Hong Kong’s Mega-Rich Kowtow in Beijing
|Sep 24, 2014|
On the day this week that thousands of Hong Kong students began a one-week strike in support of more democracy, Beijing was hosting 70 of the territory’s richest people for a meeting to support its political program and denounce those pushing for real democracy.
The contrast between Beijing’s worship of money and the students’ likely doomed hopes for progress could not have been more striking.
The contingent of the mega rich were demonstrating their need to kowtow to the central government in order to protect their wealth, however acquired. Most prominent among them were the sons and daughters, and in some cases grandchildren, of tycoons. These are people who have mostly inherited vast wealth and increased it through monopolies and oligopolies that thrive on close links with a supposedly uncorrupt government in Hong Kong.
In Beijing, they heard from none other than President Xi Jinping that the central government intends to take a greater interest in Hong Kong affairs – a statement that promises more abasement by the tycoons.
Nominally leading the group was the first chief executive of the post-British Hong Kong SAR, Tung Chee-hwa. Tung was sacked by Beijing in 2005, halfway through his second term. But at age 77 he has recently made a comeback as a grandfatherly “patriot” reading a mainland script. Previously, he inherited Orient Overseas, a pioneer shipping company, from his famous father CY Tung but nearly bankrupted it by over-ordering ships. It survived thanks to mainland support and new management led by his younger brother. Despite this none-too-stellar career, Beijing likes Tung for his pliability – and patriotic Shanghainese ancestry.
Almost all the other top 30 richest families got that way through property development. Leading the group of full-fledged tycoons was the richest of all, Li Ka-shing of Cheung Kong Holdings, accompanied by his two sons, Victor Li, who is heir apparent to Cheung Kong, and Richard Li who controls Hong Kong’s major phone and cable TV companies and an influential newspaper.
Next came Hong Kong’s second richest man, Lee Shau Kee of Henderson Land, whom Bloomberg estimates to be 19th richest person in the world. His money almost all came at the expense of owners and renters of homes and offices. He has parlayed some of it into control of local utilities, notably HK & China Gas, the monopoly piped-gas supplier.
In the cartel spirit that thrives in the incestuous world of Hong Kong big business, Lee is also a non-executive director of the next largest property group, Sun Hung Kai Properties. Its major shareholders, the Kwok brothers, inherited Sun Hung Kai from the founder, Kwok Tak-seng, 50 years ago. The brothers were not in Beijing as they are on trial in Hong Kong for bribing the territory’s former Chief Secretary for Administration, Raphael Hui, who in court last week admitted tax evasion and spending millions on horses, meals and a mistress.
Prominent among the first generation tycoons was Lui Che-woo of K Wah Holdings, another property developer. Lui was only a middle-rank tycoon until 2002, when he acquired a gambling license in Macau – which proved a license to print money wagered by money launderers and gamblers from the mainland.
The Galaxy Entertainment group, of which he controls about 50 percent, is listed on the HK Stock Exchange and has a market capitalization of around US$4.2 billion.
A mega property owner and developer with roots in Macau is New World Holdings. It was represented in Beijing by Henry Cheng, son of founder Cheng Yu-tung. It also controls bus and ferry companies.
Henry Cheng is regarded as being especially close to the Hong Kong government and is a recipient of a Gold Bauhinia Star, the highest local honor. He is also a member of the Chinese People’s Political Consultative Council. The family controls the huge Chow Tai Fook jewelry group.
Henry Cheng is also a non-executive director of HKR International, which in conjunction with Beijing-owned but long troubled conglomerate Citic Pacific, controls the huge Discovery Bay housing and resort development on Lantau island, close to Hong Kong’s airport.
HKR is the company of the Cha family, founded by Cha Chi-ming, whose sons now control the company. Cha Chi-ming was a textile industrialist from Shanghai and one of the pioneers of Hong Kong’s industrial boom in the 1950-70s but the family has since been in property. It acquired the rights to Discovery Bay in an opaque and much criticized deal in the 1970s.
