“The generational succession is always complicated, but even more so if the company faces difficulties and the previous generation maintains a position of power,” he said Marleen Dielemanfamily business teacher at the IMD Business School Singapore. “What happened today on CDL points to chaos.”
The public scandal took by surprise the direction of the promoter company on the same day he published his annual results, which did not comply with the forecasts. The company abruptly canceled your press conference and stopped the negotiation of his actions in the light of disagreement of the Board of Directors.
The company’s market value is about one third of its 2007 peak, or some U $ 4,600 million Singapurenses US $ 3,400 million Americans.
Kwek Leng Beng He spent six decades developing the business after taking control of the CDL deficit along with his father and his brother. Later, they turned MILLENNIUM & COTICHORNE HOTELS in the largest international hotel group in Singapore and one of the world’s largest operators. CDL has hotel, offices and residential properties in 29 countries, according to its website.
Kwek was based on his father’s success, the late Kwek Hong Png, who He left China When he was a teenager to move to Singapore in the 1920s. The multimillion -dollar family made a fortune with a commercial company called Hong Leong Co. and then expanded towards hotels, real estate, financial services and manufacturing.
Hong Leong Group uses more than 20,000 people and has assets for more than 40,000 million Singapurenses. He is the largest hotel owner in Singapore and has a great presence in Asia, who owns St. Regis Singapore and JW Marriott Hong Kong.
The family, through Kwek Holdings Pte, controls about 49% of CDL. Other investors include Blackrock Inc., Vanguard Group and the Investment Fund for Japan government pensionsaccording to data compiled by Bloomberg.
When the third generation heir, Sherman Kwek, 49took the reins of CDL as executive director in 2018, it seemed that the family had achieved a feat of succession, avoiding any important drama for decades.
Sherman Kwek, educated in the Boston Universityhad worked in the family empire for more than two decades, after a season in Credit suisse First Boston.
However, his management was soon overshadowed by errors made in China. Sherman headed an investment in Sincere Property Group In 2019, in an agreement that was promoted as “revolutionary” for its expansion in the largest economy in Asia.
A year later, it became a warning story. After the unprecedented real estate crisis, the bet of one billion dollars of CDL was practically completely canceled. The “debacle” caused a loss of US $ 1,900 million In 2020, Kwek’s father said in his letter.
Pandemia further affected the company. Travel restrictions made the income of the company’s hotel operations decrease during closures. Kwek Leng Beng also said that “bad investment decisions In the real estate market of the United Kingdom”Taken by Sherman caused significant financial losses. He said that CDL actions have had a consistently lower performance than their peers since their son took control.
As the business deteriorated, internal disputes began to emerge. One of the descendants of the family’s second generation, Kwek Leng Peck, resigned from the CDL board of directors in 2020 due to disagreements about investment in China.
“Sherman Kwek had to do a difficult job from the beginning,” said Dieleman. “This episode caused family divisions, doubts about leadership and a weaker financial balance.”
The dispute remains open
Kwek Leng Beng said in his statement that he had tried to dismiss his son from the position of executive director in early February due to what he claimed were “Serious corporate governance errors”. Kwek, along with three other members of the Board and CDL filed a lawsuit on Tuesday in the Singapore courts against Sherman and six other directorsa measure that, according to the president, was taken “to fix things.”
In particular, the Major of the Kwek opposed the appointment of two directors who joined the board of directors this month without going through the usual nomination process, according to their letter. CDL appointed a Jennifer Duong Youngwho passed 21 years in Credit suissealready Wong Su-Eye For the Board of Directors, according to previous statements.
“His role in avoiding good governance and consolidate power through irregular appointment Of two new directors was the last of a long series of errors, ”Kwek said in his letter, referring to Sherman.
Kwek said the “company’s commitment to the creation of long -term value and corporate stability” is now under attack. “The reckless actions of a faction That seeks to consolidate control without control not only undermine the foundations of CDL governance, but also put at risk the legacy we have built over the decades. ”
Sherman responded in a statement that he and the majority of the CDL board of directors were “Incredibly disappointed”. He said his father and a minority of the Board of Directors They took extreme measures due to the disagreement of the size and composition of the organization. He said his goal has always been to improve governance.
CDL said Sherman will continue to be the executive director of the group “until there is a resolution of the Board to change the leadership of the company.”
The conflict with Donald Trump
Leng Beng is no stranger to open battles. During their younger years, Eclipsed Donald Trump by rejecting the request of the American tycoon to continue managing the Hotel Plaza in New York, as part of its investment in the asset.
“As a father, saying goodbye to my son was not an easy decision. I accept that business decisions are difficult and that young people can commit Business errors in their careers and that is understandablebut avoiding corporate governance laws is a red line, ”said Leng Beng in his statement.
The eldest of the Kwek said that Some members of the Board of Directors are still aligned with him and “committed to maintaining the highest standards of governance and responsibility.” He added that KWEK EIK SHENGSherman’s CDL and Primo Operations Director, will serve as interim executive director “If Sherman is dismissed,” until a professional is designated to direct the firm.
“The markets are very sensitive to family disputes,” said Mandy Tham, academic director of the Master in Patrimonial Management of the Singapore Management University. “It is unlikely that family disputes are quickly resolved, and some may not be resolved at all.”
Source: Ambito
