Billionaire Kwok Brothers, Developers In Coal Harbour/Richmond/UBC, Arrested In HK Corruption Investigation – “The impression is that government policies tend to favour the rich tycoons, particularly rich property developers”; “The power of the property sector is too strong, but the business-government connection is the same around the world.”

A pair of billionaire brothers in Hong Kong who have changed the skyline of Metro Vancouver with their mega-property projects have been arrested on suspicion of corruption.
Hong Kong’s Independent Commission Against Corruption (ICAC) arrested the joint-chairmen of Sun Hung Kai Properties, brothers Raymond and Thomas Kwok, on suspicion of corruption, the company said yesterday.
The Kwoks own $18.3 billion, the second-biggest family fortune in Hong Kong after Asia’s richest man, Li Ka-shing, founder of rival developer Cheung Kong (Holdings), according to Forbes magazine.

The ICAC announced on its website that the people arrested, whom it did not identify, were “alleged to have committed offences under the Prevention of Bribery Ordinance and misconduct in public office.”

In Vancouver, the Kwok brothers, through their Canadian subsidiary, Aspac Developments Ltd., are best known for transforming Coal Harbour into a prestigious waterfront neighbourhood, with the Harbour Green luxury condo towers.
Waterfront Place, Aspac’s first Coal Harbour development, was completed in September 2003. Each of the five towers was named after a famous European city: Avila, Bauhinia, Cascina, Denia and Escala.

In Richmond, the Kwoks are involved in the new urban low-rise waterfront community called River Green, which is being developed on the banks of the Fraser River near the Olympic Oval and the Vancouver International Airport.

At UBC, the tycoon brothers are behind the 17-storey highrise called The Wesbrook on the edge of Pacific Spirit Regional Park.

The arrests of the Kwok brothers triggered turmoil in Asian markets overnight, according to media reports in Hong Kong.

The family’s history is also filled with drama and scandal. The eldest brother, Walter Kwok, was kidnapped in 1997 by a man nicknamed “Big Spender” and held for a week until he was ransomed, and a feud between Walter and his two brothers in 2008 dominated Hong Kong newspapers for weeks.

The Kwok family is known to be devoutly Christian. In 2009, they funded the construction of a 450-foot Noah’s Ark, which includes a rooftop luxury hotel and nearly 70 pairs of fiberglass animals, for an undisclosed amount on a small island near Hong Kong. In the 1990s, Thomas Kwok, the middle brother, successfully pushed to establish a church in the pyramid atrium on the 75th floor of Central Plaza, one of its three tallest buildings.

– ‘Billionaire brothers who changed Vancouver’s skyline with luxury towers arrested in Hong Kong’, The Province, 30 Mar 2012

More than $5 billion was wiped off the market value of Sun Hung Kai Properties on Friday, after the billionaire owners of Asia’s largest real estate developer, who have also been involved with a number of Vancouver projects, were arrested on suspicion of corruption.

The arrests on Thursday come just days after Hong Kong elected Beijing-loyalist Leung Chun-ying as its next leader, pledging land for cheaper public housing, and as soaring property prices, the most expensive in the world, have stirred public discontent. Home prices almost doubled in the five years to end-2011, according to real estate broker Knight Frank.

“This is not good for the image of Hong Kong, which used to have a high reputation for integrity,” said Joseph Wong, a former senior government official and colleague of Hui. “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.”

“This is justice. They’re among the biggest, richest men in Hong Kong. The power of the property sector is too strong, but the business-government connection is the same around the world,” Terry So, an elderly chauffeur, told Reuters near the Sun Hung Kai Centre.

The unfolding scandal has gripped Hong Kong, the world’s most densely populated city which was returned to Chinese rule by the British in 1997.
“It’s a sign they’re trying to shift the power away from the tycoons,” said Alaric Lau, a 45-year-old independent investor in equities and fixed income, who was walking near Hui’s residence.
“These are three very prominent people in Hong Kong. The arrests are a sign of how they want to do things going forward … there’s no more favoritism that extends beyond the law … it’s a sign that the Chinese government is changing.”

