HK's Camilla

Reuters: A power struggle at the top of Hong Kong's largest property firm intensified on Thursday after its chairman filed suit against his brothers to stop them firing him, according to the firm and court documents obtained by Reuters. Sun Hung Kai Properties Chairman Walter Kwok, who took leave of absence on Feb 18, accused his younger brothers Thomas and Raymond of trying to have him dismissed without legal basis, and argued that any attempt by the defendants to remove him would constitute a breach of agreement. Kwok added that he believed his brothers had proposed his dismissal because of heath concerns. He said those concerns were linked to a diagnosis of bipolar disorder -- a condition characterized by abrupt mood swings -- that he was contesting. The company said it was seeking legal advice after Kwok filed his suit, which sought among other things to prevent a board meeting called to vote on his dismissal. "Mr. Kwok filed his injunction just an hour before our meeting, and because the court did not have time to deliberate it, we were forced to suspend our meeting," Sun Hung Kai said in a statement on Thursday. "This does not indicate any judgment on the part of the court." The suit marks the latest twist in a saga splashed across local newspapers since February, highlighting a widening rift within a firm touted in a Euromoney poll as Asia's best-managed company in 2007. Sun Hung Kai in March posted a forecast-beating 17 percent jump in fiscal half-year earnings, buoyed by an upswing in Hong Kong home sales. Analysts had said Kwok's leave of absence -- publicly explained by the company as time off for him to go on a series of business trips -- would not unduly affect the stock because of a well-established internal management structure. But Sun Hung Kai shares have fallen 2.4 percent since Kwok's departure, versus a 7.4 percent gain on the main Hong Kong blue chip index. In the suit, Kwok said his siblings had disagreed with his attempts to enhance internal transparency and accountability, especially as related to an investigation into the award of contracts to a select group of contractors. He said that disagreement and others over various management initiatives prompted his brothers to attempt to remove him from his post. Apart from Thomas and Raymond Kwok, who with Walter Kwok had long overseen Sun Hung Kai and are estimated to have a combined fortune of $24 billion, the suit also named more than a dozen others related to the firm.

MyTake: It is a well known fact that the family’s rift started when Walter’s mistress Ida Tong Kam-Hing aka "HK Camilla", begins to meddle and wield increasing power in the Kwok family business. According to Lee Shau Kee (Henderson’s Chairman and Vice-Chairman/non executive board member of SHKP) it was Walter’s mum that forced the leave on Walter over Ida Tong to protect the Kwok’s family business interest. However, I believe it will be difficult to remove Walter as SHKP’s Chairman and CEO and redesignate him to a non-executive post unless the Board of Directors have strong evidence that he is mentally incapable to lead the company or he has failed to perform his duties at the behest of the directors. Furthermore, if he is fired without a cause, the director's contract of service will usually entitle him to compensation and may include a generous “golden parachute” which also acts as a deterrent to his removal. Many Asian businesses are very prone to bring directors' spouses and"partners" into the business and often it does not go down well within the other family members which resulted serious family disputes. For the passed 36 years with the company, Walter has done exceptionally well for this award winning property developer except for a year in 2005 which the developer was criticised for being lack of transparency in its public sales of residential properties to speculators/end users, by practicing “internal sales” of uncompleted units and announcing inflated prices etc. During this period of uncertainty, it would be best SHKP be careful, transparent and forthcoming with its plans with Walter and its strong assurance that the company is still functioning well with a good management team. Any effort lesser than this is tantamount to destroying the confidence of investors placed in this company since years ago. SHKP's market capitalisation is HKD343b and it employs 27,000 employees. SHKP's share price peaked in January 2008 when it hits HKD175.40 per share but is now hovering around HKD133.

* Japan reports a 1Q08 GDP growth of 0.8% today(4Q07 was 0.6%)

* United Nation expects the World economy to grow 1.8% in 2008 (actual 2007:3.8%) It says the economy is on the brink of severe downturn. This estimate is quite different from IMF's forecast of 3.7% growth in 2008 (posted here previously)

* Central bankers in the US and the UK are paying more attention to the way LIBOR is calculated after unusual move in the interest rate and concerns about its accuracy.

* Bursa Malaysia says it may missed the set target of 30 IPO listings for this year. As at 24 April, it has listed 2 Main Board Companies, 5 Second Board companies and 4 Mesdaq companies.