February 27, 2025
SINGAPORE – A tussle between father and son for control of City Developments Limited (CDL) came to light on Feb 26, with executive chairman Kwek Leng Beng publicly criticising his son Sherman, who is the property giant’s group chief executive officer.
The older Mr Kwek said he had filed court papers to address the “attempted coup” by Mr Sherman Kwek, 49, board members Philip Lee Jee Cheng and Wong Ai Ai, as well as a group of directors acting with them to allegedly consolidate control of CDL’s board.
“This is necessary to deal with this attempted coup at the board level and restore corporate integrity,” said Mr Kwek Leng Beng, who will be 84 in 2025.
“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,” he said.
Responding, Mr Sherman Kwek expressed his disappointment over the “extreme actions” taken by his father over a disagreement around the size and make-up of the board of the property group.
“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,” said Mr Sherman Kwek in a statement on behalf of the majority of the CDL board of directors.
He said: “To reiterate, this has never been about ousting our esteemed chairman.”
Shortly before midnight on Feb 26, the older Mr Kwek issued another statement saying that the “serious lapses of corporate governance have been halted”. This followed a closed-door court hearing earlier in the day.
He added that his son, Mr Lee, Ms Wong and the other directors acting in concert with them have undertaken to not take further action to change CDL’s board committees and management of certain subsidiaries until further notice by the Singapore court.
CDL’s nominating and remuneration committee, which oversees board appointments and other matters, has also been suspended from taking further action.
“In other words, the board committees and the management of the relevant subsidiaries are now safe from further attempts to destablise, dismantle and reconstitute them,” he said.
In his earlier statement, the older Mr Kwek claimed that Mr Sherman Kwek’s group had bypassed the nomination committee (NC) on two occasions to change the board composition, and hastily followed up by making significant changes to board committees and CDL’s governance.
This, he said, was contrary to established corporate governance principles, Singapore Exchange (SGX) listing rules and the Code of Corporate Governance.
The revelations came as the older Mr Kwek detailed a chain of events from January that revealed family infighting over the $4.7 billion Singapore-listed developer, which has properties in nearly 30 countries.
Mr Kwek Leng Beng said that on Jan 28, the eve of Chinese New Year, CDL’s corporate secretary sent an e-mail to the board about Mr Lee and Ms Wong nominating two additional independent directors.
On Feb 7, CDL’s board announced the approval of the appointment of Ms Jennifer Duong Young as an independent non-executive director following the resignation of Mr Tan Kian Seng. Ms Young spent 21 years at Credit Suisse.
The board also approved the appointment of Ms Wong Su-Yen, without proper vetting and bypassing the NC, as independent non-executive director. Ms Wong is said to have more than 30 years of experience across diverse industries, including high-tech, financial services, professional services, education, retail and the public sector. She was chair of Singapore Institute of Directors for three years until 2023, promoting governance standards in boards.
The next day, Mr Kwek Leng Beng questioned the urgency of appointing two new directors without proper vetting.
“Additionally, Mr Chong Yoon Chou, our NC chairman, was completely unaware of the nominations,” he said, adding that Mr Chong “strongly objected” to bypassing the scheduled NC meeting on Feb 20.
Mr Lee stated “urgent concerns” as justification for the rushed appointments but failed to provide specifics, Mr Kwek Leng Beng claimed.
The older Mr Kwek immediately ordered all director interviews to be cancelled, “reinforcing the need for transparency and adherence to corporate governance norms”.
He said Mr Lee called for a board meeting on Jan 31 “in an attempt to push through the proposed appointments”.
On Feb 5, the board received legal advice that bypassing the NC was against the Code of Corporate Governance.
Regardless, on Feb 7, a board meeting was held with no vote being taken, and a Directors’ Resolution in Writing for the appointment of the two new directors was circulated and approved within hours, bypassing the NC.
“This confirmed that Sherman Kwek, Philip Lee, Wong Ai Ai and the other directors acting with them had pre-planned this move,” Mr Kwek said.
