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Billionaire brothers at heart of Hong Kong corruption trial
by Staff Writers
Hong Kong (AFP) Dec 19, 2014


Hong Kong tycoon, former official guilty of corruption
Hong Kong (AFP) Dec 19, 2014 - Hong Kong property tycoon Thomas Kwok and the government's former deputy leader Rafael Hui were found guilty of corruption Friday in a blockbuster trial that shocked a city known for clean governance.

Kwok's billionaire brother Raymond was cleared after a seven-month trial over payments of HK$34 million ($4.38 million) the prosecution said were made to Hui to be their "eyes and ears" in government.

But in a complex case, the other pair were convicted over a payment of HK$8.5 million made to Hui in the four days leading up to his 2005 appointment to the government's second-highest post.

Hui, the most senior official ever arrested for graft, was found guilty on five of eight charges against him. Thomas Kwok was convicted of one count of conspiracy to commit misconduct in public office and cleared on another two charges.

Hui, who prosecutors said enjoyed an extravagant standard of living that far outstripped his official salary, was also found guilty on charges relating to rent-free use of luxury apartments and acceptance of unsecured loans.

The Kwok brothers, aged 63 and 61, jointly chair development giant Sun Hung Kai Properties and were arrested along with Hui in a major swoop by graft investigators two years ago.

Prosecutors said fat bribes were made to Hui, who served as chief secretary from June 2005 to June 2007, through a series of complicated transactions involving middlemen.

Two of the middlemen, Sun Hung Kai director Thomas Chan and Francis Kwan -- the former non-executive director of investment firm New Environmental Energy Holdings -- were both found guilty on two counts in the trial.

- 'Black eye' for Hong Kong -

The case has stunned Hong Kong, where Sun Hung Kai is the biggest property developer by market capitalisation and owns some of the city's most recognisable real estate including the 118-floor International Commerce Centre.

The two brothers are ranked 62 on the Forbes rich list and are worth an estimated $14.45 billion dollars.

"It's a big black eye for the integrity of Hong Kong," said Francis Lun, a financial analyst and CEO of Hong Kong-based Geo Securities.

"The last thing you would expect is corruption at the top," he told AFP, adding that the city has had a well established anti-graft body since the 1970s.

"I suspect this isn't an isolated case, there must be other big business eyeing into the government too," he said.

The trial also came as resentment in the city grows over the perceived cosy relationship between the government and the business elite -- one of the themes of the pro-democracy movement which gripped Hong Kong in recent months.

The southern Chinese city is seen as relatively graft-free -- it was ranked the joint 15th cleanest country or territory in 2013 by global corruption watchdog Transparency International.

However, the arrests have revived discussion on links between wealthy tycoons and officials in the Asian financial centre that have long raised public suspicion.

Former Hong Kong chief executive Donald Tsang ended his term in disgrace in June 2012 after admitting to accepting gifts from tycoons in the form of trips on luxury yachts and private jets.

And Hong Kong billionaire Joseph Lau was in March found guilty of bribing a former minister in the gambling enclave of Macau in an attempt to purchase a prime development site in the former Portuguese colony.

Kwok and Hui, who had been on bail, have been remanded in custody until Monday when the court will reconvene for further arguments before the sentence is handed down.

The charge they were both found guilty of carries a maximum penalty of seven years' imprisonment.

Thomas and Raymond Kwok, billionaire brothers and prominent Christians, count among Asia's wealthiest tycoons and run a property empire that dominates the city's landscape.

The siblings, collectively worth US$14.45 billion according to Forbes magazine, run Sun Hung Kai -- Hong Kong's biggest property developer which owns some of the city's most recognisable real estate.

But the business, which has already been dented by family infighting, has been rocked by their arrest in 2012 in a stunning swoop by graft investigators which led to a trial that ran for more than seven months.

Friday's verdict, which saw 63-year-old Thomas found guilty of corruption but Raymond, 61, cleared of all charges, has left questions over the next step for the family empire.

The marathon trial centred around claims the brothers had bribed former chief secretary Rafael Hui to be their "eyes and ears" in the government.

Hui and the elder Kwok were convicted over a HK$8.5 million payment which Hui began receiving in the months before his 2005 appointment to the government's second-highest post.

The brothers looked relaxed before their regular court appearances, often posing for photographers in neat suits and well-coiffed hair.

Both devout Christians, they called on their faith to vehemently deny the charges laid against them. Thomas said he would draw on his Christian beliefs to fight the case, quoting from the Bible as he said "light will shine in the darkness".

Raymond, who is also the chairman of major telecommunications firm SmarTone, was seen taking rigorous notes during court hearings, which started in May.

- History of turmoil -

The pair inherited the firm from their father Kwok Tak-seng in 1990, after the death of the patriarch who made his fortune in the grocery business and the garment industry before branching out into real estate.

But while Sun Hung Kai remains the city's top property developer by market capitalisation, the road has been far from smooth.

Older brother Walter was also made joint chairman as part of their father's legacy, but was ousted in a boardroom coup in 2008.

He had been the victim of a kidnapping for ransom in the previous decade, an ordeal whose effects were cited during the internal turmoil.

Educated at Harvard and Cambridge, Thomas and Raymond are jointly rated 64 on Forbes' list of the world's billionaires.

But while they are heavyweights in Hong Kong's business community, the siblings also strike a note of eccentricity at times.

As the trial reached a head last month Thomas Kwok headed to the Noah's Ark theme park that he helped to found in the west of Hong Kong, on Ma Wan island.

The park includes a hotel in a giant wooden ark and a computerised reconstruction of the biblical "great flood".

One of Sun Hung Kai's best-known pieces of real estate in Hong Kong -- the Central Plaza tower -- houses the world's highest church, where Thomas reportedly drops in for services.

- Protected dynasty -

Share values in the company have taken a hit over the years, particularly after the boardroom drama and arrests, and investors were braced for the impact of the trial result.

Sun Hung Kai has been consistently trading below its main rival Cheung Kong since the scandal erupted, and Hong Kong-based financial analyst Francis Lun said it was time for the brothers to hand over the reins.

"If they step down from the company, it's a new start and it would be better for the company," he said.

Their resignation would not spell the end of the dynasty as the next generation of Kwoks are already in management positions and the company's trust guarantees that the family will retain control, Lun added.

"They actually have the third generation in management positions already. They are just waiting to bring them up the corporate ladder.

"The way the old Kwok set up his trust, he wanted his family to stay as one unit so that they could perpetuate the control of Sun Hung Kai."


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