Tuesday, May 20, 2008

Sibling Rivalry in Hong Kong

Sun Hung Kai Properties, a major property developer in the special administrative region of Hong Kong, has become the prize in a nasty family quarrel.

SHK is chiefly owned by three billionaire brothers: Raymond, Thomas, and Walter Kwok. Walter brought a lawsuit against his brothers last week, and persuaded a judge to enjoin a board meeting. Why? He claims that Raymond and Thomas had him diagnosed as mentally ill (specifically, as bipolar) in order to get him out of the way, silencing his criticism of certain business decisions they want to push through.

Markets don't like turmoil at the tip. The company's stock lost 1% of its value Thursday and 1.7% on Friday.

According to an AP report: Walter "arranged for a Stanford University doctor to visit Hong Kong, fed him misinformation that led him to diagnose Kwok with bipolar affective disorder and called a board meeting for Feb. 18 to discuss Kwok's dismissal."

He fending off dismissal in February by agreeing to a three-month leave. Nearly three months later, on May 8, he called a board meeting inorder to present his own psychiatric evidence. His brothers apparently had that meeting rescheduled for May 18 and, in Walter's view anyway, they were working to undermine whatever presentation he had planned.

Hence the lawsuit and the injunction. No meeting took place on the 18th.

Apparently a court hearing has been scheduled for this Friday.

The Lex column, in today's Financial Times, alludes briefly to this case, as one instance of several of in-fighting among Asiatic business dynasties.

Such fall-out, the columnist thinks, is inevitable "as founding fathers, many in their 70s and 80s, prepare to hand control to the next generation."

Walter is the eldest of the sons of the family patriarch, but primogeniture doesn't seem to give him any extra pull. The patriarch, Kwok Tak Seng, died in 1990. The matriarch is still around.

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