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A REAL-LIFE Succession feud imploded from within property giant City Developments Ltd (CDL) last week, with a father-and-son tussle throwing the Kwek family-controlled group into crisis.

Explosive statements from both sides followed over three days, after trading in CDL stock was halted on Wednesday morning (Feb 26).

Accusations of an “attempted coup” and a hostile bid to remove Sherman Kwek from his group CEO position were parried by jaw-dropping revelations of “troubling matters” involving the “enormous influence” wielded by Catherine Wu, long-time adviser to patriarch Kwek Leng Beng.

All eyes are on CDL shares, which are expected to resume trading on Mar 3, with corporate governance under scrutiny and business stability and succession now at stake.

Kwek senior, who is executive chairman, has said CDL should appoint a professional CEO. Meanwhile, CDL has said that Sherman Kwek remains the group CEO, until there is a board resolution to change the company leadership.

The conflict moves into Singapore’s Supreme Court on Mar 4, when a closed-door case conference will be heard.

The elder Kwek had filed court papers on Feb 25 “to set things right”, saying a group of directors, led by Sherman Kwek, Philip Lee and Wong Ai Ai, sought to consolidate control of the board and the group by appointing two new directors and bypassing nomination procedures.

Lee is the lead independent director, and Wong is an independent non-executive director at CDL.

Court documents earlier obtained by The Business Times indicated that the elder Kwek had sought an injunction against the two new directors, Jennifer Duong Young and Wong Su-Yen, to prevent them from exercising the powers of a director.

He also sought to overturn resolutions passed by the CDL board on Feb 21 concerning Dr Wu. These resolutions were to terminate the advisory agreement that Dr Wu has with CDL unit Millennium & Copthorne Hotels (M&C), and to affirm that Dr Wu had no power and authority over the directors, management and staff of both CDL and M&C.

In his suit filed in the High Court on Feb 25, Kwek Leng Beng named Sherman Kwek, Wong, Young, Carol Fong (also known as Carolina Chan), Daniel Marie Ghislain Desbaillets, Wong Ai Ai and Philip Lee as defendants.

Kwek Leng Beng, CDL, and directors Philip Yeo, Colin Ong and Chong Yoon Chou were the applicants.

The five applicants are represented by lawyers from LVM Law Chambers, a law firm led by Senior Counsel Lok Vi Ming. The defendants are represented by a Lee & Lee team led by Julian Tay.

Here’s a summary of the story so far:

On Feb 26, bombshell news emerged that CDL executive chairman Kwek Leng Beng had filed a court action to deal with an “attempted coup” by Sherman Kwek, Philip Lee, Wong Ai Ai and directors acting with them. The chairman alleged this was orchestrated to consolidate control of the board and group.

The elder Kwek wanted to remove his son Sherman Kwek as CDL’s group chief executive officer due to “serious lapses of corporate governance” laws.

He objected to the appointment of the two new independent directors, Young and Wong, who were “irregularly and hastily appointed” earlier that month without going through the proper process via a nomination committee.

Kwek Leng Beng also pointed to missteps under his son’s leadership, including a S$1.9 billion loss from CDL’s investment in Chinese developer Sincere Property in 2020 and poor investment decisions in the UK property market.

He named his nephew – CDL’s chief operating officer Kwek Eik Sheng – as interim CEO “if and when Sherman is removed”, while the group hunts for a professional CEO to lead the company.

In a second statement later that day, the elder Kwek said the two new directors have agreed not to exercise their powers until further court notice.

News of the alleged boardroom coup attempt followed the sudden cancellation of CDL’s FY2024 results briefing on the morning of Feb 26, after the company called for a trading halt. CDL posted a 54.7 per cent decline in profit at S$113.5 million for its second half ended Dec 31, 2024, from lower property development contributions and higher financing costs.

Sherman Kwek subsequently issued a statement on behalf of the majority of CDL’s board, expressing his disappointment at his father’s “extreme actions”.

He claimed that the recent board changes were not about ousting Kwek Leng Beng – instead, it was related to “a very serious issue of corporate governance” involving Dr Catherine Wu, who has a “long relationship with the chairman”.

He said Dr Wu – who holds an official position in the board of M&C, a wholly owned subsidiary of CDL – had been “interfering in matters going well beyond her scope” and that she “wields and exercises enormous influence”. Dr Wu is also said to have been a personal assistant to Kwek Leng Beng, being paid directly by him.

“These matters have troubled us,” said Sherman.

He said efforts have been made to manage the situation sensitively, but to no avail. “This led us, with the benefit of legal advice, to propose a resolution to terminate the advisory agreement Dr Wu has with the board of M&C.”

Another resolution was to affirm that Dr Wu had no power and authority, among other things, to influence or advise the directors, management and staff of both CDL and M&C groups. The two resolutions were passed by a majority of the board on Feb 21.

These steps were necessary to protect the interests of shareholders and relevant CDL staff, as well as restore “proper corporate governance and accountability”, said younger Kwek.

Sherman Kwek also alleged that his father’s statements were inaccurate.

He said Kwek Leng Beng and other minority directors had tried to get the court to grant interim injunctions to restrain the majority directors and block the two independent directors.

But the majority directors were served court papers just hours before the court hearing on Feb 26.

The younger Kwek added that the minority directors failed in their application to reverse the resolutions that were passed, and then offered undertakings to the court to maintain the status quo until a full hearing is held.

In response, Kwek Leng Beng said that his son’s denial of an attempt to oust him “misses the point”, while director Philip Yeo added that Sherman Kwek’s statement on Catherine Wu was “an attempt to distract everyone from the matter at hand”. 

Some analysts have rerated CDL’s stock amid the uncertainty, which is expected to hang over the company until the boardroom tussle is resolved. Others remain optimistic about the group’s future, saying CDL’s “fundamentals remain intact”.