Billionaire Kwek Leng Beng claims son staged ‘attempted coup' of S'pore real estate company CDL, seeks to fire him

A legal battle has erupted between City Developments Limited (CDL) executive chairman Kwek Leng Beng and his son Sherman Kwek, who is CDL’s group chief executive officer.

The matter came to light after the former publicly criticised his son on Feb. 26.

The older Kwek, who will be 84 this year, claimed it was an “attempted coup” by his 49-year-old son and a group of directors including Philip Lee and Wong Ai Ai, who were allegedly acting to consolidate control of CDL’s board, according to The Business Times.

He filed court papers on Feb. 26, saying the action was necessary "to deal with this attempted coup at the board level and restore corporate integrity".

Stating his intention to change the chief executive officer at the appropriate time, the chairman said he will explore all legal options available to vigorously defend and protect the interests of CDL and its shareholders.

Circumventing corporate governance laws

The older Kwek claimed that his son's group attempted to circumvent corporate governance laws and principles by bypassing the nomination committee (NC) twice to change the board composition without proper review.

On Jan. 28, the eve of Chinese New Year, CDL's corporate secretary emailed the board about Lee and Wong nominating two additional independent directors.

Kwek Leng Beng questioned the urgency of appointing two new directors without proper vetting, and added that the NC chairman Chong Yoon Chou was "completely unaware of the nominations".

He added that Chong “strongly objected” to bypassing the scheduled NC meeting on Feb. 20.

The older Kwek also said that though Lee claimed “urgent concerns” as justification for the rushed appointments, he failed to provide specifics.

The chairman immediately ordered all director interviews to be cancelled, but a board meeting was called by Lee on Jan. 31 “in an attempt to push through the proposed appointments”.

Though Kwek Leng Beng said the board received legal advice that bypassing the NC was against Singapore’s Code of Corporate Governance, which applies to listed companies such as CDL, a board meeting was held and a written resolution approving the appointments was passed despite no votes taken.

He said, “This confirmed that Sherman Kwek, Philip Lee, Wong Ai Ai, and the other directors acting with them had pre-planned this move."

The older Kwek then sought his son's dismissal as group chief executive officer, over his role in circumventing good governance and consolidating power through the irregular appointment of two new directors.

The reconstituted board, led by Lee, objected to the dismissal.

Kwek Leng Beng said this was just the latest of a long series of missteps under his son's leadership, citing a S$1.9 billion loss for the company involving Chinese developer Sincere Property Group in 2020 and poor investment decisions in the UK property market which led to significant financial loss and contributed to a 94 per cent drop in profit the first half of 2023.

He added that since his son assumed leadership in 2018, CDL’s share price has also underperformed.

“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,” the older Kwek said.

By dismantling the existing NC and replacing it with a Nominating and Remuneration Committee (NRC), the election of key management personnel would be entirely at the discretion of Sherman Kwek’s group.

It not only would allow for arbitrary appointment and removal of board members, but would also strip the chairman of meaningful authority.

Should Sherman Kwek be removed as CEO, incumbent chief operating officer Kwek Eik Sheng will serve as the interim CEO while the group searches for a professional CEO.

CDL

CDL is a Singaporean multinational real estate company.

It celebrated its 60th anniversary last year.

It was founded in 1963, and Kwek Leng Beng, along with his brother Kwek Leng Joo and their father Kwek Hong Png, bought control of CDL in 1971.

Earlier today, CDL's meeting to discuss its scheduled 2024 results was cancelled and a trading halt was called.

Top image via Hong Leong Group and CDL website.