Inside the Explosive Feud That Rocked Singapore’s Richest Family
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Whatever challenge comes next, let Microsoft help you keep pushing forward. For more details, visit Microsoft.com slash challengers. Bloomberg Audio Studios. Podcasts. Radio. News. For decades, the Quek family in Singapore looked like a model of a successful family-run business. The Quek family, they are super influential. They're Singapore's richest family. Cheryl Lee is a Bloomberg reporter based in Singapore.

And they own one of Singapore's biggest listed property developers, so that's City Developments. And that in turn is actually part of a sprawling conglomerate with more than US$30 billion of gross assets. And they've always been viewed as a successful model for family transition. But recently, that image of a smooth, successful transfer of power in the family business has been shattered.

An explosive lawsuit was filed by the family patriarch and chairman, Kwek Lingbing, against his son, Sherman Kwek, the company's chief executive officer. So basically what happened was that in February, two new directors were appointed to City Development's board without consent from Lingbing and a few other directors.

Lingbing wasn't happy. He claimed Sherman had bypassed the proper committee to appoint those new directors. So he accused Sherman of attempting a boardroom coup, and he filed a lawsuit against Sherman and some of the other directors. The fight was quickly diffused with Elder Quek dropping the case. But the lawsuit has exposed key issues at the core of the multibillion-dollar family-run business.

This came as a shock to everyone because everyone on the outside had thought that the transition had already happened smoothly. And this, what it shows is that there were these long simmering tensions for many years. Now it has all spilled over into accusations of business incompetence, a boardroom coup and an outsider's influence. All that is potential risk to investors. And the spat has broader implications too.

In this part of the world more than others, Asian economies are often built on multi-generation family businesses. And the Quek dispute has highlighted just how messy succession plans can get.

So investors are looking at this case and wondering whether they have properly priced in the risks when they look at family-run businesses and their stocks. And we know that as many of these Asian patriarchs age and look to pass down their businesses to the next generation of heirs, this is going to be an increasingly hot issue that investors need to take note of and be aware of.

Welcome to The Big Take Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons, and businesses that drive this ever-shifting region. Today on the show, what's going on behind the boardroom door of one of Singapore's largest developers run by its richest family? And how are investors navigating the messiness of dynasty conglomerates?

The Kwik family traces its roots back to China. Its original patriarch, Kwik Hong Pung, immigrated to Singapore from Fujian province and founded his trading business in 1941. But it wasn't until the 90s that the Kwik family's fortune skyrocketed, thanks in part to a property developer that they'd acquired earlier, City Developments Limited, or CDL.

It was in 1972 that the Quek families bought a controlling stake in that property developer.

So CDL's property portfolio includes apartment buildings, offices, hotels, retail malls. It also owns hotels across the world under its Millennium and Copcom brand. And Cheryl, can you walk us through the main players of the family-run business now? Sure, yeah. Firstly, there's Ling Bing. He's the second-gen business owner of CDL. He's 84 now. He's the current patriarch of the family and he's the executive chairman at the firm.

So he is the second of Hong Peng's children and he joined the business in his early 20s after getting his law degree in London. And based on Ling Bing's official biography, he was very much influenced by his father who taught him a lot about business but who was also a very tough boss. So his dad would scold him harshly and Ling Bing said that he actually learned a lot through hardship. Under his dad. Yeah, exactly. Typical Asian father.

Leng Bing also has a reputation for being a savvy businessman. In 1995, he famously bought a hotel owned by Donald Trump in a deal that rocked the business world. Trump was undergoing bankruptcy proceedings at that time. And basically, Leng Bing rejected a request by Trump to keep control of the iconic Plaza Hotel in New York City.

So in the end, what happened was that City Developments and a Saudi prince bought the iconic property for $83 million less than what Trump had paid for it. Wow, so he's a very good businessman, Ling Bing. He is very visionary, keen on striking great deals, a tough boss with high standards for everyone, including himself. Ling Bing's tough management style left a strong impact on his own son, the other key player in the story, Sherman Quick.

He is 49, he's the eldest son of Ling Bing, and he is a hardworking person. He has always wanted to prove himself as a capable CEO to his staff, to investors, and his own dad. Sherman became the chief executive of CDL in 2018, after years of working in the family business. The next year, he led the company to make a huge investment that resulted in CDL's first annual loss in nearly five decades.

Sherman is the one who spearheaded this $1.9 billion dollar investment into Sincere Property Group. That was the China investment that turned out to be disastrous. It totally blew up. So what happened after was that Sincere ran into liquidity problems and CDL had to sell its stake for a nominal $1. So it was a total loss.

CDL has now lost 70% of its market value, or more than $8 billion since its shares peaked close to 18 years ago. Much of that decline has taken place since Sherman became CEO, although high interest rates, COVID, and government curbs have hit Singapore's property sector more broadly too. The losses caused a rift in the family.

And then, a longtime apprentice of the elder Quek brought even more division. One other really important character in this story is Catherine Wu. So Catherine Wu, she met Quek Lingbing in Taiwan in 1992. She is a musical person, a singer, and she calls Lingbing her benefactor and her boss. And she moved to Singapore to be his mentee.

Over the next 30 years, she accompanied him to hotel inspections and hotel meetings in Singapore and even in other countries. And she has been very involved in the business and contributed a lot. The tricky part is that when she issues instructions, no one is quite clear whether she did it or she is a proxy for the chairman.

