CDL Chairman Kwek Leng Beng moves to oust son over 'attempted coup'

He also pointed to financial missteps under his son's leadership.

City Developments Limited (CDL) Executive Chairman Kwek Leng Beng has initiated legal action to remove his son, Group CEO Sherman Kwek, accusing him of orchestrating a boardroom coup that undermines corporate governance.

In a statement, the elder Kwek alleged that his son, along with directors Philip Lee and Wong Ai Ai, bypassed established governance processes to consolidate control of the board.

The dispute escalated on 28 January, when CDL’s corporate secretary announced the nomination of two new independent directors.

The move, spearheaded by Lee and Wong, was made without consulting the Nomination Committee (NC), a critical oversight body chaired by Chong Yoon Chou.

On 5 February, the Board received legal advice warning that bypassing the NC could violate the Singapore Code of Corporate Governance and raise reputational risks. However, on 7 February, a resolution approving the appointments was passed within hours, circumventing the traditional vetting process.

In response, the chairman moved to dismiss his son as CEO, citing repeated governance failures. The newly reconstituted Board, led by Lee, opposed the decision.

Beyond governance concerns, the elder Kwek pointed to financial missteps under his son's leadership. He highlighted the $1.9b loss in 2020 from the failed Sincere Property investment in China, a 94% profit decline in the first half of 2023 attributed to poor UK property investments, and the continued underperformance of CDL’s share price relative to industry peers since 2018.

“As a father, firing my son was certainly not an easy decision," the senior Kwek 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."

Legal proceedings have been initiated to challenge the boardroom changes. The chairman, along with director Phillip Yeo, is working to restore governance safeguards and ensure leadership continuity. CDL’s current COO, Kwek Eik Sheng, is expected to step in as interim CEO if Sherman Kwek is removed, with a professional CEO to be appointed in due course.

In a separate statement, the elder Kwek said that a Singapore court has intervened in the ongoing corporate governance dispute at CDL, effectively suspending recent boardroom changes that were challenged by him.

Following a court hearing on Wednesday, two directors who were hastily appointed on February 7 have agreed not to exercise their powers until further notice from the court. Additionally, Sherman Kwek, Lee, Wong, and other directors aligned with them have undertaken not to proceed with their attempted restructuring of CDL’s board committees and subsidiaries’ management.

The court’s decision also suspends the irregularly constituted Nominating & Remuneration Committee from taking further action.

He said that the court’s decision safeguards the company from what he described as an attempt to "destabilise, dismantle, and reconstitute" its leadership.

"The Board and the management of these subsidiaries will now be able to function normally and without unwarranted interference as they were prior to the attempted coup," the chairman said.

He reiterated CDL’s commitment to strong corporate governance, emphasising that transparency, accountability, and responsible decision-making are critical to investor confidence and long-term shareholder value.