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Outgoing Cordlife directors explain why damage to cord blood units was not disclosed earlier

Outgoing Cordlife directors explain why damage to cord blood units was not disclosed earlier

Source: Straits Times
Article Date: 15 May 2024
Author: Lee Li Ying

Processes at the company have been in the spotlight after it was revealed on Nov 30, 2023, that cryopreserved cord blood units in seven of its 22 storage tanks were exposed to sub-optimal storage temperatures.

Board members of beleaguered private cord blood bank Cordlife learnt that seven of its cryogenic tanks were affected by temperature lapses only after the Ministry of Health (MOH) stepped in and uncovered the shortcomings in late 2023.

Before that, the board knew only of one tank that was affected by temperature lapses in February 2023, and that was confirmed only in May 2023. Thereafter, the company was trying to put in place plans to inform affected parents.

This was revealed by Cordlife’s outgoing directors at the company’s annual general meeting (AGM) held on May 14, when shareholders pressed the board for accountability.

Processes at the company have been in the spotlight after it was revealed on Nov 30, 2023, that cryopreserved cord blood units in seven of its 22 storage tanks were exposed to sub-optimal storage temperatures.

About 7,500 cord blood units in two tanks and in a dry shipper – a container used to transport cord blood units at extremely low temperatures – have been deemed non-viable and unlikely to be suitable for stem cell transplants.

The two-hour-long AGM session held at Temasek Club saw a crowd of fewer than 100 shareholders.

While attendees were mostly civil, the conversation became tense when the board was asked to account for why it chose not to inform parents and the authorities of the temperature irregularities in one of the tanks when it knew of this in February 2023.

The firm had previously said it chose not to do so as there would be no material impact on the financial performance of the group.

Outgoing Cordlife acting chairman Ho Choon Hou said that when the board of directors were first told, they were shocked and wanted to make sure the information was accurate.

Board members were also told by the company’s chief financial officer that the impact of one tank would fall below the threshold of materiality needed for corporate disclosure.

Dr Ho, who is also the co-founder of Cordlife, was ousted from the board at the end of the AGM amid an internal shareholder dispute.

“There was no intention not to disclose. It’s just that in February 2023, we did not know enough of what was going on from the board standpoint... We told management – please be sure that this has happened, and let us know if any other tanks are affected. That was the mandate given to the then CEO and her team,” said Dr Ho.

In May 2023, the board was told that results from the tank showed that cord blood units were definitively affected. Sixty samples were tested, with varying results.

Dr Ho said: “The mandate was given to management to start the announcement plan to 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.”

It was not addressed at the AGM why the company did not inform parents in May 2023, and clients learnt about the lapses only when MOH made its announcement in November 2023.

MOH had received a complaint from a member of the public on July 24, 2023.

In response to queries from The Straits Times on what happened between May and November 2023 and why parents were not informed, Cordlife said the company will publish minutes of the AGM within one month, with details on this included.

When pressed on why the lapses in one tank did not push the company to check if there were issues in other tanks, Dr Ho said former group chief executive Tan Poh Lan would be best placed to answer that instead. Ms Tan resigned last October, citing the pursuit of personal interests.

“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?” said Dr Ho.

“As it turns out today, we feel... that there were people involved behind the incidents,” he added. This is why police reports have been made against former staff.

Outgoing independent director Titus Cheong said some board directors had wanted to convene a committee of inquiry after February 2023, but faced obstacles as “information was totally not forthcoming”.

Mr Cheong said: “We were doing what we could, based on the information given to us. One lesson we have learnt is that you cannot just rely on information from management, and you have to really go down and get details for yourself.”

Seven of Cordlife’s key leaders have been arrested for potential breaches of the company’s disclosure obligations in relation to its mishandling of cord blood units. These include Dr Ho and Mr Cheong, as well as Ms Tan and chief financial officer Thet Hnin Yi.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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