Testimony in the trial of billionaire brothers Thomas and Raymond Kwok of Hong Kong revealed the role their mother, Kwong Siu-hing, played behind the scenes at the family company, Sun Hung Kai Properties Ltd.,
a Bloomberg report said.
Thomas Kwok was found guilty of corruption and received a sentence of five years in prison. His brother Raymond was acquitted, the article said. The charges stem from the company’s secret hiring of Hong Kong chief secretary Rafael Hui as an adviser. Hui received HK$15 million a year from the company via hidden payments, according to the report. Sun Hung Kai’s executive director, Thomas Chan, was also convicted.
Kwong, who controlled the trust that holds the family’s stake in the $42.7 billion company, took charge of the board in 2008, after her two sons ousted a third brother, Walter, from the company, the report noted. Walter had been chairman since the death of their father, who co-founded the company in 1963.
The family cited mental illness as the reason for Walter’s ouster. They said he had been acting erratically since being kidnapped in 1997, although they didn’t disclose this to shareholders until after he left his post as chairman and CEO, the Bloomberg article said.
Walter denied being mentally ill and sued his siblings for libel; that suit was later dropped, the article said. Kwong, now 86, removed Walter from the family trust in 2010; this year, she restored his share in the trust. She stepped down as chairman in 2011, Bloomberg reported.
Joseph Fan, a professor at the Chinese University of Hong Kong, told Bloomberg, “Many Chinese families do not have family governance mechanisms in place, including the Kwok family.” However, the report noted, Sun Hung Kai has received a number of corporate governance awards from business publications.
Thomas Kwok’s son Adam, 31, has been named Sun Hung Kai’s new executive director. In 2012, when his father was charged with corruption, Adam became an alternate director of the company, the Bloomberg article said. The judge in the case barred Thomas from being a director for five years.
Thomas testified that the payments to Hui were hidden because he had promised his mother he wouldn’t provoke Walter, who opposed hiring Hui. Thomas testified that most of the payments to Hui came from his own pocket and that he hoped his mother would pay him back, the report said.
According to Thomas’s testimony, his mother also stepped in to resolve an argument he had with Walter in 2003 over lease negotiations for an office tower, the article said.
The Bloomberg report said that the three brothers hold about 7% of the company under their own names. The family trust holds 33%, which is separated among three offshore companies. According to the report, Kwong’s share dropped from 43.4% in October 2013 to 26.4% in November 2014 after she transferred shares from the family trust to her sons. Thomas Kwok’s lawyer told the court that Kwong is in “very poor health” and has had a stroke, the article said. (Source: Bloomberg, Dec. 23, 2014.)
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