Taipans with egg on their faces

No one has come out of the spiralling crisis at Trafalgar House looking particularly clever, but few have as much egg on their face as Simon and Henry Keswick, taipans of the Jardine Matheson trading empire and just about the most powerful Britons in Hong Kong, writes Tom Stevenson.

Their investment in Trafalgar House in 1992, via Jardine's 30 per cent owned subsidiary Hongkong Land, was to have been an insurance policy for the company made famous, in James Clavell's novel of the same name, as the colony's Noble House.

In the run-up to the Chinese takeover of Hong Kong in 1997, Trafalgar was to have been the base for the Keswicks' global business ambitions, a goal that has proved horribly wide of the mark. It is not the first time the Keswicks have stumbled - although, with an investment of pounds 300m for a 26 per cent stake in a company worth three quarters of that, it has been a particularly embarrassing failure.

Back in the 1960s Henry Keswick was widely credited with failing to take advantage of Hong Kong's rapid expansion into the New Territories. The company then invested in British property just before the early 1970s crash and Jardine rapidly declined in power and wealth.

The group continued to perform poorly under Henry's successor, David Newbigging, when Hongkong Land came close to going bust and takeover by Chinese entrepreneurs threatened until the clan reasserted control, sacking Newbigging and installing Henry's youngest brother Simon.

Since then, the 1980s economic boom in Hong Kong has allowed the group to prosper, making more money for Jardine and the Keswicks than in the whole of its previous history. Success has come despite the transfer of the group's domicile from Hong Kong to Bermuda in 1984, a move which has been both cause and effect of a deteriorating relationship between Jardine and the Chinese authorities.

Jardine and the Chinese have been conducting a tense stand-off for 160 years now, so Henry Keswick's fabled hatred of Hong Kong's communist neighbour is nothing new for the company. Founded in 1832 by William Jardine, a Scottish surgeon with a bent for trade, Jardine has a long and not entirely distinguished history.

It bought the first patch of land to be sold on Hong Kong, when the island became a colony in 1842. By then Jardine was heavily involved in the opium trade with China and helped to push Britain into the opium wars of the 1840s to protect its trade. The Chinese have never forgotten.

It is easy to see why Henry and Simon Keswick wanted to loosen the tie with the colony in which their family has prospered for so long. But Trafs was hardly the getaway vehicle they would have chosen.