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Billionaire Brothers Plead Not Guilty As Mammoth Hong Kong Graft Case Begins

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Billionaire brothers Thomas and Raymond Kwok, co-chairmen of Asia's largest developer, Sun Hung Kai Properties Ltd, pleaded not guilty on Thursday in Hong Kong's biggest corruption case since the anti-graft agency was formed 40 years ago.

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.

It involves a series of payments and loans totaling more than HK$35 million ($4.5 million) suspected to have been paid to Rafael Hui, who headed the civil service from 2005 to 2007.

The three men, friends since childhood through family connections, confirmed earlier pleas of not guilty to all charges. The Kwoks face seven charges, including conspiracy to offer an advantage to a public servant, and Hui faces eight.

Hui, 66, faces three misconduct charges, including that of accepting rent-free use of two flats while head of Hong Kong's retirement authority and two unsecured loans.

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 and pleaded not guilty.

All five defendants appeared in court, where about 50 photographers and cameramen jostled to get shots of the men at the entrance to the building.

Thomas Kwok, wearing a black suit and red tie, thanked reporters as he entered the court looking relaxed.

The prosecution and defendants have hired high-profile lawyers, with media reporting the Kwok brothers could spend more than HK$100 million in legal fees, the most ever paid in the city.

Clare Montgomery, a specialist in criminal and fraud law, is representing Thomas Kwok. She led the prosecution in the extradition case to Sweden of WikiLeaks founder Julian Assange.

John Kelsey-Fry, a lawyer who represented former News Corp. executive Rebekah Brooks in a phone-hacking scandal, is defending Raymond Kwok.

Hong Kong's Court of First Instance will summon more than 80 witnesses during the trial, which is scheduled to run for 70 days, according to local media reports.

The Independent Commission Against Corruption (ICAC) arrested the tycoons, both devout Christians, in March 2012 in the agency's biggest investigation since it was set up in 1974 to root out widespread corruption in the colonial government and police.

The arrests sent a shock through Hong Kong's business community, a close-knit group of tycoon-led families that control much of the city's business operations.

Sun Hung Kai Properties, the world's second-largest property company with a market value of $34 billion, has said the legal battle will not affect its business and operations.

Shares in the company fell 0.3 percent on Thursday, lagging a 0.4 percent gain for the broader market. The stock has fallen about 3 percent so far this year.

Analysts have said the company has already taken steps to reassure investors, including the appointment of additional non-executive directors and naming Adam Kwok and Edward Kwok, the sons of Thomas and Raymond Kwok, as alternative directors.

Sun Hung Kai is the city's largest real estate developer, followed by Cheung Kong (Holdings) Ltd, which is controlled by Asia's richest man, Li Ka-shing.