CDL saga exposes governance gaps in family firms

The public dispute reveals the risks of blurred roles, weak succession systems, and informal governance in family-run businesses.

City Developments Limited’s (CDL) high-profile boardroom fallout has cast a spotlight on governance vulnerabilities in family-run businesses, especially those navigating complex leadership transitions across generations.

The clash, which erupted after Executive Chairman Kwek Leng Beng accused his son and Group CEO Sherman Kwek of attempting a “coup” over independent director appointments, has shaken investor confidence and raised serious questions about internal controls.

According to Ellyn Tan, Partner for Financial Advisory at Forvis Mazars, the case reflects deeper structural risks that often go unaddressed in family-controlled enterprises.

“Firstly, the private, public and personal lines are sometimes blurred in family-run businesses. Now, when boundaries are blurred, disputes will arise when interests are conflicted,” said Tan.

“This is when governance is put to the test—when your guiding principles and your systems are under stress,” she noted.

Tan stressed that strong governance isn’t defined by legislation alone, but by how seriously company leaders uphold existing principles—particularly in times of crisis.

“Succession planning is not an overnight process. It certainly requires a road map—of identifying talent and nurturing talent, be it within the organisation or outside of the organisation,” Tan said.

She pointed out that modern stakeholders increasingly expect leadership based on merit, not inheritance. “The idea of succession by birthright is perhaps not the norm and maybe not so acceptable anymore.”

Tan also warned of the hidden influence of unconscious bias in family transitions, especially when succession planning remains internalised or informal. “It is useful to have third-party professionals to provide some objectivity in a process that is often clouded… by biases and unconscious preferences.”

While CDL has been widely seen as a model of multigenerational success, the public nature of its leadership dispute has shown how quickly governance risks can escalate when authority, oversight, and expectations are misaligned.