The potential conflict of interest in a senior government official living – rent-free, according to media reports – in an upscale residence owned by an influential property family has not escaped public and media attention.
“We always assumed there was something between property and government. Maybe there’ll be more scandals. I think it’s a starting point in changing the relationship between government and developers,” said Joe Lin, a young marketing professional, during a smoking break near the Sun Hung Kai offices.

A former company employee who didn’t want to be named, said he was “very surprised and very sad” at the arrests. “They are men of integrity. Thomas would always repeat the company’s mission – Building Homes with Heart – during meetings and ask staff to treat clients with a true heart,” he said.

A loan banker in Hong Kong, who asked not to be named as his bank is a lender to Sun Hung Kai, said there was unlikely to be any significant impact on the company’s business.
“No one’s going to start cutting their credit lines to the company. Sun Hung Kai isn’t going bust because of this. It’s not a (mainland Chinese) mid-cap, but a Hong Kong blue-chip with hard assets and very low gearing.


– ‘Billionaire Kwok brothers arrested in Hong Kong, Sun Hung Kai Properties value plunges’, Vancouver Sun, 30 Mar 2012

We don’t expect any direct Vancouver effects from this, but it could possibly have a subtle effect on local RE sentiment. It adds to the cumulative negative info about the market that appears to be seeping in.
– vreaa

39 responses to “Billionaire Kwok Brothers, Developers In Coal Harbour/Richmond/UBC, Arrested In HK Corruption Investigation – “The impression is that government policies tend to favour the rich tycoons, particularly rich property developers”; “The power of the property sector is too strong, but the business-government connection is the same around the world.”

  1. Media icon Nelson Muntz said it best: “Haha!”

  2. I am sure they will seek some sort of asylum here in Canada and be fast tracked by Harper personally

  3. nice, vreaa. much need boost for the ‘peeps’ heading to the weekend after budget non-event. party!

  4. Told ya.

    TeeHee.

  5. ok. the rockabilly outsourcing isn’t going so well yet

    better stick with the reliable swiss made for now

    ciao out

  6. Bah. Their lawyers will have them sprung and they’ll be in a Macau peeler bar by tomorrow night.

  7. Wow, who’d have thunk it? Allegedly corrupt Chinese real estate/business “tycoons” in Vancouver RE. And, in other news, the sun will rise tomorrow morning.

    • Village Whisperer

      Regrettably no one in Vancouver will see the sun come up because the clouds and rain impair their vision (metaphorically speaking as well).

  8. Each of the five towers was named after a famous European city: Avila, Bauhinia, Cascina, Denia and Escala.

    Huh?

  9. “The Kwok family is known to be devoutly Christian”

    Why are the devout such hypocrites? This seems to be the norm.

    Thou shalt not practice douche baggery!

    • Today, the Vancouver RE speculative mania;
      tomorrow, hypocrisy of all kinds.

    • “Eldest son, Walter Kwok fell in love with an ambitious lawyer Ida Tong Kam-hing (唐錦馨), but his father did not allow him to marry her.
      His parents introduced him to Lydia Ku, whom he married, but the marriage broke up six months afterwards. Later, he married his present wife, Wendy Lee.”
      According to gossip columns, current wife is not approved by his mother to this day.
      Real estate, Christianity, pedigree marriage … someone please reinvent the monopoly game.

    • “Thou shalt not….” Funny you should say that, Bob…

      [UK Telegraph] – Vatican Bank faces fresh controversy: Thirty years after it was entangled in a scandal involving the mafia, money laundering and the mysterious death of the man nicknamed “God’s banker”, the Vatican bank faces fresh controversy.

      http://tinyurl.com/7rrlg8w

  10. West Coast Woman

    Well I’m glad they got arrested in Hong Kong because they never would have been arrested here, no matter how many bribes they may have made here.

    Good old Canada would never arrest such stellar individuals – they’re too rich to be subject to our unenforced corruption laws and, even if they were arrested, they’d likely never be charged; if they were charged, they’d likely never be convicted, and if they were convicted, they’d serve little or no time in jail.

    Such is the difference between Hong Kong, which sees corruption as a problem, and Canada (especially BC), where it’s business as usual.