This irked Sherman, the younger Quek. He blamed Wu for causing the family dispute and accused her of meddling in business affairs beyond her scope. Things got so tense that at one point, father and son stopped speaking directly to each other. After Lingbing filed the lawsuit in February, accusing his CEO son of attempting a boardroom coup, Sherman responded that he wasn't trying to oust his father and pointed at Wu for being the source of the conflict.

But the very public feud ended almost as abruptly as it had started. On March 4th, just about a month after the lawsuit was filed, Lingbing released a statement saying Wu had irrevocably resigned from her role as an unpaid advisor. And he dropped the case about a week after, saying he and Sherman would keep their roles at CDL's helm and investors' confidence needs to be restored.

But shareholders are already startled. Trading in the stock was halted, still is halted. Singapore is riveted by the Kwik family drama that feels ripped right out of a TV show. After the break, what do these succession feuds say about the state of wealth and family business in Asia? ♪

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The drama in the Quake family could be a warning sign for other family businesses in Asia. To put into context the risks investors face, we brought in Dexter Lo, Bloomberg's Singapore real estate reporter. Dexter, it sounds like you guys there are watching the Singapore edition of Succession, you know, the TV series, play out in real life. Yes, indeed. And it's something that has invariably attracted comparisons in Singapore, a very public falling out.

a lot of mudslinging from both sides that you don't really normally see in corporate scene in Singapore. Now, on the other hand, succession dramas and transitions happen all around the world. What does the Quek family saga tell us about the broader challenges for transition of wealth in Asian families? So I think the struggles that you are seeing right now with the Queks is not something that's unfamiliar to quite a lot of large, wealthy Asian families or even around the world.

I think one of the main challenges for a lot of these families now is that they're handing over from what you call the second generation, the third generation of younger scions. And a lot of them want to bring the business in a different direction. There's a Chinese saying in Asia called 富不过三代.

And basically, if you directly translate it, it means wealth does not survive past the third generation. And for a lot of families, it's almost like a curse. And it's been documented both in Asia, but as well in the West, that wealth doesn't typically tend to go beyond the third generation or it tends to start declining over time.

And one reason for that, which Quik himself had talked about in the past, is that families sort of disagree each other on how to bring the business forward and how to distribute the wealth, so to speak. And that can lead to feuds like this one. So in these multi-generation family businesses, the problems often surface when it's time for the old guard to hand over the reins of the business to the next generation, right? Yeah.

So one of the major challenges that you have essentially in these kind of family businesses is that the patriarch basically still wants to run the show. It leaves limited room for the scion to navigate, in a sense. And that can lead to all sorts of problems. And another challenge, of course, is that the world has changed quite radically from when their fathers or their mothers were growing up. So, for example, there's much more competition now.

According to one McKinsey report, 85% of Asia's businesses are family-run.

Many of the biggest names in the region, from Samsung to Toyota, are run by multi-generational families. And that makes the region especially vulnerable to the dramas of family dynamics bleeding into the boardroom.

It's generally the case that in Asia, families dominate businesses, even more so than in the West where it's much more institutionally run or much more controlled by, say, activist investors. And that's why for a lot of investors and people looking to invest in this region, it's definitely a case where you have to kind of take note of all these family feuds and where they're going. And as we have seen with the case of city developments, these issues can definitely affect how the stock performs.

Hmm. And in what way do you think this could be a warning for other Asian clans as well who are involved in businesses? I think it's definitely a warning sign to a lot of families in Singapore, but also the white region. We have seen in the case of Hong Kong, for example, where you have very public and very bitter intergenerational feuds, which can lead to huge splinters in the family. And it's the same case in Singapore.

And there's obviously the additional complexity because a lot of these firms are listed. And it's not just the family that wants to have a say in the future of these companies, but other shareholders as well. And going forward, as we go into the annual general meeting of shareholders, for example, we might see some of these tensions play out. So Dexter, what's happening with the Quek family now?

Going forward, there'll be an annual general meeting in April where the chairman and the CEO is likely to face shareholders. So that will be one of the first attempts for them to present a very united front to the public. And Dexter, how does what's happening with this family shed light on the risks of investing in family-run corporations across Asia?

I think this issue is being closely watched by a lot of firms because we are at the stage where a lot of firms, especially real estate firms, controls a huge sizable part of Singapore economy as well. So the fact that a succession plan that is so well laid out and so well telegraphed can go so badly wrong.

It's probably quite worrying to not just shareholders and investors in this market, but also to all these various families that are very closely planning and thinking about what's next for these firms as a lot of these patriarchs age and start thinking about handing off the reins to a younger generation.

This is The Big Tech Asia from Bloomberg News. I'm Wan Ha. This episode was produced by Yang Yang and Nomi Ng. It was edited by Grace Jennings-Edquist and Serena Ng. It was fact-checked by Naomi, Aaron Edwards, and mixed and sound design by Taka Yasuzawa. Our senior producer is Naomi Chavon. Our senior editor is Elizabeth Ponzo. Our deputy executive producer is Julia Weaver. Our executive producer is Nicole Beamsterbauer. Sage Bauman is Bloomberg's head of podcasts.

If you like this episode, make sure to subscribe and review The Big Tech Asia wherever you listen to podcasts. It really helps people find the show. Thanks for listening. See you next time.

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