CDL saga: Kwek Leng Beng ends lawsuit, all parties to remain in roles

SINGAPORE - Billionaire tycoon Kwek Leng Beng will drop the lawsuit he had filed against his son Sherman Kwek and other directors of City Developments Limited (CDL), in the latest turn of a high-profile family rift that set tongues wagging for more than two weeks.

The executive chairman of CDL said on March 12 that he has decided to drop the lawsuit he had filed in February to stop his son and majority directors of CDL from implementing a number of board resolutions. 

The lawsuit was also filed to restrain two newly appointed independent directors from exercising their powers.

“I will continue in my role as executive chairman, and Sherman Kwek will continue as group chief executive officer,” he said.

All the current directors, including the two new independent directors – Ms Jennifer Duong Young and Ms Wong Su-Yen – will remain on the CDL board, he added.

The older Kwek said all CDL board members have agreed to put aside their differences for the greater good of CDL and its stakeholders.

“We will all continue to focus on strengthening CDL’s business, in accordance with good corporate governance, now and in the future, including completing the raft of landmark developments under way across Singapore and globally, furthering the expansion of various brands under Millennium & Copthorne, continuing our capital recycling initiative and, above all, maximising shareholder value.” 

This comes after Mr Kwek Leng Beng had earlier sought to remove his son as chief executive officer of CDL over an “attempted coup”.

Mr Kwek initially accused his son and six CDL board members of trying to take control of what was once Singapore’s largest listed developer.

He alleged that Mr Sherman Kwek and several directors had attempted to appoint two new independent directors without securing full board approval and bypassing the nomination committee, with committee chairman Chong Yoon Chou left “completely unaware” of the situation.

This led to the accusations of an attempted power grab that erupted into a legal dispute.

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Mr Sherman Kwek, in turn, denied that he tried to oust his father.

The younger man named his father’s aide, Dr Catherine Wu, as the source of the disputes.

The former Taiwanese musician, now a Singaporean, was accused of meddling with company matters “well beyond her scope, and she wields and exercises enormous influence”.

Mr Sherman Kwek alleged that “due to her long relationship with the chairman, efforts that were made to manage the situation were done sensitively, but to no avail”.

In response, Mr Kwek Leng Beng announced the resignation of Dr Wu on March 4 as “an unpaid independent adviser” to the board of directors at CDL’s hotel arm, Millennium & Copthorne Hotels (M&C).   

Last week, the older Kwek said it was high time to restore investor confidence and ensure that “breaches of corporate governance committed by the CEO and his team of directors will never happen again”.

CDL shares closed at $4.94 on March 12. This is down from $5.12 before trading was halted on Feb 26 when the dispute was made public. Trading resumed on March 3.

With the boardroom tensions seemingly defused, analysts are hoping for a renewed focus on driving shareholder returns and profitability, and a gradual recovery in share price.

However, there were some who were concerned whether the current board can work well together, given that it has gone through such a public spat.

“It remains to be seen if the board will be able to function effectively. In my view, this will be resolved by the votes of shareholders at the next annual general meeting,” said one analyst.

In an earlier note, Mr Brandon Lee of Citi Research said that the potential impact of this episode was hard to quantify, and this could weigh on its share price in the short term.

When contacted, representatives of Mr Sherman Kwek said he had no further comment.

This article was first published in The Straits Times. Permission required for reproduction.