CDL executive chairman Kwek Leng Beng (left) files court case against son and group CEO Sherman Kwek over 'attempted coup'. - ST
SINGAPORE: A tussle between father and son for control of property giant City Developments Limited (CDL) was revealed on Wednesday (Feb 26) with executive chairman Kwek Leng Beng publicly criticising his son Sherman Kwek, who is CDL’s group chief executive.
The older Kwek said he has filed court papers on Feb 26 to deal with the “attempted coup” by his son Sherman Kwek, 49, Philip Lee and Wong Ai Ai and a group of directors acting with them to allegedly consolidate control of CDL’s board.
“In response, we have filed court papers today to set things right. This is necessary to deal with this attempted coup at the board level and restore corporate integrity,” said Kwek, who will be 84 this year.
“We intend to change the chief executive officer at the appropriate time. We will continue to explore all legal options available to us to vigorously defend and protect the interests of CDL and its shareholders,” he said.
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The older Kwek claimed that Sherman’s group had bypassed the nomination committee (NC) on two occasions to change the board composition, and hastily followed up by making significant changes to board committees and CDL’s governance.
This, he said, was contrary to established corporate governance principles, the Singapore Exchange Listing Rules and the Code of Corporate Governance.
The revelations come as the older Kwek detailed a chain of events from January that revealed family infighting over the S$4.7 billion Singapore-listed developer which has properties in nearly 30 countries.
Kwek Leng Beng said that on Jan 28, the eve of Chinese New Year, CDL’s corporate secretary sent an email to the board about Lee and Wong nominating two additional independent directors.
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The next day, Kwek Leng Beng questioned the urgency of appointing two new directors without proper vetting.
“Additionally, Chong Yoon Chou, our NC Chairman, was completely unaware of the nominations,” he said, adding that Chong “strongly objected” to bypassing the scheduled NC meeting on Feb 20.
Lee claimed “urgent concerns” as justification for the rushed appointments but failed to provide specifics, Kwek Leng Beng claimed.
The older Kwek immediately ordered all director interviews to be cancelled, “reinforcing the need for transparency and adherence to corporate governance norms”.
But he said Lee called for a board meeting on Jan 31 “in an attempt to push through the proposed appointments”.
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On Feb 5, the Board received legal advice that bypassing the NC was against the Code of Corporate Governance.
Regardless, on Feb 7, a board meeting was held with no vote being taken, and a Directors’ Resolution in Writing for the appointment of the two new directors was circulated and approved within hours, bypassing the NC.
“This confirmed that Sherman Kwek, Philip Lee, Wong Ai Ai and the other directors acting with them had pre-planned this move,” Kwek said.
“I was left with no choice but to send an email on Feb 8, 2025 seeking Sherman’s dismissal from the position of Group Chief Executive Officer. His role in circumventing good governance and consolidating power through the irregular appointment of two new directors was the latest of a long series of missteps,” Kwek said.
On Feb 9, the reconstituted board, led by Phillip Lee, objected to the chairman’s attempt to dismiss Sherman.
Kwek said this was not the first time Sherman’s decisions have put CDL in a “precarious position”.
He went on to cite the Chinese developer Sincere Property Group debacle that led to a $1.9 billion loss for CDL in 2020; poor investment decisions in the UK property market which resulted in significant financial losses and contributed to a 94 per cent drop in profit the first-half of 2023; as well as the underperformance of CDL’s share price since Sherman assumed leadership in 2018.
This reflects “eroded investor confidence and shareholder concerns over strategic missteps”, Kwek said.
“As a father, firing my son was certainly not an easy decision. I accept that business decisions are difficult and young people may make business mistakes in their careers and that is understandable, but circumventing corporate governance laws is a red line,” he said.
“As chairman, my responsibility is to CDL, its shareholders, and its future. I take my role as executive chairman seriously and have always prioritised the interests of all shareholders, not just those of my family. The stakes are simply too high to allow reckless power grabs to destabilise the company,” he said.
By dismantling the existing NC and replacing it with a Nominating and Remuneration Committee (NRC) is a “calculated effort to sideline independent oversight and give the majority bloc unrestricted control over CDL’s leadership and decision-making”.
This restructuring leaves the election of key management personnel entirely at the discretion of Sherman’s group, and allows for arbitrary appointment and removal of board members.
It also strips the chairman of meaningful authority.
“As an executive chairman, notwithstanding my decades of institutional knowledge, I am not able to have a position on the newly formed NRC under the Code,” he said.
Kwek said he and certain members of the board including Phillip Yeo, remained firmly committed to upholding the highest standards of governance and accountability.
To restore stability and realign CDL’s leadership with the interests of shareholders, he proposed the removal of Sherman as CEO as “CDL already has internal measures in place to ensure business stability in the absence of a CEO”.
Incumbent chief operating officer, Kwek Eik Sheng, will serve as the interim CEO, maintaining continuity while the Group searches for a professional CEO, Kwek said.
“We will reinforce and strengthen CDL’s governance framework to prevent future violations and ensure that no single group can override corporate governance safeguards,” Kwek said.
Last year, CDL celebrated its 60th anniversary.
In 1971, Kwek, his brother Kwek Leng Joo and their father, Kwek Hong Png, bought control of a loss-making CDL.
Under Kwek’s leadership, CDL grew to become a major hotel and property developer, with footprints growing beyond Singapore.
Kwek’s statement comes after a trading halt was called and CDL cancelled its scheduled 2024 results briefing in the morning of Feb 26.
CDL shares closed at $5.12 on Feb 26. - The Straits Times/ANN
