For years, Singapore's richest family seemed an effective succession planning model. But a recent dispute between father and son has destroyed that image and has turned the Kwek clan, whose fortune is valued at 17,000 million dollars, a clear warning for investors of companies controlled by families. The rich families around the world prepare to convey their inheritance to their heirs. In Asia, many veteran magnates are discussed between giving the reins of their business dynasties to their descendants or hiring external professionals. The Kwek saga shows how even the best planned leadership transitions can be disrupted by distrust and accusations of bad decisions. Before this year, there were few signs of conflict under the command of City Developments Limited (CDL), a real estate giant based in Singapore that owns offices, shopping centers and luxury hotels worldwide. Its president, Kwek Leng Beng, for decades promoted the promoter before her eldest son, Sherman Kwek, assumed the position of executive director in 2018. The two presented a united front in numerous public events. The family succession plan was completed in 2023, but there were latent tensions and frictions, even around a nearby confidant of the president, and father and son had different points of view on the business strategy. His recent conflict increases investors' concern about the quoted promoter, who has not achieved the commercial objectives or forecasts of benefits of analysts, and whose actions have collapsed more than those of their competitors. Singapore's stock market regulator has questioned CDL about its transparency and corporate governance after the dispute, according to Bloomberg News.In January, a day after the 84th birthday of Leng Beng, the billionaire received an email that caused a break in confidence between him and Sherman. The CDL Board of Directors notified the appointment of two new members, which surprised the octogenarian. After the notification, the majority of the Board supported the incorporations – despite the objections of Leng Beng – and dismissed the executive president. The changes occurred despite the agreement reached by Leng Beng and Sherman earlier that month, according to sources close to the organization, not to alter the composition of the promoter's council. The dispute came to light in February, when Leng Beng publicly accused Sherman to orchestrate a coup d'etat at the Board and revealed that he had tried to fire his son. He sued Sherman and several managers to try to reverse the changes. Sherman claimed that they never intended to dismiss his father. The 49 -year -old executive explained that the cause of the dispute was Catherine Wu, an advisor to the CDL Hotel Unit, whom he accused of interfering with the business and said that his influence should be limited. Father and son stopped talking while the conflict intensified, according to sources asked for anonymity. In March, the dispute ended almost as abruptly as it began. Wu resigned from his unpaid position and Leng Beng withdrew the lawsuit and declared that the members of the Council had agreed to put aside their differences. The vertiginous succession drama raises many questions about the family dynamics of the Kwek and how a seemingly cohesive relationship could deteriorate so fast, and if things have really been fixed. Back to status quo and avoid airing dirty rags «does not solve the underlying problems, such as the management of the company in a context of possible distrust between the members of the Council and the Management,» said JPMorgan analyst Mervin Song, in a note to his clients. Nor does it address the problem of low CDL performance, he added. CDL and Sherman declined to comment. Leng Beng, in response to Bloomberg News questions, said the article is «full of factual inaccuracies,» without giving more details. He added that the objective of CDL is «to improve our commercial operations and maximize the value for shareholders.» Wu did not respond to the request for comments.Kwek Leng Beng, Executive President of CDL in an image of 2023. Kevin Lim (ST / SPH Media / AFP / Contact) Leng Beng spent the last six decades expanding the Hong Leong group, which controls City Developments and other real estate assets, financial and industrial services. He assumed the presidency of the conglomerate in 1990, four years before his father's death. And a reputation was forged as a cunning entrepreneur and sensible negotiator. Sherman, his firstborn, joined the promoter's hotel division in the United States. In 2010, he founded a unit called Chinese CDL. The line between work and the family was often diffuse, and Sherman was heading to his father as «president» in the office and outside it. Kwek Father sometimes questioned his son's decisions or rebuked him at work. In 2017, when Leng Beng received an award to the business career, he praised Sherman's tenacity and vision and said his son worked harder than him. The following year, Sherman was appointed executive director of CDL after receiving unanimous support from the Council. Shortly after, he led an investment of 1.9 billion Singapurenses (1.4 billion US dollars) in Sincere Property Group, a indebted Chinese real estate promoter. The Board of Directors of CDL, then with eight members, approved the investment in a vote of four to three in which Sherman abstained, according to nearby sources, who said that Leng Beng was in favor. The incursion failed quickly. The energetic measures of the Chinese government against the excessive indebtedness of the promoters unleashed a real estate crisis and Sincere had liquidity problems. CDL canceled its investment and reported losses of 1.9 billion Singapurenses in 2020, the first in almost five decades.
