SINGAPORE: Singapore real estate billionaire Kwek Leng Beng said he has filed court papers against his son, Sherman Kwek, City Developments Limited’s (CDL’s) group chief executive officer since 2018.
According to The Straits Times, the 84-year-old executive chairman said the move was to “set things right” after his 49-year-old son, Sherman Kwek, along with board members Philip Lee Jee Cheng, Wong Ai Ai, and a group of directors, allegedly attempted a “coup” by appointing two new directors without proper vetting by the nomination committee.
He said, “This is necessary to deal with this attempted coup at the board level and restore corporate integrity.”
He added, “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.”
Boardroom tensions amid 37 per cent profit drop
Tensions in the boardroom reportedly surfaced after CDL posted a 37 per cent drop in its 2024 net profit to S$201.3 million (US$150.5 million), according to Forbes.
In the company’s earnings statement, Mr Sherman described 2024 as a year of “formidable headwinds,” with macroeconomic pressures and sector-specific challenges weighing on the group’s near-term earnings and portfolio calibration plans.
In a separate statement, CDL temporarily suspended trading and cancelled a scheduled media briefing, though it said business operations remained fully functional and unaffected, with Mr Sherman continuing as group CEO “until such time as there is a Board resolution to change company leadership”.
Mr Sherman, speaking on behalf of the “majority of the Board,” said in an emailed statement that changes to the board’s composition have “never been about ousting the esteemed chairman”. He said the changes were meant to “ensure CDL has the highest standards of governance”.
“As the matter is now before the courts for adjudication, we will not comment on the merits of the case and will make further announcements if there are any material developments,” he added.
He also expressed disappointment with the “extreme actions” taken by his father and the minority of the CDL board regarding the disagreement over the size and make-up of the CDL board.
According to The Straits Times, on Feb 26, near midnight, the older Mr Kwek issued another statement after a closed-door court hearing, saying “serious lapses of corporate governance at CDL, together with its subsidiaries, have now been halted”.
He added that his son, Mr Lee, Ms Wong, and other directors have undertaken not to make further changes to CDL’s board committees and the management of certain subsidiaries until the Singapore court issues further notice. CDL’s nominating and remuneration committee was also barred from taking further action.
He said, “The board committees and the management of the relevant subsidiaries are now safe from further attempts to destabilise, dismantle, and reconstitute them.”
Proposed removal of CEO Sherman Kwek
The executive chairman said this was not the first time his son’s decisions have put the company in a “precarious position”.
He noted how firing his son was “not an easy decision,” adding it has been his responsibility to the company and its shareholders to “always prioritise the interests of all shareholders, not just those of family”.
He said, “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 added, “The stakes are simply too high to allow reckless power grabs to destabilise the company.”
In response, he proposed the removal of his son, Mr Sherman, as CEO, stating incumbent chief operating officer Kwek Eik Sheng can serve as the interim CEO while the group looks for a professional CEO.
He said they will reinforce and strengthen CDL’s governance framework to prevent future violations and ensure no single group can override its corporate governance safeguards.
A multi-billion dollar family business in conflict
According to Forbes, CDL’s executive chairman has a net worth of US$11.5 billion (S$15.42 billion), with the Kwek family among Singapore’s wealthiest.
He, his late brother Kwek Leng Joo, and their father, Kwek Hong Png, bought the struggling City Developments in 1971 and grew it into one of Singapore’s biggest property developers, now with a market value of S$4.6 billion.
He is also the executive chairman of privately held Hong Leong Group, which his father founded in 1941 as a trading firm.
Meanwhile, his billionaire cousin, Quek Leng Chan, owns and runs a separate Hong Leong business in Malaysia. /TISG