Raymond and Thomas Kwok, owners of Asia's largest real estate developer, arrested on suspicion of corruption
More than $5bn was wiped off the market value of Sun Hung Kai Properties on Friday, after the billionaire owners of Asia's largest real estate developer were arrested on suspicion of corruption.
Hong Kong's Independent Commission Against Corruption arrested Raymond and Thomas Kwok in the biggest investigation since it was set up in 1974 to root out what was seen as widespread corruption in the government and police.
Rafael Hui, a former No 2 official in the government, was also arrested, according to media reports. Hui resigned as an independent director of insurer AIA Group late on Thursday.
The arrests on Thursday came just days after Hong Kong elected a Beijing loyalist, Leung Chun-ying, as its next leader, pledging land for cheaper public housing. Soaring property prices, the most expensive in the world, have stirred public discontent. House prices almost doubled in the five years to the end of 2011, according to the real estate broker Knight Frank.
Joseph Wong, a former senior government official and colleague of Hui, said: "This is not good for the image of Hong Kong, which used to have a high reputation for integrity. The impression is that government policies tend to favour the rich tycoons, particularly rich property developers. These sort of cases will only add to the suspicions."
The two Kwok brothers and Hui were released late on Thursday but were expected to return for more questioning. Local media reports said the brothers were still inside a Deepwater Bay luxury compound on the south side of Hong Kong on Friday.
The Kwoks are worth $18.3bn, according to Forbes magazine – the second-biggest family fortune in Hong Kong after that of Asia's richest man, Li Ka-shing, founder of rival developer Cheung Kong (Holdings).
Shares in Sun Hung Kai slumped more than 15% to 15-week lows when they resumed trading on Friday. The company owns some of the former British colony's largest properties, including its tallest building, the International Commerce Centre that houses Morgan Stanley and the Ritz Carlton.
Sun Hung Kai said the Kwoks would continue with their duties as chairmen and managing directors, and normal business operations would not be affected.