Disagreements
The saga caused a family breakdown. The cousin of Leng Beng, Kwek Leng Peck, left the CDL Board in 2020, claiming disagreements on Sincere's investment. Two other managers followed him. «When Sincere's investment exploded, I went from a hero to zero overnight,» said Sherman. He later acknowledged that there were requests to resign and that the Council commissioned an investigation into its management whose result was not revealed. After the outbreak, he said that CDL would try to obtain greater profits by accelerating the disinvestment of assets and acquiring other properties. New independent counselors were incorporated into the Board, expanding it to 10 members. During decades, Leng Beng focused their attention on the Millennium & Comethorne Hotels subsidiary, constituted in the United Kingdom. And he met Catherine Wu, pianist and singer Taiwanese in 1992 with a doctorate in music education. During the following more than 30 years, he accompanied the president to some M&C meetings and facilities inspections in Singapore and other countries. In 2018, WU was mentioned in a judgment of a British labor court in a claim for inadmissible dismissal filed by an ex -employed from M&C. Although he did not prosper, the Court's conclusions indicated that Wu was a personal assistant from Leng Beng, received remuneration from the president and acted as his «eyes and ears» on the ground. Last year, in an interview in Taiwan, Wu referred to him as his benefactor and boss and said they allowed him to work alone in M&C after 15 or 20 years. He resigned in January 2024 after staff complaints about his interference. Subsequently, an internal Memorandum of Leng Beng indicated that he had agreed to be an unpaid advisor to the hotel chain and that he would help define his strategy. Sherman and some members of the CDL Council wanted to limit their influence on the business; They thought they could achieve it restructuring the advice of CDL and M&C.
Reorganization
At the end of 2024, an independent CDL counselor triggered events that would bring to light years of family tension. After discussing possible candidates, the Council was divided with respect to a replacement. Then Leng Beng and Sherman agreed to maintain their composition without changes. However, on the eve of the Lunar New Year, an email aimed at the Board seemed to reverse the agreement. Two independent CDL counselors proposed two new candidates. Leng Beng counteratacious and questioned the urgency of appointments. Sherman believed that the private discussion with his father was not binding for the rest of the Council and did not apply to the candidates presented later, according to a source close to him.Leng Beng and three other counselors opposed the extension of the Council and said that they no longer considered a third candidate proposed before by the president. Most voted for the two new directors. That enraged Leng Beng, who requested Sherman's dismissal as executive director, although the reconstituted council opposed. And approved resolutions to prevent WU from influencing or advising both the promoter and her hotel unit. The influence of Leng Beng in M&C was also reduced by incorporating six new counselors. Sherman seemed to have the pan by the handle. But in February, Leng Beng decided to make the dispute public and issued a statement in which he denounced serious corporate governance failures in CDL. He accused a group of counselors to act with Sherman to consolidate control and infringe the contribution standards and best practices. And he said it was the last of a long series of errors of Sherman, including bad investment decisions in the British real estate market, and blamed him for the enormous losses that CDL suffered for his failed investment in sincere. Leng Beng and several managers filed a lawsuit. Sherman said there was no attempt to dismiss the president and that Wu was the main cause of the dispute. «He has been interfering with matters that exceed their competence,» he said on behalf of the majority of the Council. Wu remained silent. Philip Yeo, who has been director of CDL since 2009, said that the attempt to dismiss it was due to Sherman's complaints and that the hotel segment had improved his profits. «It is a tangle of quite disconcerting things,» said Robson Lee, partner of the Kennedys international law firm in Singapore, about the Kwek family dispute. He added that it is not clear why changes in the Council were needed to dismiss a subsidiary advisor. The dispute alarmed the relatives and commercial partners of Leng Beng and Sherman. A week after he exploded, Leng Beng declared that M&C had received Wu's resignation. The demand was withdrawn in March. And, although father and son seem to have fixed things, it is not clear what awaits CDL and the Hong Leong group when Leng Beng gives the witness. He nominated Sherman as his successor, but said that the result will be based on merit and will be determined by the Kwek family, which controls almost half of the CDL.CDL shares has lost more than 70% of its value (more than 11,000 million Singapurenses dollars) since their actions reached its maximum almost 18 years ago. In recent years, high interest rates and pandemic have also made real estate actions. Some of the other investments of the promoter, including those of the United Kingdom, have lost value, and the benefits have been weighed. In 2024, Sherman set the objective of disinteering 1 billion Singapurenses in assets, but did not succeed. «Sherman has to generate confidence in the market, transmit a clear strategy and meet it,» said Vijay Natarajan, RHB Banking Group analyst. «You have to recover the confidence of the market.» If Sherman Resign, Leng Beng has said that he prefers his nephew Kwek Eik Sheng, CDL operations director, as an interim general director until an external manager is located. This is an edited version of the Bloomberg report, for whose elaboration he has had interviews with 20 sources, documents and public statements.
