Four Cordlife directors, ex-group CEO arrested amid CAD probe

FOUR directors of Cordlife Group, : P8A 0% along with its former group chief executive, Tan Poh Lan, have been arrested by the Commercial Affairs Department (CAD) and then released on bail.

On Friday (Mar 22), the troubled cord-blood bank said this was related to alleged breaches-of-disclosure obligations by Cordlife on the matter of irregular temperatures in a certain cryogenic storage tank, first disclosed by the group on Nov 30, 2023.

The four directors are acting chairman Ho Choon Hou, independent directors Yeo Hwee Tiong and Titus Cheong, and non-independent, non-executive director Chow Wai Leong.

Tan tendered her resignation as the company’s group chief executive and executive director in October 2023 to “pursue personal interests”.

Former TransGlobal Real Estate Group director Yiu Pang Fai was appointed in February this year to take over as group chief executive. TransGlobal holds a 27.9 per cent stake in Cordlife.

In its statement on Friday, Cordlife said its chief financial officer Thet Hnin Yi has been asked to assist with CAD’s investigations, but has not been arrested, placed on bail, or charged with any offence so far.

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In response to queries from The Business Times, the police said Tan and the four directors were arrested for suspected offences under Section 203 of the Securities and Futures Act 2001. “As investigations are ongoing, it is inappropriate to comment further.”

CAD and the Monetary Authority of Singapore issued a notice on Mar 19 for certain Cordlife directors to attend an Apr 2 interview at the CAD.

These directors – independent director Joseph Wong as well as non-independent, non-executive directors Zhai Lingyun, Chen Xiaoling and Yiu Ming Yiu – are not based in Singapore. 

Wong was also the company’s chairman until he stepped down in February this year, citing “personal reasons”.

Cordlife said: “Given that the current board has been overseeing and providing guidance on the ongoing work undertaken by the company to investigate and address the lapses identified by the Ministry of Health (MOH) in relation to the company’s Singapore operations, the majority of the board is of the view that it would be in the interests of the company for all directors to continue serving on the board.”

But the group added that Zhai and Chen “disagree that all the directors who have been arrested and released on bail are suitable to remain on the board”.

As it awaits the development of CAD’s investigations, Cordlife said it will continue to consider and assess the suitability of its directors to continue serving on its board.

It will also consider appointing new independent directors to “serve as additional checks and balances”.

Shareholder tussle

Cordlife’s statement follows its disclosure on Thursday that two of its substantial shareholders were separately requisitioning the removal of directors from its board.

One shareholder, Nanjing Xinjiekou Department Store, requested that the board convene an extraordinary general meeting (EGM). Cordlife’s annual report stated that this company had a 20.3 per cent stake in Cordlife as at Mar 20, 2023.

The Mar 14 notice laid out seven ordinary resolutions.

Of the seven, three called for the removal of Ho, Yeo and Cheong, three of the four Cordlife directors arrested and out on bail; one more resolution sought the removal of Wong, who is based outside Singapore and been asked to attend the Apr 2 interview at CAD.

The remaining three resolutions concerned the appointment of three individuals to the board – Teo Tong Kooi, Xu Tianhong and Cai Yong.

On Mar 18, the company received a letter from controlling shareholder TransGlobal, also requisitioning an EGM to vote on three ordinary resolutions.

The first was to reject the proposed resolutions in the Mar 14 requisition notice; the other two concerned the removal of two non-independent, non-executive directors: Shally Chen, also known as Chen Xiaoling, and Zhai Lingyun. Both directors were previously nominated to the board by Shanghai-listed Nanjing Xinjiekou Department Store and are involved with the company. Chen is a senior director, and Zhai is the chair of Nanjing Xinjiekou’s board.

Cordlife on Thursday said that it is seeking legal advice as it considers both notices.

The group called for a trading halt on Mar 14 after the company’s shares fell 6.3 per cent or S$0.015 to S$0.225.

After its latest announcement regarding its directors and former group chief’s involvement in CAD’s investigations, the company requested to resume trading on Friday.

Cordlife was recently thrust into the spotlight after MOH began investigations into its operations.

Last November, MOH handed the mainboard-listed healthcare provider a six-month suspension notice when it came to light that Cordlife kept some cord-blood tanks at above acceptable temperature limits. An audit found that cryopreserved cord-blood units in seven tanks had been exposed to temperatures above -150 deg Celsius.

At the time, the cord-blood units in one of the seven tanks were confirmed to have been damaged. Some 2,200 cord-blood units in the tank belong to at least 2,150 clients.

MOH said the final results of the tests on the affected cord-blood units will be ready by end-March.

The ministry also found three other process lapses at Cordlife, and said it would require the healthcare group to rectify these issues by end-May.

Earlier this month, the group reported that its net profit for the second half ended Dec 31, 2023, fell 50.3 per cent to S$1.5 million from S$3 million in the year prior.

Amid the six-month suspension imposed by MOH from Dec 15, 2023, revenue was down 4.5 per cent year on year to S$27.6 million, mainly due to lower banking revenue contributions amid a decrease in new samples stored in Singapore, India and Indonesia.