June 5, 2014 / 9:08 AM / 5 years ago

Ex-Hong Kong official took secret payments from tycoons, trial told

HONG KONG (Reuters) - Prosecutors in Hong Kong’s largest corruption trial opened their case on Thursday with details of what they described as “concealed and disguised” payments made to a former top civil servant by property tycoons seeking government favor.

Thomas Kwok, co-chairman of developer Sun Hung Kai Properties, poses for journalists upon his arrival at the High Court in Hong Kong May 8, 2014. REUTERS/Bobby Yip

Thomas and Raymond Kwok, the billionaire co-chairmen of Asia’s largest developer, Sun Hung Kai Properties Ltd (0016.HK), appeared in court with co-accused Rafael Hui, Hong Kong’s former chief secretary.

The case involves a series of payments and loans totaling more than HK$37 million ($4.77 million) allegedly paid to Hui, who headed Hong Kong’s civil service from 2005 to 2007.

The three men have pleaded not guilty to all charges, including conspiracy to offer an advantage to a public servant.

The case has thrown a spotlight on the close relationship between the city’s powerful developers and government in the former British colony, which returned to Chinese rule in 1997 and has a separate legal system from the mainland.

Thomas Chan, a board member in charge of land purchases at Sun Hung Kai Properties, and Francis Kwan, a former Hong Kong Stock Exchange official, have also been charged in the case. They have also pleaded not guilty.

Prosecutor David Perry told the court that Hui had abused his position of power to receive millions of dollars in secret payments during his term in office.

“His loyalty to the public was compromised and undermined” by the use of public office and influence for personal gain, Perry said.

Hui, 66, looked on sternly, betraying little emotion as he sat bespectacled with wispy graying hair as he listened to the opening remarks.

In the four days leading up to Hui’s appointment as chief secretary, he received HK$8.5 million, Perry said.

In late 2007, Hui received another “secret” payment of HK$11 million, Perry said. The payments, the court heard, were disguised in a “very, very elaborate way” and “very careful steps” were taken to ensure no one knew the payments were made.

Perry detailed how the payments came from or were facilitated by Sun Hung Kai executives including Raymond and Thomas Kwok, routed through a string of companies including one in Singapore, several intermediaries and via some 10 different bank accounts. The money was then disbursed to Hui in smaller segments that included cash, cheques and cashier orders.

In 2005, Hui also received three sets of payments totaling HK$17.6 million when he was in another post, the court heard. He also lived rent-free in a luxury Sun Hung Kai property development and received two loans from the property developer that put him in “a position of obligation” to the company.

Perry characterized Hui’s behavior as a “deep and serious conflict of interest” as well as “wilfully misconducting himself” in public office.

Hui gave the impression that he was a principled official, Perry said, “but he was not”.

Perry, in outlining the thrust of the prosecution’s case, said the Kwok brothers, dressed in dark ash suits and sat expressionless in the dock, had been motivated to “make sure they had a friend in government”.

In explaining the motive for one of the payments, Perry said Hui would serve as “the eyes and ears of Sun Hung Kai Properties. It was a bribe.”

The former No. 2 Hong Kong official was close to the city’s leader at the time, Donald Tsang, who referred to him as a friend and adviser in a letter to Hui that was read in court, saying “he was personally indebted to Hui” for his public service including as an advisor on the city’s Executive Council.

The trial before Judge Andrew Macrae is estimated to last four months and involve more than 50 witnesses including senior government officials, bankers and Sun Hung Kai staffers.

It got under way on Thursday a day after a second nine-person jury was selected following the discharge of the first one last week after a juror fell ill, which led to the dismissal of the entire group of nine.

($1 = 7.7529 Hong Kong Dollars)

Additional reporting by Nikki Sun and Emily Chung

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