Singapore Ministers cleared of misconduct in Ridout Road properties rental ahead of parliamentary debate

Singapore Ministers cleared of misconduct in Ridout Road properties rental ahead of parliamentary debate

SINGAPORE — The reviews of the rental of Ridout Road state properties by Ministers K Shanmugam and Vivian Balakrishnan, conducted by both Senior Minister (SM) Teo Chee Hean and the Corrupt Practices Investigation Bureau (CPIB), have been submitted by Prime Minister Lee Hsien Loong to the Parliament on Wednesday just days before the parliamentary session on Monday next week.

The reports reveal no evidence of corruption, criminal wrongdoing, abuse of power, or conflict of interest, effectively clearing the ministers of any untoward allegations.

PM Lee mandated this extensive review last month in light of growing public discontent over the revelation of the two ministers’ rental of black-and-white colonial houses along Ridout Road.

Report by SM Teo, the same colleague who “cleared” the rental by Minister Shanmugam

SM Teo’s report specifically concludes that both ministers, along with public officers and private sector intermediaries involved, conducted themselves appropriately in both transactions.

SM Teo, who was revealed to be the senior colleague who gave the go-ahead to K Shanmugam’s rental of the Singapore Land Authority’s (SLA) estate at 26 Ridout Road, states in his report: “There was no abuse of power or conflict of interest resulting in the ministers gaining any unfair advantage or privilege.”

SLA had earlier noted in its 12 May press statement that Mr Shanmugam had notified a senior Cabinet colleague that he was making a bid for the property.

The report notes that the process of renting out the two properties didn’t deviate from the prevailing SLA guidelines and approaches for renting out black and white bungalows for residential purposes.

State properties such as No. 26 and 31 Ridout Road in 2018 and 2019 were leased out via direct tenancy due to low demand. This process allowed prospective tenants to be considered if their submitted bid was not below the guide rent and met the stipulated financial and letting criteria, said the report.

The report notes that a conflict of interest could have arisen since Mr Shanmugam is the Law Minister, and MinLaw oversees SLA. But it states that Mr Shanmugam had removed himself from the chain of command and decision-making process, ensuring he did not influence the rental of No. 26 Ridout Road.

It said that Mr Shanmugam had informed the then Deputy Secretary of the Ministry of Law that he would recuse himself from any discussion related to the rental of the property.

Mr Shanmugam was also said to have instructed the deputy secretary to approach the then Senior Minister of State in MinLaw, Indranee Rajah, in the event any matter had to be referred to the Minister.

Mr Shanmugam also informed SM Teo that if the matter had to go beyond Ms Indranee, she would approach SM Teo.

In the case of No. 31 Ridout Road, the report asserts that there was no conflict of interest as Dr Balakrishnan’s responsibilities as Minister for Foreign Affairs did not include SLA. It adds that no preferential treatment was given in the rental transaction process.

Background of how the Ministers rented their black-and-white bungalows

The reports also shed light on the chronology of the ministers’ involvement with the properties. The property at 26 Ridout Road, which Mr Shanmugam rented, had been vacant since December 2013.

In January 2017, Mr Shanmugam requested a list of available properties for rent, all of which had a “For Lease” sign prominently displayed at the gates.

In January 2018, he appointed a property agent to represent him for the rental transaction. Mr Shanmugam then expressed concern to SLA about potential health and safety risks posed by the overgrown vegetation on an empty plot of land adjacent to the property.

The SLA fenced this additional land within the property boundary, increasing the land size to 23,164 sqm.

Regarding the rental transaction of No. 31 Ridout Road, the property had been vacant for five years before two unsuccessful bids were made below the prevailing guide rent. It was only after Mrs Balakrishnan came across a “For Lease” sign at the property and contacted the SLA’s appointed managing agent that the lease proposal was accepted.

On the note of property improvement, Mr Shanmugam is said to have paid $61,400 to build the car porch at No. 26, where the SLA was the developer and also mentioned during his interview with CPIB that he had paid over $400,000 for additional improvement works not covered by SLA’s restoration works.

In the case of No. 31, Dr Balakrishnan revealed during his interview with CPIB that he spent more than $200,000 on additional improvement works to the state property.

SLA, however, spent $515,400 and $570,500 to refurbish 26 and 31 Ridout Road, respectively. It is also said that SLA spent $172,000 on-site clearance, replanting of greenery and fencing for 26 Ridout Road.

The report did not note much the SLA spent to clear the property of greenery and fencing at 31 Ridout Road. Satellite imagery indicates extensive greenery clearance at the estate when the Minister for Foreign Affairs rented the property.

26 Ridout Road was leased out with a 3+3+3 year term. After the first three-year term, it was renewed in June 2021 for a second three-year term, with the rental maintained at $26,500 a month as determined by SLA, considering the prevailing market conditions then.

As for 31 Ridout Road, Mrs Balakrishnan requested and was granted a renewal of another 3+2-year term after the first 3-year term instead of the 2+2-year term that was earlier granted. The rental for the second term was increased from $19,000 to $20,000 per month, taking into consideration the then prevailing market conditions in 2022.

The report also examined whether the ministers had benefited unfairly from favourable rental rates.

In 2018, the rental per floor unit area for No. 26, which had been previously described as a palace, was $30.94 per sqm per month, which was comparable to that of the other Ridout estate properties, ranging from $26 to $33 per sqm per month.

Similarly, the rate for No. 31 was $23.05 per sqm per month in 2019, which was slightly lower than $25 to $33.33 per sqm per month for other Ridout estate properties, but this was due to the condition of the property.

CPIB: Rental paid by Mr Shanmugam was equal to the correct guide rent

Alongside SM Teo’s report, the CPIB also presented its findings. The CPIB found no evidence suggesting any abuse of position by the ministers for personal gain. It also found no preferential treatment or disclosure of privileged information in the rental transactions.

However, the CPIB did point out a “lack of precision” in SLA’s use of the term “guide rent” with respect to 26 Ridout Road, rented by Mr Shanmugam. Consequently, an earlier statement made by the SLA claiming that Mr Shanmugam’s offer was above the guide rent was incorrect. The CPIB found that the rental Mr Shanmugam paid was equal to the correct guide rent.

Regarding the rental transaction of No. 31 Ridout Road, it was only after Mrs Balakrishnan came across a “For Lease” sign at the property and contacted SLA’s appointed managing agent that the lease proposal, after two unsuccessful bids below the prevailing guide rent, was accepted.

No further action to be taken, parliament to debate

The Attorney-General’s Chambers (AGC) agreed with the findings and recommendations of both reports, directing that no further action be taken as the facts did not disclose any offence.

PM Lee has accepted the two reports, and ordered that they be published and tabled in Parliament as a miscellaneous paper. They are scheduled for debate when Parliament next sits on Monday (3 Jul).

While the detailed investigations brought significant transparency to the proceedings, it’s worth noting that there was no clarification of the excessive clearing of trees at the two estates as documented by satellite photos and the approving bodies of the work.

There is also no mention of the additional structures built at the estate of Mr Shanmugam where no approval is found in Urban Redevelopment Authority’s public records, such as the roundabout, as the estate is a conserved building.

Furthermore, there is no reference to any issue about the Ministers’ Code of Conduct, which states: “A minister must scrupulously avoid any actual or apparent conflict of interests between his office and his private financial interests.”

Edit: Correction on the 25-metre swimming pool as the report did mention no approval is needed as URA deemed it a minor work.

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