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HONG KONG: Like many family-run businesses, the troubled Sun Hung Kai Properties empire has been run by a coterie of relatives and friends for decades.
Now, with its top management under investigation by the anti-graft commission, the city’s biggest developer has been urged to bring in new blood through appointing executive directors to its management board.
Analysts say that will help tackle the governance crisis it now faces after the brothers who run the company were arrested by the Independent Commission Against Corruption (ICAC). They have not been charged.
“The arrested executive directors should be suspended from their duties temporarily,” said Kwan Cheuk-chiu, a commentator and former associate professor of economics at Chinese University. “They are still involved in company decisions but for the sake of the image of the company, they should leave and appoint someone else.”
The joint chairmen of Sun Hung Kai Properties, Thomas Kwok Ping-kwong, 60, and Raymond Kwok Ping-luen, 58, were arrested last Thursday along with former chief secretary Rafael Hui Si-yan over allegations of bribery and misconduct in public office.
The Kwok brothers are among seven executive directors of the company, including Thomas Chan Kui-yuen, who was also arrested by the ICAC last month in an investigation into alleged corruption connected to the Kwoks’ case.
Adding to woes at the top echelons of the company was the death of 79-year-old Chan Kai-ming, an executive director since 1981, a day before the Kwoks were arrested.
The remaining executive directors are 82-year-old Kwong Chun, who is the brother of the Kwoks’ elderly mother Kwong Siu-hing, long-serving staff member Mike Wong Chik-wing, 56, as well as chief financial officer Patrick Chan Kwok-wai, 55.
“For family-run corporations, the family members are always the core of the management and in this case, the younger ones are now getting into trouble,” Kwan said. “The rest of the directors are quite old and many non-executive directors are family friends and have been sitting on the board for a long time.”
He suggested the company appoint an acting chairman, ideally former chairman Kwong Siu-hing, and some experienced staff or younger family members as executive directors. At the same time, it could appoint retired judges or lawyers as independent non-executive directors to enhance the company’s image as a healthy and well-governed organisation.
JP Morgan said in a report that the worst-case scenario is that the two chairmen were charged and found guilty. “We could see SHKP’s strategic decision-making power impacted for a period,” analyst Lucia Kwong wrote. — South China Morning Post
