Secrecy Around Kwok Brothers’ Arrest Raises D&O Challenges

Thomas Kwok and Raymond Kwok

Thomas Kwok and Raymond Kwok in 2010. PHOTO CREDIT: Bobby Yip / Reuters

The arrest in Hong Kong of the property billionaires and brothers Raymond, Thomas and Walter Kwok by the Hong Kong Independent Commission Against Corruption (ICAC) has caused quite a stir.  The Kwok brothers control Sun Hung Kai which is one of the largest property developers in Asia and owns Hong Kong’s two tallest buildings.Forbes estimates the combined wealth of the Kwok brothers at US$18.3bn.

Hong Kong Independent Commission Against CorruptionWhat is interesting about the arrests is that virtually nothing is known or has been made public.  No charges have yet been brought against the Kwoks, nor have ICAC released any information as to the nature of its on-going investigation.  The brothers have been released on bail and have made comments to the press to the effect that they have done nothing wrong.  It may now be a matter of many months until we know where (if anywhere) the ICAC investigation will lead

In cases such as these where the stakes are very high, it is not unusual for regulators and prosecutors to seek to play their cards close to their chests (although a cynic might be forgiven for asking why, in these circumstances, high profile arrests are often deemed necessary or desirable by the authorities).

D&O Implications

This secrecy can give rise to interesting challenges both for those individuals who are the subject of the investigation and also for those whose evidence may be relevant to the enquiry and to all the professional advisers concerned.  Difficult practical and legal questions of privilege and confidentiality can arise as to the extent to which such information as is made available by the investigators can be shared with D&O and/or other insurers.

These challenges can make the adjustment and settlement of claims for legal representation under any relevant insurances especially challenging. To some extent these challenges can be met by well-crafted claims handling and control provisions in the relevant insurances although whether the Kwoks have sought to avail themselves of liability insurance is unknown.

 

About Francis Kean

Francis is an Executive Director in Willis Towers Watson's FINEX Global, where he specializes in insurance for Dir…
Categories: Asia, Directors & Officers | Tags: ,

Leave a Reply

Your email address will not be published. Required fields are marked *