  11. Joe_Blown_Away_By_High_Housing_Costs

    Well said, WCW! I agree.

  12. They can suck my kwok in prison !

  13. now, compare and contrast with corzine et al and ask why hasn’t anything been done yet? because your govt is the cronies. next ask if they can get away with vaporizing supposedly segregated customer accounts and conjuring a few hundred $Bs to patch screw ups, where will it stop?

  14. Interesting summing up at the Time Colonist
    ‘The arrests come just days after Hong Kong elected Beijing-loyalist Leung Chun-ying as its next leader, pledging land for cheaper public housing as soaring property prices – the most expensive in the world – have stirred public discontent.’
    I was too young then, but it resonances the 90s when SHKP first set foot on ex CP Rail waste yard. Never would I imagined then that Raincouver would become the most unaffordable in 20 years time. I should have paid heed of the older observers’ warnings.

  15. “The arrests on Thursday come just days after Hong Kong elected Beijing-loyalist Leung Chun-ying as its next leader, pledging land for cheaper public housing, and as soaring property prices, the most expensive in the world, have stirred public discontent.”

    Sounds like someone didn’t pay off the right people when the guard changed. Sloppy.

    • could be. or could be they’re trying to do the right thing and needed to send a stronger message – by publicly slapping well-connected billionaires in the face. i am more willing to bank, do business in hk now, not less.

      • Just a show. It will be over soon.

      • yes, agree. but it is still a message that even top guys arearen’t immune and they’ll continue to take it up a notch as needed. this is the sort of function a bond market and fed used to perform.

      • Chubster – I concur, and at the risk of ‘throttling’ my naturally ingrained cynicism in such matters I would say only this to Farmer… when it began, “The Cultural Revolution” was considered a ‘show’ of sorts, too.

        Regardless of whether it’s just CCP internecine realpolitik and posturing or an authentic attempt at ‘compliance’… You’ve got to admit, at least they’re trying. And making a show of it.

        By comparison – try contrasting Chinese enforcement regimes with ours… Here in Columbie Brittanique we usually just throw our corrupt public officials a banquet at the Board of Trade, ‘decorate’ them… and then shuffle them off to the Senate and/or a safe/distant diplomatic posting…

        It’s not for nothing the CCP’s Central Commission for Discipline Inspection is genuinely feared by the Yellow Emperor’s ‘naughty’ children…

        Perhaps it’s our compliance/enforcement regimes that should be out-sourced to China (versus our national airline’s Maitenance, Repair and Operations/Overhaul)…

      • considering the practicalities of steering a boat loaded with +1B, they’re actually doing a pretty good job, imo. compare what it takes to get anything useful done in the maple kingdom. they could offload 30M-40M and hardly notice. taken as a blackbox, i tend to conclude their leadership genuinely desires a better life for its citizens. strategy and execution are separate matters. but really, what understanding could i have about setting policy for +1B? i tend not to arrive at the same conclusion for leadership in the west.

      • Yeah, good post Nem. Maybe I have just gotten so cynical that even the arrests of Tycoons and Billionaires does not phase anymore. When I actually sat and gave it more though I had to concede that what is taking place is perhaps a more fundamental shift in politics itself.

        The guys who were “in” have becomes liabilities to the powers that be and so they are being contained. As usual it is about power and who controls it. (Money is not real power by the way….just ask any successful politician.) Public disenchantment with the excess of wealth that is not shared equitably has become quite acute just about everywhere on the planet these days.

        The 99% are indeed a little pissed off. So we need to get with the game.

        I suspect the developing middle class and even rural poor are going to push back and have their way in China. Political forces will ensure it. What is easier to do after all? Tame a few million people angry about the excess wealth of a few billionaires or just put 2 or 3 guys in the bucket to calm everyone down?

        Guess its a no-brainer. Billionaires get the bucket (except those who paid like they were told to do).

  16. Paul Streppel

    the symmetry with the Chinese cultural revolution is an important consideration, and hopefully VREAA and others here, will continue to draw attention to the similarities today with the turmoil of the 1966-68 era.

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