SINGAPORE — Sherman Kwek, group chief executive of City Developments Limited (CDL) and son of billionaire Kwek Leng Beng, said on Feb 27 that the underlying reason that led to the public fallout at the company was his father's adviser, Dr Catherine Wu.
"There has been no attempt by us to oust the chairman," he said in a statement, referring to his father, who is executive chairman of CDL.
"The primary reason for the dispute relates to a very serious issue of corporate governance within the CDL group arising from the conduct of one Dr Catherine Wu."
He added: "The chairman's claim that there is an 'attempted coup' by the majority directors to consolidate control of CDL's board is not only incorrect, it distracts from the nub of the issue, therefore requiring us to respond to present the full picture."
Although Wu's official position is adviser to the board of Millennium & Copthorne Hotels (M&C), a wholly owned and principal subsidiary of CDL Group, she has been interfering in matters going well beyond her scope, and she wields and exercises enormous influence, the younger Kwek claimed.
"These matters have troubled us as directors. Due to her long relationship with the chairman, efforts that were made to manage the situation were done sensitively, but to no avail," he said.
His group is proposing a resolution to terminate the advisory agreement that Wu has with the board of M&C, and another to affirm that Wu has no power and authority, among other things, to influence or advise the directors, management and staff of the CDL and M&C groups.
"We considered them to be necessary to protect the interests of the shareholders and relevant staff of the CDL group, and to restore proper corporate governance and accountability," he said.
These resolutions were passed by the majority of the board on Feb 21.
The application for the injunctions was filed on Feb 25, and the minority directors asked the court to hear them on the merits on an urgent basis, unsuccessfully asking that these resolutions be reversed, Sherman Kwek disclosed.
Dr Wu served as a director at M&C, the hotel subsidiary of Kwek Leng Beng's business empire, until her service was terminated in January 2024.
She also acted as personal assistant to the older Kwek — though she was not an employee — and was paid directly by him, according to an employment tribunal document filed in London in 2018.
Last August, Wu returned to M&C's board as an adviser.
Sherman Kwek said CDL's minority directors, comprising his father, Philip Yeo, Colin Ong and Chong Yoon Chou, served him and four others court papers just after noon on Feb 26 for a hearing that was held only 2½ hours later.
There was little time to respond, he added.
Following a closed-door High Court hearing, Kwek Leng Beng said that newly appointed directors Jennifer Duong Young and Wong Su-Yen have agreed not to exercise their powers until further court notice.
The older Kwek added that lapses of corporate governance at CDL and its subsidiaries have been halted.
But his son said: "What in fact happened was that because the majority directors did not have the opportunity to present our case, we voluntarily offered undertakings, as defendants often do in such urgent applications, to preserve the status quo until a full hearing where we would have that opportunity."
The younger Kwek added: "Therefore, despite the attempt to ambush us, the minority directors did not succeed in persuading the court to hear and decide the merits, and in fact ended up on the receiving end of directions themselves and unable to use CDL's name at the hearing."
The senior Kwek had alleged earlier this week that his son and a group of directors bypassed CDL's nomination committee to push through the appointment of Young and Wong as new independent directors, as well as made significant changes to board committees and governance.
In response, the senior Kwek filed court papers to "restore corporate integrity", and intends to replace his son as CEO.
CDL said Sherman Kwek will remain as CEO until a formal board resolution is passed to change the company's leadership.
Trading of CDL shares was temporarily suspended due to the boardroom dispute, though business operations remain unaffected, a company spokesperson said.
After news of the boardroom discord erupted, DBS Group Research cut its target price for CDL to $6.70 from $10.50. UOB Kay Hian downgraded the stock to a "hold", with a target price of $4.60, while HSBC kept its "hold" call.
JP Morgan downgraded CDL to "neutral", with a price target of $4.85, and Morgan Stanley reiterated its "underweight" call on the counter, with a price target of $5.
This article was first published in The Straits Times. Permission required for reproduction.
