The two statements issued by City Development’s (CDL) executive chairman Kwek Leng Beng “do not present the full picture”, says his son Sherman Kwek.
The elder Kwek issued statements on Feb 26, first accusing his son, Philip Lee, Wong Ai Ai and a group of directors acting with them of trying to consolidate control of CDL’s board and the group. More poignantly, Leng Beng said that “as a father, firing my son was certainly not an easy decision”. In response, Sherman, on behalf of the majority of the CDL board of directors, called the public moves "incredibly disappointing" regarding the disagreement around the size and make-up of the CDL board.
In a second statement issued near midnight on the same day, the elder Kwek said the “serious lapses” of corporate governance at CDL had been stopped.
Following a court hearing on Feb 26, the two new directors, who were “irregularly and hastily appointed” on Feb 7, have undertaken not to exercise any powers as directors until further notice of the court. The directors refer to Jennifer Duong Young and Wong Su Yen.
In a statement sent out on Feb 27 on behalf of the majority of CDL’s board of directors, Sherman said that the elder Kwek’s statement did not reveal that the minority directors served Sherman and the board of directors in his camp “just after noon” on Feb 26 for a hearing that was held just two and a half hours later. The minority directors Sherman was referring to comprised his father, Philip Yeo, Colin Ong and Chong Yoon Chou.
“Without giving us the opportunity to respond in time to give the court the full picture, the minority directors tried to get the court to grant interim injunctions to restrain the majority directors on the board of CDL, comprising six independent directors and myself, from implementing a number of resolutions, to restrain two independent directors from exercising powers as directors and to reverse a number of resolutions that had been passed by the majority directors on the board of CDL,” says Sherman.
See also: Salesforce pledges to invest US$1 billion in Singapore over the next five years
He adds that Leng Beng’s suggestion that the minority directors succeeded in their application and that the lapses of corporate governance at CDL and its subsidiaries have been halted is “most unfortunate”.
“As the chairman must know, yesterday the minority directors failed in their application to reverse the resolutions that were passed,” Sherman adds.
“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.”
See also: Tank builder's stock hotter than LVMH in new European order
As such, the court recorded Sherman and the majority directors’ undertakings that they would not take any further action for the time being. This was in relation to a number of the resolutions that had been passed. The two new directors also agreed not to exercise powers as directors of CDL.
“This explains why the court made it a point to say it was not making any substantive orders on the minority directors’ application, a point which is not found in the chairman’s second statement.”
Sherman’s statement added that Leng Beng did not mention that all the directors, including himself and the minority directors were directed by the court to refrain from doing anything in relation to CDL’s subsidiaries, Singapura Developments and Millennium & Copthorne Hotels (M&C) that would affect the other party’s position in the dispute until it is resolved.
No attempt to oust chairman; issue of corporate governance stems from conduct of Dr Catherine Wu
Further to his statement, the younger Kwek said that there was no attempt to oust his father despite the elder Kwek’s claims of an “attempted coup” by the majority directors.
However, he said the primary reason for the dispute is due to a “very serious issue of corporate governance” within the group “arising from the conduct of one Dr Catherine Wu”. According to a filing on Companies House, the executive agency of the British government, Wu was appointed as director to M&C's board in July 2022 before she resigned in January 2024. Her occupation was listed as "chief of staff".
“Although her official position is advisor to the board of 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. These matters have troubled us as directors,” alleged the younger Kwek.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
“Due to her long relationship with the chairman, efforts that were made to manage the situation were done sensitively, but to no avail,” he adds. “This led us, with the benefit of legal advice, to propose a resolution to terminate the advisory agreement Dr Wu has with the board of M&C and another to affirm that Dr 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.”
According to Sherman, the resolutions proposed were deemed to be necessary to protect the group’s shareholders and relevant staff. They were also meant to restore proper corporate governance and accountability.
The resolutions were passed by the majority of the board on Feb 21 while the application for the injunctions was filed on Feb 25 with the minority directors asking the court to hear them on the merits of an urgent basis. The minority directors had requested for the resolutions to be reversed, but unsuccessfully.
To this end, Sherman notes that the majority directors are “alive to their duties and will continue to uphold corporate governance and accountability within the CDL Group."
The trading of CDL's shares remain halted, with its last-traded price at $5.12.
See also:
- SIAS asks CDL to clarify Dr Catherine Wu’s role at M&C, process of board appointments, and shareholder safeguards
- Dr Catherine Wu resigns; CDL CEO can ‘no longer’ make corp governance allegations and justify board coup: Kwek Leng Beng
- Urgency of court application stems from disruption of CDL’s corporate structure; Phillip Yeo sees saga as distraction
- CDL board fight cools with undertaking from two new IDs
- Father and son battle it out in court for control for CDL
- Sherman Kwek to remain as group CEO of CDL; finds episode 'incredibly disappointing'
- CDL calls for trading halt, cancels FY2024 results briefing
