Another director arrested amid Cordlife investigations, total arrests reach nine

Another director at Cordlife has been arrested amid ongoing investigations into the company’s mishandling of cord blood units, bringing the total number of arrests in connection with the case to nine.

In a filing to the Singapore Stock Exchange on Monday (29 July), the company announced that Mr Zhai Lingyun, a non-independent non-executive director, was arrested on 25 July and released on bail after attending an interview with the police’s Commercial Affairs Department (CAD).

Cordlife had previously announced that Mr Zhai was required to attend an interview with the CAD, but it had been postponed.

The investigation revealed that seven of Cordlife’s storage tanks were exposed to temperatures above acceptable limits, damaging cord blood units belonging to at least 2,150 clients, with another 17,000 possibly affected.

“The company understands that the offence for which he was arrested and released on bail is in connection with potential breaches of the disclosure obligations of the company regarding the irregular temperatures of a certain cryogenic storage tank, first disclosed by the company on 30 November 2023,” Cordlife stated.

The arrest follows those of other non-independent non-executive directors, including Ms Chen Xiaoling, Mr Yiu Ming Yiu, Mr Chow Wai Leong, Chief Financial Officer Ms Thet Hnin Yi, former Group CEO Tan Poh Lan, acting chairman Ho Choon Hou, and independent directors Yeo Hwee Tiong and Titus Jim Cheong Tuck Yan.

Former chairman Joseph Wong Wai Leung was also required to attend a police interview in April but was unable to do so due to health reasons.

According to Cordlife’s website and a separate bourse filing, Mr Zhai was first appointed a non-independent non-executive director in December 2019 and was last re-elected in April 2023. He is also the chairman of Dendreon Pharmaceuticals, an immunotherapy company based in California, and Shandong Cord Blood Bank, a cord blood stem cell preservation company based in China.

In its filing, Cordlife stated that Mr Zhai would retain his board position as he has been “overseeing and providing guidance” on the ongoing investigations and work undertaken by the company to address the lapses identified by the Ministry of Health (MOH) concerning the company’s Singapore operations.

“The board will continue to consider and assess the suitability of Mr Zhai to continue serving on the board, pending the development of the investigations,” the company added.

Cordlife also announced its efforts to identify additional independent directors to strengthen its board and guide management in rectifying the company’s lapses and addressing corporate governance issues.

The private cord blood bank assured that its operations would “continue as usual” while cooperating fully with regulatory authorities.

Mishandling of Cord Blood Units

The mishandling of cord blood units was made public on 30 November 2023, when MOH announced that investigations against the private cord blood bank were ongoing.

The ministry had received a complaint on 24 July 2023 about alleged issues with a storage tank, which later revealed that Cordlife’s board had known about the issue since February 2023.

About 5,300 cord blood units stored in a second Cordlife tank and a dry shipper were deemed “non-viable,” according to MOH in April. This was in addition to the roughly 2,200 cord blood units damaged in the first tank, affecting at least 2,150 clients.

While MOH assessed the remaining five tanks to be at low risk, experts recommended that Cordlife test a large number of cord blood units in these tanks to achieve statistically significant results, with 99 percent of samples needing to pass potency and viability tests.

Cordlife agreed to test more than 200 samples across the five tanks, with the process expected to take about a year. Clients will be informed of the outcomes in batches.

In December of the previous year, Cordlife accepted a six-month suspension from MOH for the collection, testing, processing, and storage of new cord blood and human tissues.

The suspension, initially set to end on 15 June, was extended by up to three months in late May. Additionally, the company’s cellular therapy accreditation has been indefinitely suspended by the Foundation for the Accreditation of Cellular Therapy, a global non-profit corporation conducting inspections and accreditation in cellular therapy.

Senior Minister of State for Health Janil Puthucheary said in Parliament in May this year, “The ministry will be supervising the proper completion of further tests in the affected tanks to achieve a high level of confidence in the findings.”

He added that the testing would take another year to complete due to sample sizes and testing capacity.