By Rishav Chatterjee
(Reuters) -Singapore’s City Developments was plunged into a power struggle on Wednesday and suspended trading after its executive chairman accused his son, the company’s CEO, of plotting a boardroom coup.
Kwek Leng Beng, 84, said in a statement that he has filed court papers to remove his son, Sherman Kwek, from his position because of changes he has made to the company’s board.
“This is necessary to deal with this attempted coup at the board level and restore corporate integrity,” Leng Beng said.
He accused his son, two board members and a group of directors who acted with them of consolidating control of the company’s board.
In a statement on Wednesday afternoon, Sherman Kwek said he and the majority of City Developments’ board were disappointed by what he described as extreme actions taken by his father.
He said in an emailed statement to Reuters that changes to the board have “never been about ousting our esteemed chairman”.
Kwek was appointed CEO in January 2018. The company ended trading on Tuesday at S$5.12, about 60% lower than highs it had achieved in the start of 2018.
In a statement, City Developments announced a halt on share trading and said its business operations were fully functional and unaffected by the row. Sherman Kwek continues to be its group chief executive officer, it added.
Leng Beng alleged that his son bypassed the firm’s nomination committee on a couple of occasions to change the board composition and made significant changes to committees and governance.
“As a father, firing my son was certainly not an easy decision. 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,” Leng Beng said.
Leng Beng added that some members of the board were still aligned with him.
Sherman Kwek said in his statement, “steps to strengthen our Board have purely been to ensure City Developments 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.”
The company suspended trading before the market opened, citing a pending announcement, and unexpectedly cancelled its scheduled post-results briefing.
(Reporting by Rishav Chatterjee in Bengaluru; Additional reporting by Xinghui Kok; Editing by Janane Venkatraman, Alexandra Hudson)
