bankers and shuffles of assets between public and private companies. Hopewell Holdings' Gordon Wu Ying-sheung can certainly claim engineering capabilities and vision when it comes to bridges, roads, power stations and transport systems. And at least he kept his large property inheritance. However, Hopewell has, in practice, done little much more than ride the ups and downs of the property market.

I will not dwell here on the historic linkages of such figures as Stanley Ho Hung-sun, or of the patriots behind the Emperor Group, the former employer of Legco president Rita Fan Hsu Lai-tai. Nor will I dwell on how some billionaires got their money. All are entitled to their opinions on political reform. But those who claim the right to extra influence on political systems and decision-making on account of the size of their business need to have their credentials closely examined. In particular, they need to prove they have added to wealth, rather than simply being beneficiaries of birth or politics.

As it is, Hong Kong has, like the Philippines, the hallmarks of a modernised version of feudalism where land ownership and political power go hand in hand.

Philip Bowring is a Hong Kong-based journalist and commentator