Ex-CEO of social media company sues co-founder

Mr Cheo Ming Shen alleges he was forced out as chief executive officer of Nuffnang's parent company Netccentric.
Mr Cheo Ming Shen alleges he was forced out as chief executive officer of Nuffnang's parent company Netccentric.

He alleges co-founder conspired with others to engineer his exit

Two entrepreneurs who started Nuffnang, a social media advertising network that represents influencers such as prominent blogger Xiaxue, are facing off in court with one accusing the other of "betrayal".

Singaporean Cheo Ming Shen, 35, who says he was forced out as chief executive officer (CEO) of Nuffnang's parent company Netccentric last year, has sued co-founder Timothy Tiah Ewe Tiam, 34, a Malaysian. Mr Tiah had earlier stepped down as Netccentric's chief operating officer.

In a hearing that began in the High Court on Thursday, Mr Cheo claimed that Mr Tiah, after getting a generous severance package, conspired with his uncle and father to engineer Mr Cheo's resignation.

The court heard that after Netccentric was listed on the Australian Securities Exchange in July 2015, tensions simmered between the two over how the company they started in 2006 should be run.

Mr Tiah agreed to step down and let Mr Cheo helm the company. Mr Cheo alleged that Mr Tiah promised not to interfere with his leadership for the next three years.

Not long after, the board received a letter from Malaysian tycoon Tony Tiah Thee Kian, an investor in Netccentric and Mr Tiah's uncle.

Citing millions in losses and a share price drop of 80 per cent, the tycoon demanded in the letter that the board replace Mr Cheo as CEO to hold him responsible for the company's "deplorable performance".

Mr Cheo said he had "no choice" but to resign, to save himself from the embarrassment of being ousted.

In his lawsuit, Mr Cheo claims that the younger Mr Tiah had participated in the tycoon's call for his resignation. He alleges that Mr Tiah breached his agreement not to interfere with his leadership and is suing for about $720,000 for salary and allowances that he would have received had he remained as CEO.

"Tim... betrayed Ming in the worst way possible - engineering Ming's forced removal from the company he co-founded," said Mr Cheo's lawyer, Mr Jonathan Yuen of Rajah & Tann, in his opening statement.

But Mr Tiah contends that there was no such agreement which obliged him to effectively guarantee Mr Cheo's position.

His stand is that Mr Cheo's claims were a bid to inflict unnecessary damage on him.

Mr Tiah's lawyer, Mr Pradeep Pillai of PRP Law, said in his opening statement: "This case represents the unreasonable pursuit of a disgruntled CEO who voluntarily resigned on his own accord and has now contrived to profit out of his voluntary actions."

Cross-examining Mr Cheo, Mr Pillai noted that his claims included $20,000 per year in business class air tickets for his wife and himself.

Pointing out that Netccentric's loss at the end of 2016 stood at $5.88 million, Mr Pillai asked Mr Cheo whether he would still insist on the $20,000 allowance if he was still CEO.

Mr Cheo replied yes, saying that shareholders were aware of it. But Mr Pillai countered that financial statements disclosed to shareholders would not reveal this amount.

Mr Cheo called four witnesses to testify on his behalf, including Xiaxue, whose real name is Wendy Cheng.

Yesterday, Ms Cheng testified that Mr Tiah recounted to her how his uncle had confronted him over Netccentric's performance and asked him whether he thought Mr Cheo was doing a good job.

Mr Tiah responded by telling his uncle that Mr Cheo should be removed as CEO, she said.

She testified that Mr Tiah told her he felt like he was betraying Mr Cheo but had "no choice" given the pressure from his uncle and his own belief that Mr Cheo was not suited to lead the company.

Mr Pillai objected to her evidence as inadmissible hearsay.

Mr Tiah is expected to take the stand when the trial continues on Tuesday.

A version of this article appeared in the print edition of The Straits Times on September 01, 2018, with the headline 'Ex-CEO of social media company sues co-founder'. Print Edition | Subscribe