CDL Chairman Accuses Son of “Attempted Coup” as Sherman Kwek Remains CEO

Investors eager for Singapore’s largest non–government controlled developer to announce its 2024 financials on Wednesday received more excitement than expected when the executive chairman and chief executive officer of City Developments Ltd issued separate statements regarding an alleged struggle for control of the company.

In a statement, 84-year-old CDL chairman Kwek Leng Beng said that his eldest son and chief executive of the company, Sherman Kwek, along with other directors of the company, had orchestrated an “attempted coup at the Board level” of the 61-year-old builder after additional directors were added to its board earlier this month.

“In response, we have filed court papers yesterday to set things right. This is necessary to deal with this attempted coup at the Board level and restore corporate integrity,” Kwek Leng Beng said in the statement. He added that, “We intend to change the CEO 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.”

Sherman Kwek, in a statement later on Wednesday said to be made on behalf of a majority of CDL’s board directors, expressed regret over the conflict surrounding the board moves.

“It is incredibly disappointing that our Chairman and a minority of the City Developments Limited Board have decided to take these extreme actions regarding this disagreement around the size and make-up of the CDL Board,” Sherman Kwek said. He added,  “To reiterate, this has never been about ousting our esteemed Chairman. These steps to strengthen our Board have purely been to ensure CDL has the highest standards of governance to which it has become known, and our collective decision making as a Board is as robust as possible.”

New Directors Added at Holiday Time

The father-son dispute over CDL’s governance apparently centres on the addition of two new independent directors to the developer’s board which Kwek Leng Beng says commenced on 28 January, the day before the lunar new year holiday.

Per the elder Kwek’s account, CDL’s corporate secretary, together with lead independent director Philip Lee and independent, non-executive director Wong Ai Ai, a former Baker McKenzie attorney, that evening sent an email to the board nominating two additional independent directors.

Kwek Leng Beng said that he questioned the urgency of the appointments the following day and that the head of the board’s nominating committee was unaware of the nominations, objecting to the process bypassing a meeting of his committee on 20 February.

The elder Kwek said that despite instructions from him to cancel director interviews, Lee on 31 January asked for a board meeting to be arranged.

Stating that the board received legal advice on 5 February which questioned the propriety of voting on the nominations of directors not yet reviewed by the nominating committee, Kwek Leng Beng said that on 7 February a board meeting was held with no vote being taken.

The statement went on to allege that, on the evening of the 7th, a directors’ resolution in writing for the appointment of the two new directors was circulated and approved without having been reviewed by the nominating committee. “This confirmed that Sherman Kwek, Philip Lee, Wong Ai Ai and the other directors acting with them had pre-planned this move,” the statement said.

CEO Struggle

Kwek Leng Beng, who controls a majority stake in CDL through the clan’s Hong Leong Group holding company, said that on 8 February he responded to the board moves by sending an email seeking Sherman Kwek’s dismissal as chief executive officer.

Laying out a set of measures said designed to restore stability in the company, Kwek Leng Beng said that his nephew and group chief operating officer Kwek Eik Sheng would be made interim CEO, “If and when Sherman is removed as CEO.”

In a statement to the Singapore stock exchange on Wednesday, CDL confirmed that, “”Mr Sherman Kwek remains the Group Chief Executive Officer until such time as there is a Board resolution to change company leadership.”

“Our focus as CEO and directors, as a Board majority and with clear guidance and support from our company and independent legal counsel, has always been to implement steps to improve governance,” the statement from Sherman Kwek said.

Blame for Missteps

Blaming his son for ill-fated CDL investments such as a S$1.9 billion (then $1.4 billion) loss on an investment in China’s Sincere Property five years ago, and struggling acquisitions in the UK, as well as the performance of the company’s stock, Kwek Leng Beng described the board additions as an attempt to wrest control of the developer.

“Their scheme has been deliberately designed to consolidate unchecked authority over CDL by dismantling the existing Nominating Committee (NC) and replacing it with a Nominating and Remuneration Committee (NRC),” the statement read. “This restructuring is a calculated effort to sideline independent oversight and give the majority bloc unrestricted control over CDL’s leadership and decision-making.”

Kwek Leng Beng said that the alleged scheme was designed to “Strip the Chairman of meaningful authority, by ensuring the I cannot be involved in the nomination process of Directors and KMPs (key management personnel).”

In its 2024 financial results released amid the board drama, CDL said its revenue slid to S$3.3 billion last year from S$4.9 billion a year earlier while its net profit after tax and non-controlling interest (PATMI) fell to S$201.3 million, down 35.3 percent from S$317.3 million in 2023.

The slide was due to lower revenue from condo sales in 2024, as well as higher construction costs and project delays.