Mother knows best when it comes to running the world’s second-largest real estate company.
That’s one conclusion from the graft trial of Hong Kong’s billionaire Kwok brothers, which ended today with Thomas Kwok jailed for five years for corrupting Rafael Hui, the city’s chief secretary from 2005 to 2007. His younger brother Raymond Kwok, who was also a defendant in the case, was acquitted of all charges.
Thomas and Raymond wrested control of developer Sun Hung Kai Properties Ltd. (16) from their eldest brother Walter in 2008 after their mother intervened, according to testimony heard in the trial which started seven months ago.
Even though the matriarch, Kwong Siu-hing, didn’t hold a position in the firm at the time of Walter’s ouster, she called the shots by controlling the trust that holds the family’s stake in the $42.7 billion company. Kwong, now 86, stepped in to lead the company’s board in 2008 and stripped Walter from the family trust in 2010 before ceding chairmanship to her two younger sons in 2011.
The family had kept private that Walter had been acting erratically since he was kidnapped by a gangster in 1997, testimony revealed. His troubles were only disclosed to shareholders more than a decade later when he stepped back from running the company.
“Any family affair can influence corporate performance greatly,” said Joseph Fan, a professor who researches governance issues in family firms at the Chinese University of Hong Kong. “Many Chinese families do not have family governance mechanisms in place, including the Kwok family.”