“I was left with no choice but to send an e-mail on Feb 8, 2025, seeking Sherman’s dismissal from the position of group chief executive officer. His role in circumventing good governance and consolidating power through the irregular appointment of two new directors was the latest of a long series of missteps,” Mr Kwek said.
On Feb 9, the reconstituted board, led by Mr Lee, objected to the chairman’s attempt to dismiss Mr Sherman Kwek.
The older Mr Kwek said this was not the first time his son’s decisions have put CDL in a “precarious position”.
He cited the Chinese developer Sincere Property Group episode that led to a $1.9 billion loss for CDL in 2020; investment decisions in Britain’s property market that contributed to a 94 per cent drop in profit the first half of 2023; as well as the underperformance of CDL’s share price since his son assumed leadership in 2018.
This reflects “eroded investor confidence and shareholder concerns over strategic missteps”, said Mr Kwek Leng Beng, who has a majority stake in CDL through the Hong Leong Group, which he controls.
“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,” he said.
“As chairman, my responsibility is to CDL, its shareholders, and its future. I take my role as executive chairman seriously and have always prioritised the interests of all shareholders, not just those of my family. The stakes are simply too high to allow reckless power grabs to destabilise the company.”
Dismantling the existing NC and replacing it with a nominating and remuneration committee is a “calculated effort to sideline independent oversight and give the majority bloc unrestricted control over CDL’s leadership and decision-making”, he claimed.
This restructuring, he alleged, leaves the election of key management personnel entirely at the discretion of Mr Sherman Kwek’s group, and allows for arbitrary appointment and removal of board members.
It also strips the chairman of meaningful authority, Mr Kwek Leng Beng added.
“As an executive chairman, notwithstanding my decades of institutional knowledge, I am not able to have a position on the newly formed NRC (nominating and remuneration committee),” he said.
The older Mr Kwek said he and several members of the board, including Mr Philip Yeo, remain committed to upholding the highest standards of governance and accountability.
To restore stability and realign CDL’s leadership with the interests of shareholders, he proposed the removal of Mr Sherman Kwek as CEO as “CDL already has internal measures in place to ensure business stability in the absence of a CEO”.
Incumbent chief operating officer Kwek Eik Sheng can serve as the interim CEO, maintaining continuity while the group searches for a professional CEO, said Mr Kwek Leng Beng.
“We will reinforce and strengthen CDL’s governance framework to prevent future violations and ensure that no single group can override corporate governance safeguards,” he said.
In 2023, CDL celebrated its 60th anniversary.
In 1971, Mr Kwek Leng Beng, his brother Kwek Leng Joo and their father Kwek Hong Png bought control of a loss-making CDL.
Under Mr Kwek Leng Beng’s leadership, CDL grew to become a major hotel and property developer, with footprints growing beyond Singapore.
Mr Kwek Leng Beng’s statement comes after a trading halt was called and CDL cancelled its scheduled 2024 results briefing on the morning of Feb 26.
Mr David Gerald, president of Securities Investors Association (Singapore), or Sias, said it “hopes that the board issue will be resolved amicably among the relevant parties in the best interest of all CDL stakeholders. It encourages the directors of CDL’s board to work towards a fair and constructive resolution”.
In August 2024, Mr Sherman Kwek was appointed patron of Sias.
Professor Lawrence Loh, director at the Centre for Governance and Sustainability at the National University of Singapore Business School, noted that the developments in CDL show that “corporate governance is sacrosanct in any company, not least a listed family business. Due diligence is essential to assure the confidence of stakeholders, including shareholders”.
He added that “the code of corporate governance stipulates the role of the NC in recommending the appointment of directors. Routing candidates through this committee will upkeep good governance”.
Prof Loh added that “the ongoing sequence of events is probably more than what meets the eye. It will be necessary to ascertain clarity even as the matter may potentially be addressed by the legal court”.
A spokesperson for the SGX Group noted that the exchange is unable to comment on specifics about a listed issuer. “In general, Singapore Exchange Regulation expects issuers to have in place a proper process for the appointment of directors and to disclose any material development.”
CDL shares closed at $5.12 on Feb 25.