THE “primary reason” for the ongoing dispute at City Developments Ltd (CDL) is “a very serious issue of corporate governance” involving Dr Catherine Wu, Kwek Leng Beng’s adviser, said group chief executive Sherman Kwek in a statement on Thursday (Feb 27) evening.
He cited Dr Wu as holding an official position as adviser to the board of Millennium & Copthorne Hotels (M&C), a wholly owned and principal subsidiary of CDL.
“(She) has been interfering in matters going well beyond her scope, and she wields and exercises enormous influence. These matters have troubled us as directors,” he said.
Sherman Kwek added that Dr Wu has a “long relationship” with CDL executive chairman Kwek Leng Beng, and that “efforts that were made to manage the situation were done sensitively, but to no avail”.
““(She) has been interfering in matters going well beyond her scope, and she wields and exercises enormous influence.”
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Sherman Kwek, CDL group CEO, referring to Catherine Wu
“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,” he said.
Another resolution was to affirm that Dr Wu has no power and authority, among other things, to influence or advise the directors, management and staff of the CDL and M&C groups. Both resolutions were passed by a majority of the board on Feb 21.
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“We considered them to be necessary to protect the interests of the shareholders and relevant staff of the CDL Group, and to restore proper corporate governance and accountability,” said Sherman Kwek.
His statements are the latest salvo in the ongoing father-and-son tussle for the control of CDL.
The saga erupted on Feb 26, after Kwek Leng Beng said that he had filed court papers on Tuesday to deal with an “attempted coup” – by Sherman, board members Philip Lee Jee Cheng and Wong Ai Ai, as well as a group of directors acting with them.
In particular, the elder Kwek questioned the appointment of two new directors – Jennifer Duong Young and Wong Su Yen – that he alleged was done without due diligence and proper vetting.
According to Kwek Leng Beng, his son’s group had bypassed the nomination committee, contrary to corporate governance principles and the Singapore Exchange’s listing rules.
Ambushed
In his Feb 27 statement, Sherman Kwek alleged that his fathers’ statements “sadly do not present the full picture” and that there “has been no attempt by us to oust the chairman”.
He noted that his father and other minority directors – Philip Yeo, Colin Ong and Chong Yoon Chou – had tried to get the court to grant interim injunctions to restrain the “majority directors”, comprising six independent directors and himself.
The injunctions were to restrain two independent directors from exercising powers as directors and to reverse a number of resolutions that had been passed by the majority directors on the board of CDL.
“It has not been disclosed that the minority directors… served five of us court papers just after noon on Feb 26 for a hearing that was held only two-and-a-half hours later,” Sherman Kwek said in the statement.
The CEO also said that his father’s second statement – stating that the minority directors succeeded in their application and that lapses of corporate governance have been halted – was “most unfortunate”.
In fact, he said, the minority directors had failed in their application to reverse the resolutions that were passed.
“What in fact happened was that because the majority directors did not have the opportunity to present our case, we voluntarily offered undertakings, as defendants often do in such urgent applications, to preserve the status quo until a full hearing where we would have that opportunity,” noted Sherman Kwek.
“As a result, the court recorded our undertakings that we would not take any further action for the time being in relation to a number of the resolutions that had been passed, and undertakings from two independent directors that they would not for the time being exercise powers as directors of CDL,” he added.
Sherman Kwek said that the court “made it a point to say it was not making any substantive orders on the minority directors’ application”, adding that this point was not in his father’s second statement.
“(Despite) the attempt to ambush us, the minority directors did not succeed in persuading the court to hear and decide the merits, and in fact ended up on the receiving end of directions themselves and unable to use CDL’s name at the hearing,” he added.
