Family ructions shake Kwok empire

Sun Hung Kai Properties and the three brothers who control the company have often been held up as the ideal example of how an inherited family business can be well run, transparent and profitable. But on Monday, chairman and eldest son Walter Kwok Ping-sheung, 57, surprisingly announced he would temporarily stand down from his position, ostensibly for a three-month overseas business sojourn to Beijing and the US. What has since emerged is that this is a family as prone to drama as any other. And they have been played out in the boardroom and offices of Hong Kong's biggest property developer by a family whose collective wealth of US$24 billion is second only to Li Ka-shing's. But unlike Mr Li, whose clashes with son Richard Li Tzar-kai have been aired widely in the press, the Kwoks have managed to keep whatever personal grievances they may have had out of the public domain. While other tycoons are prone to flaunting their money through grandiose purchases of giant truffles, football clubs or private jets, the Kwoks seemingly shun the spotlight and rarely grace the social pages. The three Kwok brothers - Walter, Thomas Kwok Ping-kwong and Raymond Kwok Ping-lue - have previously won praise and awards for running the 'best managed' company not just in Hong Kong, but in Asia. Since taking over from their father Kwok Tak-sing after his death in 1990, the fraternal triumvirate has taken Sun Hung Kai onwards and upwards, making the brothers billionaires many times over. This progress has translated into strong support from institutional investors because of the firm's proven track record and relative transparency. Probably the firm's most high-profile development at the moment is the International Commerce Centre above the MTR Kowloon, but there are plenty of others in Hong Kong and over the border. Walter Kwok's decision this week to step aside appears to be linked to a mysterious 60-year-old woman called Ida Tong Kam-hing, whom, it is understood, the other two brothers blame for exerting undue influence over Walter Kwok's business decisions. Matriarch Kwong Siu-hing was asked to step in and act, and she did, forcing Walter Kwok out. Ms Kwong controls a majority shareholding through a family trust. On January 23, Mr Kwok incorporated a private company called Sun Hung Kai Properties International Limited, with himself as the sole director. Then on the day it was announced Mr Kwok was stepping down, an application was made with the companies register to change the company's name. A Sun Hung Kai Properties spokeswoman would not say whether her company had filed a complaint to have the name changed - a right any existing firm has if it says a new company's name is too close to its name. Ms Tong has been in the background for more than 30 years - well before the chairman married his wife, Wendy - and at one stage Walter is believed to have approached his father about marrying her. But Kwok senior did not take to the woman, and his son was told he would not get his approval for such a union. Mr Kwok apparently stayed close to Ms Tong, and she was a regular fixture at his side during business functions. However, the family showed little concern about the long-term relationship until the woman displayed an ambition to take over parts of the firm, including its lucrative shopping mall and mainland business interests. Ms Tong has been alleged by a source close to the company, who has spoken extensively to the Sunday Morning Post, to have lobbied the chairman to hire up to 10 middle-ranking staff to work on mainland investments such as land acquisitions and leasing. Once hired, these staff are also alleged to have taken advantage of their direct access to the chairman to advise him to buy particular sites in Beijing. 'These sites were 20 or 30 per cent above the market value,' the source says. 'If the sellers got those prices, the staff would have received big commissions.' However, because of the considerable sums involved, consensus had to be reached by all three brothers before the sale could be approved. The two other Kwok brothers flatly refused to approve the purchases, seeing no potential for profit. Mr Kwok then tried to buy the InterContinental de la Ville Roma hotel in Rome, a 17th century historical landmark, after a holiday with Ms Tong last year, but the deal was cancelled due to the complexity of sorting out the leases already made on the building, the source said. Another source has told the Post that since Walter Kwok's supposed kidnapping in 1997 by notorious gangster 'Big Spender' Cheung Tze-keung, his hands-on role in the company had been reduced to running the less important projects. Despite these issues, any disillusionment with Mr Kwok did not filter out into wider property circles. Ms Tong may have been a companion of Mr Kwok, but there was no apparent tension between the brothers and their mother over Mr Kwok's behaviour or the mystery woman's growing influence. 'We maintained a regular dialogue with Mr Kwok and his staff,' one property consultant said. 'But no one has answered the phone after the company announcement.' Ms Tong, who has three children from a previous marriage, did not return calls seeking her side of the story. The issues came to a head at the end of last week, and the matriarch was asked to pass judgment. She decided Ms Tong had an influence over company matters, and Mr Kwok was told to step down until he 'cleared his head', the source said. David Ahlstrom, of Chinese University's department of management, said the decision to remove a top chairman at a family-run business was rare here, but the move was seen as in the best interests of the company. 'What's happening there is a little bit unusual because family businesses are normally very reluctant to make a decision like this at the top,' Professor Ahlstrom said. 'But for Sun Hung Kai this doesn't surprise me because its reputation is very good. Something that might hurt its shareholder value, they seem to be very attentive to that.'