Investors used to love Sun Hung Kai Properties and its professional management by the three billionaire Kwok brothers who formed what was called an iron triangle. But their bitter family feud and now corruption charges against two of the brothers reveal once again the limits and unreliability of family-controlled business empires in Hong Kong.
Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, co-chairmen of the city's largest listed developer by market capitalisation, were charged with bribery and public misconduct on Friday.
The company now faces an unprecedented challenge; restoring the confidence of shareholders and would-be investors should be paramount. But what did the company do on Friday after its bosses were charged? Instead of hiring professional managers with a trusted reputation, it appointed two of the Kwoks' sons to be alternate directors. Aged 29 and 31, the two hold impressive academic titles but are complete unknowns with little or no business track record.
It is hard to believe this was the best plan SHKP could come up with. The company and the Kwok family had almost four months to prepare - from when the Kwok brothers were arrested to their court appearances on Friday.
This kind of crisis management by parachuting in an inexperienced family member has happened before. When the eldest brother, Walter Kwok Ping-sheung, was ousted after a boardroom fight with his two brothers, their mother, Kwong Siu-hing, took over for a period as chairwoman and non-executive director in 2008. Described as the family's matriarch, Kwong had no real business experience. A bitter Walter called her a housewife, but an unnamed associate claimed she had been heavily involved in the business.
Since the Kwoks' arrest, share prices have taken a beating. If they have not plunged further, it is largely thanks to the company's large holding of quality Hong Kong property rather than any response from its management.
As is often the case in the local business world, it's all about keeping family control rather than protecting shareholders.