Advertisement
Advertisement
Sun Hung Kai Properties
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
Sun Hung Kai Properties co-chairman Thomas Kwok Ping-kwong appears at the High Court in Admiralty on Friday. Photo: Felix Wong

Update | SHKP announces management reshuffle after conviction of Thomas Kwok in graft trial

Raymond Kwok becomes the sole chairman as Thomas Kwok's son named executive director

Sun Hung Kai Properties, the biggest property developer in Hong Kong in terms of market value, announced a management reshuffle last night after its co-chairman Thomas Kwok Ping-kwong and executive director Thomas Chan Kui-yuen were found guilty of bribery yesterday afternoon.

Both Kwok and Chan resigned with immediate effect while Thomas Kwok's 31-year old son Adam Kwok Kai-fai was appointed an executive director, the company said in a statement to the stock exchange last night.

Thomas Kwok and Chan were both remanded following the verdict and will appear in court again on Monday for mitigation. Both men will appeal against their convictions, the company said last night.

Kwok's co-defendant, younger brother and SHKP co-chairman Raymond Kwok Ping-luen walked out of court a free man, after being acquitted on all four counts of bribery and of furnishing false information. Raymond Kwok is now the sole chairman of the company.

In its statement, SHKP said that "the company is of the view that the normal daily business and operations of the company and its subsidiaries (together with the group) have not been affected and will not be affected" by the verdict and resignation of the two executives.

"The executive committee of the company continues to be responsible for the day-to-day management and operation of the group as usual," it said.

The company will apply to resume trading on Monday morning, after it suspended trading from 2.45pm yesterday, just before the jury released its verdict. It stood at HK$113.30 just before the suspension, 1.4 per cent higher than Thursday's close at HK$111.70. Overall, the stock has been up about 15 per cent this year, beating the benchmark Hang Seng Index, which has risen only 0.65 per cent.

The two brothers and Thomas Chan, a long-time employee of SHKP, were in the dock during the 131-day trial facing multiple charges of corruption.

The markets, however, appeared to have shrugged off the impact of the court case on the company's fortunes.

VC Brokerage director Louis Tse Ming-kwong said: "The market has fully digested the scandal of the corruption case by now. It is all expected by the market that they may be guilty and may face jail. As such … the share price might see slight fluctuations after the verdict in the short term, but the movements would not be substantial."

Thomas Kwok was found guilty of one charge of conspiracy to commit misconduct in public office. He was convicted of paying Rafael Hui Si-yan HK$8.5 million in 2005 to act as his eyes and ears in government ahead of Hui becoming chief secretary and an Executive Council member. Chan, a loyal employee for 40 years, was found guilty of two charges, bribery and conspiracy to commit misconduct in public office, for transferring funds between Thomas Kwok and Hui.

The fact that the graft trial was about individual executives of the property developer and not about the firm itself made a difference to the market, Tse noted.

"If the ruling was to impose any fine on SHKP, it would have been very bad news for the company," he said.

Shortly after the Independent Commission Against Corruption arrested the brothers in March 2012, they resumed their duties as co-chairmen.

And since the trial started in May, they had returned to the Sun Hung Kai Centre in Wan Chai almost every time after the day's hearing ended, people familiar with the pair said.

But the firm now has two new deputy managing directors; Mike Wong Chik-wing and Victor Lui Ting. Thomas Kwok's son Adam Kwok Kai-fai and Raymond Kwok's son Edward Kwok Ho-lai have also been named as alternative directors to their fathers since 2012.

KGI Asia director Ben Kwong Man-bun called the appointments "a good corporate governance practice".

"Since the arrests, the company has put succession planning in place," Kwong said. "This … would ensure the company is not affected by any executives who may need to step down because of legal issues."

Local listing rules do not require company directors who are convicted in a court of law to step down, but it is common practice to resign if found guilty. Prosecutors yesterday also asked the judge to disqualify Thomas Kwok and Chan as directors.

Kwong agreed the ruling would not hurt the share price. "SHKP is not managed only by the two brothers, but has a board with other executive and independent directors."

Another analyst said many overseas investors had queries about the case only during the first few months after the arrests on March 29, 2012.

Panic selling the following day caused SHKP stock to tumble 13 per cent to a 14-year low of HK$94, wiping HK$38 billion from the company's market value in a single day.

When the Kwoks were charged that July, however, the shares nudged down just 0.895 per cent to HK$94.50."In the past year or so, no one has raised questions about the corruption charges during the analysts' briefings," the analyst, who declined to be named, said.

"Brokers and analysts now pay more attention to the company's development plan. In fact, the two brothers and Chan have had to attend court hearings almost every day in the past six months, but SHKP has continued to buy land and sell flats. This shows the company can run its business as usual even if any of the trio goes to jail."

SHKP was the most aggressive land buyer among all the property firms, having invested HK$50 billion since 2011, the analyst noted.

The company was founded in 1963 by the Kwoks' father, Kwok Tak-seng. It was listed in 1972.

This article appeared in the South China Morning Post print edition as: Guilty duo step down from jobs at SHKP
Post