A senior executive at Sun Hung Kai Properties Ltd, Asia's largest property developer by market value, has been arrested by Hong Kong's anti-graft body over suspected bribery, in a rare case for a major property company in the city.
Thomas Chan Kui-yuen, executive director responsible for project planning and land acquisitions, was arrested by the Independent Commission Against Corruption (ICAC) in relation to allegations of bribery, the company said. It did not give more details of the alleged offence.
Sun Hung Kai is run by brothers and joint chairmen Thomas and Raymond Kwok. The Kwoks are Hong Kong's second-richest family, according to Forbes magazine, with a net worth of $18.3 billion as of March.
EXCEPTIONAL CASE
One analyst said there had not been a similar case at a major Hong Kong developer since the analyst started covering the sector 15 years ago.
The Standard newspaper reported that Chan was particularly active in assembling the land at Ma Wan, where the company is marketing its multitower Park Island apartment project, and at The Vineyard, a luxury low-rise development in rural Yuen Long.
Another analyst told Reuters Chan was particularly active in buying farmland from villagers in Hong Kong's New Territories.
The Hong Kong Economic Journal stated that the allegations stem from a land deal in 2003, citing sources with knowledge of the matter.
Shares of Sun Hung Kai, which has a market value of around $39 billion, slipped 2.4% in afternoon trade on Tuesday, with the benchmark Hang Seng index down 0.5%.
Spreads on the company's 2022 bonds widened by 20 basis points on Tuesday to 220 basis points over U.S. Treasuries.
Both stock and bond analysts said the dips would likely prove short-lived. Some analysts said the company is very careful with its land acquisition strategy and willing to pay higher prices for plots that it can buy securely at arm's length.
"Sun Hung Kai has a very professional management team and proven track record so it shouldn't have an impact on the share price," said Alfred Lau, Hong Kong property analyst at Bocom International.
CALL FOR DISCLOSURE
Chan, 65, has worked at the company since 1973 and has been a director since 1987. Sun Hung Kai develops property in Hong Kong and mainland China and holds a portfolio of office space including Hong Kong's tallest building, the International Commerce Centre.
Though land in Hong Kong is ultimately leased from the government, developers often assemble projects in the New Territories by negotiating with villagers that hold the plots.
Sun Hung Kai Properties reported in February an underlying profit of HK$11.8 billion ($1.52 billion) for the fiscal first half ended Dec. 31, up 13% from a year earlier, slightly exceeding expectations.
The number of property deals in Hong Kong fell 33.1% in 2011 from the previous year as the government imposed a series of measures to stamp out property speculation and cool the city's housing market.