HKR runs almost everything in Discovery Bay, making it in effect a privately owned and operated town of 20,000 people thanks to official indulgence. HKR managing director Victor Cha is married to Laura Cha, a US-trained financial services lawyer, HSBC board member and member of the Executive Council of the HK government. Born in Shanghai, Laura Cha became a US citizen, but re-Sinicised herself in 2001 and is now a delegate to China’s rubber stamp National People’s Congress.
Then there was Vincent Lo, head of the Shui On group, which has gambled massively on mainland property. He is a son of the founder of property group Great Eagle, which was founded by his father and run by his brother.
Another second generation property tycoon paying tribute in Beijing was relatively small but high-profile Ronnie Chan of Hang Lung Group. He recently made a name for himself with the biggest ever donation to Harvard University. His money has also taken him to be a co-chairman of the prestigious US-based Asia Society – this honor despite having been on the board and audit committee of Enron, the biggest-ever US corporate fraud and bankruptcy.
Another company that parlayed profits in international business into the safer world of the Hong Kong property cartel was that of the late YK Pao, a banker who became the world’s largest ship owner. His Wharf and Wheelock property companies are headed by one of his three sons in law, Peter Woo, who has tended to keep his distance from other property tycoons but nonetheless was part of the delegation to Beijing.
Also present were two foreigners who are regarded as patriotic Chinese. One is Robert Ng, eldest son of Singapore’s late property tycoon Ng Teng Fong. The younger Ng managed Sino Group, which bought its way into the big league of Hong Kong developers in the mid 1980s despite Robert’s crashing of the HK Futures Exchange in 1987 by refusing to pay margin calls on his massive positions by using front companies.
Criminal prosecution was recommended by the police but the colonial government backed off under pressure from other business interests, including HSBC, leaving the taxpayer with a large bill.
The other patriotic ethnic Chinese to join the group was 90-year-old Malaysian Robert Kuok, a onetime wheeler-dealer in Malaysia and Indonesia who is now focused mostly on the HK-based Kerry Properties and the Wilmar palm oil company.
Kuok also owns the South China Morning Post, Hong Kong’s best known English language newspaper, which is now managed by Singaporeans and edited by a mainlander with close Communist Party connections. Kuok was accompanied by eldest son Kuok Khoon-chen who now heads Shangri-la Hotels. He is one of seven Kuok children from two wives.
The Kuoks have always been associated with legitimate businesses. The same could not be said of the Eurasian Ho family, which controlled Macau’s STDM gambling monopoly for decades under now seldom-seen boss Stanley Ho. On more than one occasion Ho was linked to organized crime. The family gambling interests are now mostly in the hands of daughter Pansy Ho, who has a large stake in the MGM Grand, and joined the group to Beijing.
The most conspicuous full-foreigner in the group was Michael Kadoorie, grandson of Sir Elli Kadoorie, who arrived in Shanghai in 1880 from Baghdad via Bombay, and later set up business in Hong Kong. The family empire now spans the globe but its core asset is CLP Holdings, whose major asset is the electric power monopoly it enjoys in Kowloon and the New Territories – more than two thirds of Hong Kong. The franchise expires in 2018 and is threatened by demands for competition – mostly pushed by mainland firms which are themselves monopolies. CLP has a pressing need to be seen to be loyal to Beijing.
The delegation did contain a few names of wealthy people who do not owe their wealth to Hong Kong property and monopolies but to internationally competitive business. But the dominance of the group by the sons and daughters of connected entrepreneurs emphasized how inherited wealth and Communist Party rule are inextricably linked in Hong Kong, as they are coming to be on the mainland. It also illustrates how little Beijing appears to know or care about the image this sort of uber-rich delegation creates for Hong Kong people, especially the younger generation.
At one time, men such as Li Ka-shing were admired for their rags-to-riches achievements. Now the tycoons who made big money in tiny Hong Kong are widely seen as leeches on the community at large and their offspring as the spoiled brats who make Hong Kong a paradise for dealers in Ferraris, Lamborghinis, $100,000 watches and million-dollar mistresses.