We have all heard of the common story of nepotism where a youngster who has no experience whatsoever gets to be the next CEO of the company, all because his or her father is the founder.
But have you ever heard of one where the father decides to fire his own son instead of making him CEO?
A power struggle between father and son for control of Singapore-listed property developer City Developments Limited (CDL) became public on 26 Feb, with executive chairman Kwek Leng Beng filing court papers against his son Sherman Kwek, who currently serves as the group’s chief executive officer.
The 83-year-old chairman accused his son and several board members of attempting a “coup” to consolidate control of CDL’s board, bypassing corporate governance protocols in the process.
Court Papers Filed to Address Alleged Board-Level Coup at CDL
Mr Kwek Leng Beng revealed he had taken legal action against his son, Mr Sherman Kwek, 49, and board members Mr Philip Lee and Ms Wong Ai Ai, claiming they had circumvented proper governance procedures to push through board changes without appropriate review.
“This is necessary to deal with this attempted coup at the board level and restore corporate integrity,” said the elder Kwek, who stated his intention to change the CEO “at the appropriate time.”
The dispute centres on events that began on 28 Jan, when an email was sent to the board on the eve of Chinese New Year about the nomination of two additional independent directors.
According to the chairman, Mr Chong Yoon Chou, the nomination committee chairman, was “completely unaware” of these nominations.
Despite objections about the rushed nature of the appointments, the board approved the appointment of Ms Jennifer Duong Young and Ms Wong Su Yen as independent non-executive directors on 7 Feb, following a written resolution circulated and approved within hours.
Mr Kwek Leng Beng claimed the board received legal advice on 5 Feb that bypassing the nomination committee violated the Code of Corporate Governance, yet the appointments proceeded anyway.
“This confirmed that Sherman Kwek, Philip Lee, Wong Ai Ai and the other directors acting with them had pre-planned this move,” the elder Kwek stated.
Following these events, on 8 Feb, Mr Kwek Leng Beng sent an email seeking his son’s dismissal as group CEO. The reconstituted board, led by Mr Philip Lee, objected to this attempt the next day.
Past Business Decisions and Performance Under Scrutiny at CDL
The chairman cited several instances where his son’s decisions allegedly put CDL in a “precarious position.”
These included the Chinese developer Sincere Property Group investment that led to a $1.9 billion loss for CDL in 2020 and investment decisions in the UK property market which contributed to a 94 per cent drop in profit during the first half of 2023.
Mr Kwek Leng Beng also pointed to what he described as the underperformance of CDL’s share price since his son took leadership in 2018. At the start of Mr Sherman Kwek’s tenure in January 2018, CDL’s share price was around $12.18, compared to $5.12 when trading was halted on 26 Feb.
“As a father, firing my son was certainly not an easy decision,” said the senior Kwek. “I accept that business decisions are hard and young people may make business mistakes in their careers and that is understandable, but circumventing corporate governance laws is a red line.”
If successful in his legal action, Mr Kwek Leng Beng proposed that the current chief operating officer, Mr Kwek Eik Sheng, who is his nephew, serve as interim CEO while the group searches for a professional chief executive.
In response, Mr Sherman Kwek expressed disappointment over what he called his father’s “extreme actions.”
“It is incredibly disappointing that our chairman and a minority of the CDL board have decided to take these extreme actions regarding this disagreement around the size and make-up of the CDL board,” he said in a statement.
The younger Kwek maintained that the board changes were implemented to improve governance, not to oust the chairman.
“These steps to strengthen our board have purely been to make sure CDL has the highest standards of governance to which it has become known, and our collective decision-making as a board is as solid as possible,” he added.
A CDL spokesperson confirmed that trading was halted due to the disagreement within the board about its composition and constitution, but stressed that business operations remain “fully operational and unaffected.”
Securities Investors Association (Singapore), or Sias, expressed hope that the board issue would “be resolved amicably among the related parties in the best interest of all CDL stakeholders.”
The $4.7 billion property giant, which has holdings in nearly 30 countries, was bought by Mr Kwek Leng Beng, his brother Kwek Leng Joo and their father, Mr Kwek Hong Png, in 1971 when it was a loss-making company.
Under the elder Kwek’s leadership, CDL grew to become a major hotel and property developer with an international presence.
CDL shares closed at $5.12 on 25 Feb before the trading halt was called.
If you watch at least 10 minutes of brain rot content daily, you must know this:
Read Also:
- McDonald’s Singapore Launching Curry McNuggets, Brings Back Nasi Lemak Burger
- Couple Jailed for Public Indecency after Wife Performs Explicit TikTok Live Stream at HDB Block
- Singapore’s Last Manhattan Fish Market Outlet Closes at Northpoint City
- PARKROYAL’s Ginger Restaurant Launches Halal Korean Ramadan Buffet with Over 30 Dishes until April 2025
- TikTok Lays Off Dozen Safety Staff in Singapore as Global Restructuring Push
- Singapore Suspends National Food Defence Programme after 20 SOTA Students Fall Ill from Ready-to-Eat Meals
Advertisements
