Outgoing Cordlife Directors Explain Why Lapses in Tanks Were Not Disclosed Earlier

If you’ve been following the Cordlife saga, there’s been a new update after they held an annual general meeting (AGM) yesterday (14 May).

Describing the AGM as tense is an understatement.

Shareholders of the company pressed the board for accountability over improper storage of cord blood units investigated by the Ministry of Health (MOH).

If you’ve no idea what went on, watch this video to the end then:

To recap, cord blood units need to be stored below certain temperatures in specialised cryotanks. If not, it would be ineffective.

Unfortunately, Cordlife directors struggled to explain the serious issue during their AGM.

Summary of Cordlife Group’s Investigations?

Cordlife Group’s track record with the authorities hasn’t always been clean.

Five members of the company were arrested over potential breaches of disclosure obligations concerning the mishandling of cord blood units.

It wasn’t a good look, since the ones arrested were higher-ups: former chief executive Tan Poh Lan, independent director Yeo Hwee Tiong and Titus Jim Cheong Tuck Yam, outgoing acting chairman Ho Choon Hou and non-independent non-executive director Chow Wai Leong.

MOH released an investigation report dating back to Nov 2023 and it stated that the damage incident was reported in Feb 2023 but they chose not to inform parents and authorities about the issue.

Yikes.?

Board Members Try to Justify The Silence

When it comes to life-saving cord blood, which is especially useful for patients with blood disorders or cancer who can use them to make their bodies produce whatever they need to survive, full transparency with any handling could be the difference between life and death.

Therefore, this entrustment to a third party comes with a huge responsibility.

So why the hush-hush??

The Straits Times?reported about Cordlife’s AGM. During the meeting, Dr Ho Choon Hou, Cordlife’s co-founder and outgoing acting chairman, said that the silence wasn’t on purpose.

He said that in Feb 2023 when the board first found out, they didn’t know enough about the situation to make the announcement to their clients.

They had informed the management to confirm that the mishandling and damage of cord blood units even took place, and were expecting them to tell the board if more tanks were affected.

The board members gave that order to the former CEO Tan Poh Lan and her team. Coincidentally, she had resigned due to personal reasons.

Failure to Address Concerns in AGM

The AGM lasted two hours at Temasek Club, said The Straits Times. There were less than 100 shareholders who were relentless in seeking accountability from the board members.

Dr Ho didn’t quite answer the question besides saying that it was unintentional, they were shocked, and they were waiting for more info.

Dr Ho also said that when they first found out, former CEO Tan informed them that the impact of one tank’s irregular temperature wasn’t enough to warrant corporate disclosure.

They didn’t really take her word for it and conducted testing for sixty samples in May 2023. The results showed that the cord blood units were undeniably affected by improper storage.

By then, it was too late.

Dr Ho said that this spurred them to tell Cordlife’s management to prepare an announcement plan for the parents.

“Please let the parents know first, don’t (let them) hear it from the press, don’t (let them) hear it from the stock market.’ That’s what the execution (of the plan) was meant to do in May 2023”, as quoted by The Straits Times.

Still, all these didn’t answer the question of why the company didn’t tell parents in May, or why their “plan” didn’t go through.

Clients of Cordlife ended up finding out from MOH when they announced it in Nov 2023.

An Inside Job – Police Investigations ongoing?

In the AGM, shareholders also asked why the company didn’t check the other tanks after finding out there was an issue in one.

Dr Ho stated that the former CEO would be the best person to answer.

Interestingly, Dr Ho emphasised that the order given to management was firm.

The Straits Times quoted, “The mandate given to the management team was: Spare no expense, go and find out exactly what happened. Was it a one-off isolated incident, did someone turn off the alarm, did someone sabotage the tank, that’s what we were trying to find out – is it a person or system issue?”

Dr Ho added that because there are suspicions of potential sabotage, they have engaged the police to investigate former staff.

Other board members said that getting information about the problem was hard and this left them in the dark – but they’re doing whatever they can with what they have.

Most importantly, Mr Cheong said that a key learning point for them was to take initiative and investigate for themselves rather than rely on information from management.

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