Sun Hung Kai Properties Chairman Walter Kwok Replaced by Mother

May 27 2008 - Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer, replaced Chairman Walter Kwok with his mother, seeking to end a feud that has gripped the city and split its second-richest family.

“Walter has ceased to be the chairman and chief executive,” the company said in a filing to Hong Kong’s stock exchange today. Kwong Siu-hing, 79, was appointed chairman.

Sun Hung Kai rose in Hong Kong trading after the decision, extending a rebound from a slump that erased more than $4 billion of market value. Walter, who became chairman in 1990 after his father’s death, lost a court battle with younger brothers Thomas and Raymond yesterday to block a vote on whether to oust him.

“The market welcomes this change,” said Raymond So, associate dean of the Faculty of Business Administration at Chinese University of Hong Kong. “The company is on its way back on track. What new direction Sun Hung Kai may take remains to be seen.”

The dispute aired squabbles over the company that built Hong Kong’s highest skyscraper and is the foundation of the Kwok family’s combined wealth of $24 billion, second on Forbes Magazine’s list of Hong Kong’s richest only to Li Ka-shing.

Walter Kwok said in a court filing that his brothers tried to remove him because he was suffering from mental illness. Walter, 57, who has been on leave for personal reasons since Feb. 18, said he doesn’t have any such disorder and is suing his siblings for libel.

40 Years Experience

“Investors were obviously concerned about who’s going to be in charge,” Wilson Hung, an analyst at Hong Kong-based brokerage Quam Ltd., said before today’s announcement. “They were worried that if this keeps dragging on it will ultimately impact the company’s business.”

Sun Hung Kai rose 0.9 percent to HK$126.8, the biggest two- day gain in three weeks. The stock is down 23 percent this year after jumping 85 percent last year.

“Madam Kwong has over 40 years of experience in real estate business,” the statement said. She “is well respected by the board.”

Brothers Raymond and Thomas will assume the CEO duties though not the title, according to company spokeswoman Fiona Wan.

Listed on the Hong Kong stock exchange in 1972, Sun Hung Kai rode a three-decade surge in home prices to become the city’s biggest developer. Since Walter Kwok took over, the company’s value has ballooned 10-fold and now employs more than 27,000 people, according to its Web site.

Tallest Building

Sun Hung Kai built and runs some of Hong Kong’s landmark developments including its tallest building, the 88-storey International Finance Center, which stands 420 meters (1,378 feet) tall and contains 22 trading floors. The developer also manages luxury apartment projects such as Dynasty Court in Mid-Levels and shopping centers including the Tai Po Mega Mall.

The company’s assets have risen under Walter Kwok to total HK$264.5 billion ($34 billion) as of Dec. 31.

Today’s decision ends Kwok’s tenure as Sun Hung Kai chairman. He took over after the death of his father Kwok Tak Seng, who co- founded the company with billionaire Lee Shau-kee and Fung King Hei in 1963.

The Kwoks remained focused on property, in contrast to Li Ka-shing, who started in plastics and moved on to real estate, telecommunications, retail and ports.

Twelve years ago, Walter Kwok was taken hostage and then freed after an undisclosed sum was paid to Hong Kong gang boss Cheung Tze-keung, nicknamed “Big Spender.” The Kwok family never reported the crimes to Hong Kong police.

Cheung was sentenced to death in 1998 after being tried by authorities in the southern Chinese city of Guangzhou for crimes including kidnapping Victor Li, billionaire Li Ka-shing’s son.

Court Cases

Walter filed an injunction May 15 to block the board vote. On May 21, he sued his brothers for libel, saying they had dubbed him a liar, a person of “low integrity,” and made “unwise” investment decisions. They have denied all the allegations.

Hong Kong’s Court of Appeal yesterday upheld a High Court ruling on May 23 that canceled a temporary injunction blocking the meeting.

“This court simply cannot dictate to the board who should be their chairman,” Mr. Justice Rogers and Mrs. Justice Le Pichon said in Hong Kong’s appeals court yesterday.

Sun Hung Kai Chairman Walter Kwok Replaced by Mother
by Kelvin Wong | Bloomberg