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Apr 2, 2012

Hong Kong tycoon arrests put graft agency in spotlight

Coconucumo _ | Apr 2, 2012

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HONG KONG - The arrest of two brothers from one of Hong Kong's most powerful families and a former top government official is a major test for the city's anti-corruption agency, which has scored most of its recent successes in fighting lower level and petty graft.

Raymond and Thomas Kwok, the billionaire co-chairmen of Asia's largest developer Sun Hung Kai Properties were arrested on Thursday -- and later released on bail -- in the highest profile investigation ever launched by Hong Kong's Independent Commission Against Corruption (ICAC).

The graft-busting agency, set up in 1974 when crime and police corruption was rampant in the then British colony, has investigated top cops, government officials and construction executives.

But in the last few years critics complain the commission has failed to successfully prosecute any high level cases involving Hong Kong's rich and powerful, or the burgeoning new class of mainland Chinese entrepreneurs.

"This is the sort of case that would bolster the ICAC's public profile and credibility," said a source familiar with the agency, who did not want to be identified because of the sensitivity of the case.

Details of the investigation remain unclear and none of the arrested men have as yet been charged with any offence.

The Hong Kong public has been increasingly aggrieved at the perceived cosy ties between government and big business, especially the city's property tycoons. The issue played out in last month's Hong Kong election, and some observers have interpreted the arrests as a first move in an attempt to rein in the power of the monied elite.

Closely watched case

Going after corrupt officials was always the remit of the ICAC, yet hauling in two members of one of Hong Kong's wealthiest families took the agency to an investigative level it had never reached.

Also arrested was Rafael Hui, a close confidante of the Kwok family and the city's former No. 2 government official.

"It is the first time the former chief secretary has ever been arrested so that's a major issue," said Steve Vickers, an ex-commander of the Hong Kong police criminal intelligence bureau, who now runs his own risk and security consulting firm.

"It is a very significant case for the ICAC. And everybody will be watching to see if charges follow."

Corruption cases are notoriously difficult to prosecute, and there is a risk to the commission's reputation if the ICAC does not manage to convince the Department of Justice that it has a case to bring.

"It will depend entirely on how they've conducted themselves," Vickers said. "I would be very surprised if an organization with the professionalism that they have would move on something so important without considering it very carefully."

Lawyers say ICAC sets a higher bar on whether to press charges in high profile cases, and that a decision on whether to do so could be expected within three to six months.

When it does prosecute, the ICAC has a very strong success rate. In 2010 the ICAC had an 88 percent conviction rate (373 out of 443 people prosecuted were convicted), according to the latest available statistics.

Colonial era

Corruption was rampant in colonial Hong Kong when the ICAC was founded, with graft penetrating virtually all levels of basic government services.

Without paying a bribe, it was difficult to get a driver's licence, a bed at a public hospital or to call out an ambulance.

Corruption was particularly entrenched in the police force, where the sergeants who had administrative control over police stations became extremely wealthy. Retired police officers who served at that time say that many senior officers were also accepting illegal payments.

Police joked that there were only three choices for an officer serving at that time. An officer could get on the bus (become corrupt), stand in front of the bus (wreck their career by attempting to fight graft) or watch the bus go by (keep quiet).

The catalyst for the formation of the graft buster was the blatant corruption of a senior policeman, Chief Superintendent Peter Godber.

Godber fled Hong Kong to his native Britain in 1973 when he was accused of corruption, sparking a public outcry.

Armed with powers that even current government officials describe as draconian, the newly formed ICAC brought Godber back to Hong Kong where he was convicted and jailed.

In following years, many corrupt police and civil servants were weeded out and civil service salaries and benefits improved to reduce the temptation of graft.

By the time of Hong Kong's 1997 handover to China, the city had one of Asia's cleanest administrations.

Between 1974 and 2010, the commission prosecuted almost 14,000 cases. Of these, 2,105 were public servants and 3,858 were civilians involved in public sector cases, according to Hong Kong government statistics.

One reason the ICAC has been successful in fighting corruption, according to its supporters, is that it enjoys powers that are not available to the police.

On top of the normal police powers, the ICAC can compel witnesses to answer questions under oath. It can also prosecute suspects who have assets or wealth they cannot explain.

One of its most spectacular cases was the investigation and prosecution between 1997 and 2002 of corrupt construction industry executives involved in deliberately shortening the depth of pilings sunk under a public housing estate in Hong Kong's New Territories.

Building on top of so-called "short pilings" allows for substantial savings in construction costs. The executives were jailed and the unsafe buildings demolished.

Other high profile cases included the successful 1989 prosecution of Warwick Reid, the government's former deputy director of prosecutions for accepting bribes and the long running investigation of the collapsed Carrion Group.

In 2005, a Hong Kong appeals court upheld the conviction of a top ranked police officer, senior superintendent Sin Kam-wah, for misconduct in public office.

Sin was the most senior government official jailed in recent years following an ICAC investigation.


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