PUBLISHED ONJune 28, 2023 7:47 AMByChing Shi JieAn independent investigation into the rental of state properties by Cabinet ministers K Shanmugam and Vivian Balakrishnan has found no evidence of wrongdoing or corruption, said a report released on Wednesday (June 28).
The review, led by Senior Minister Teo Chee Hean, also found that the process of renting out the black-and-white bungalows at 26 and 31 Ridout Road did not deviate from prevailing guidelines set by the Singapore Land Authority (SLA).
It was revealed that Prime Minister Lee Hsien Loong had separately tasked the Corrupt Practices Investigation Bureau (CPIB) on May 17 to look into whether there was any corruption or criminal wrongdoing by Shanmugam and Dr Balakrishnan for personal gain.
Findings from the review relied on the bureau's "in-depth investigation", it said.
"The ministers, public officers, as well as private sector intermediaries involved [had] conducted themselves properly in the two rental transactions," the report said.
"They were aware of their duty to declare and avoid any conflict of interest and took appropriate steps to prevent any potential or actual conflict of interest from arising."
The review additionally asked for the Ministry of Law to provide a detailed briefing on the policies and processes regarding the rental of black-and-white bungalows for residential purposes.
Here are five key findings from the report.
There was no conflict of interest when SLA rented out the properties to the Law and Home Affairs Minister Shanmugam and Foreign Affairs Minister Dr Balakrishnan, the review found.
The lease availability of the state properties at 26 and 31 Ridout Road were made known to the general public, it said, adding that "for lease" signs were also displayed prominently at the gates.
When Shanmugam appointed a property agent to represent him in renting 26 Ridout Road in January 2018, the property — with a land size of 9,350 sqm — had been left vacant without attracting bids for more than four years.
While SLA comes under the law ministry's purview, the report noted that Shanmugam had informed the then deputy secretary of his ministry that he would recuse himself from any discussion related to the rental of the black-and-white bungalow.
"Shanmugam also instructed him to approach the then Senior Minister of State for Law Indranee Rajah [instead]," it said, adding that he had also declared to Teo about renting the property.
"The minister had thus recognised the potential of conflict of interest, and took effective steps to eliminate this potential conflict and to prevent any actual conflict from arising."
There is no conflict of interest in Dr Balakrishnan's case as his official responsibilities do not include SLA.
In the case of 31 Ridout Road, a property with a land size of 9,157 sqm, it had been vacant since July 2013 and was listed on the State Property Information Online website.
Mrs Balakrishnan contacted SLA's managing agent to negotiate on the rental price in September 2018.
In the process of the rental transaction, CPIB found that "in response to the managing agent's query on policy for VVIPs, the SLA leasing manager emphasised that there was no policy for VVIPs, and all prospects and tenants were to be treated equally".
Shanmugam's wife signed the tenancy agreement in June 2018, while 31 Ridout Road was leased to Dr Balakrishnan in October 2019.
The report also stated that CPIB's investigations found that no preferential treatment was given to Shanmugam, Dr Balakrishnan, and their spouses.
In a series of online articles written by opposition politician and Reform Party chief Kenneth Jeyaretnam last month, he questioned if Shanmugam and Dr Balakrishnan were "paying less than the fair market value" for the Ridout Road properties.
However, the CPIB report found that there is no evidence that the ministers were given favourable rental rates due to their positions.
CPIB's investigations found that Shanmugam's property agent had independently determined the rent for 26 Ridout Road after studying the rates of comparable neighbouring properties.
The final negotiated offer amounted to $26,500, after the minister instructed his agent that "he should not be paying less than his neighbours".
In the case of 31 Ridout Road, the report found that SLA accepted Dr Balakrishnan's offer of $19,000 a month, since it was $200 higher than the guide rent.
Neither the minister nor his wife were aware that the guide rent was $18,800 at that time, according to the report.
For the second term, the rental went up to $20,000 per month due to prevailing market conditions in 2022, it said.
On May 23, PM Lee called for an independent review of the properties rented by both ministers.
In a doorstop interview later that day, Shanmugam addressed the allegations that SLA was asked to pay for work done on the car porch at his rental property.
"Speaking from a personal perspective, the allegations are outrageous," he said then.
The review has since found that SLA covered the cost of essential repair works at 26 Ridout Road, which amounted to $515,400, to ensure that the black-and-white bungalow is habitable.
Shanmugam in turn paid over $400,000 for additional improvement works, including $61,400 to build the car porch.
CPIB's investigations also found that the land size leased to the minister increased from 9,350 sqm to 23,164 sqm after he noticed "thick and overgrown vegetation" on the land adjacent to the property.
"He expressed his concern to SLA that it might pose public health and safety risks from snakes, mosquitos, [as well as] fallen trees," it said, adding that the property agent negotiated with SLA to clear the land before leasing the property.
"The extent of works done before handover was comparable to other similar properties."
The report said that the cost of clearing the site, replanting greenery and fencing was $172,000 — an amount initially borne by SLA and would be recovered through Shanmugam's rent.
"SLA's view was that the tenant's responsibility would not extend to maintain the area beyond the tenant's property boundary," they added. "If Shanmugam was to maintain the adjacent land at his own cost, the adjacent land had to be included into the tenancy of 26 Ridout Road.
As for Dr Balakrishnan, CPIB investigations found that he paid more than $200,000 on additional improvement works to the state property at 31 Ridout Road.
This includes upgrading the toilets since SLA considered it as "improvement works" that are not covered by them.
The cost of essential repair works for this property was $570,500, a sum borne by SLA.
In the report, CPIB highlighted that SLA's statement on May 12 which said the $26,500 rental paid by Shanmugam was above the guide rent.
This was incorrect, the bureau said.
CPIB explained: "The guide rent is intended to be the minimum rental to be achieved. With the additional land cleared at 26 Ridout Road, SLA valued the minimum rental of the property at $26,500."
This means that the guide rent for 26 Ridout Road should be been equal to the minimum rental.
CPIB added that the "lack of precision" in the use of the term did not result from any ill intent on the part of any SLA officers involved.
"Despite this issue with the guide rent, SLA did ensure that Minister Shanmugam paid not less than $26,500, the minimum rental to be achieved."
CPIB has concluded that it found no evidence of corruption, criminal wrongdoing, or abuse of positions by the ministers for personal gain, the Prime Minister's Office (PMO) said in a statement on Wednesday afternoon.
There was also no preferential treatment, and disclosure of privilege information during the rental process.
The Attorney-General's Chambers have reviewed the findings and agree with CPIB's findings, PMO said, adding that no further action will be taken "since the facts do not disclose any offence".
"The investigation into the matter is closed," CPIB said in its report.
The issue will be heard in the upcoming parliamentary session starting on July 3, with Leader of the Opposition Pritam Singh and three lawmakers from the People's Action Party (PAP) already tabling questions relating to the rental of the state properties.
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