Shanmugam reveals why he moved from GCB to rental black-and-white house on Ridout Road
PHOTO: MCI, The Straits Times file
PUBLISHED ONJuly 03, 2023 6:40 AMByChing Shi JieLaw and Home Affairs Minister K Shanmugam rented a state property at Ridout Road after deciding to put his Good Class Bungalow family home up for sale, Parliament heard on Monday (July 3).
Speaking to Members of Parliament the 64-year-old also shared that he did not make any money while renting out his house to live in the black-and-white bungalow.
Shanmugam’s speech comes after weeks of public speculation around the Singapore Land Authority’s (SLA) leasing of the state properties to Shanmugam and Minister for Foreign Affairs Vivian Balakrishnan.
An investigation by the Corrupt Practices Investigation Bureau (CPIB) found no evidence of criminal wrongdoing or preferential treatment given to both ministers.
Another 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 SLA.
The findings were released to the public on June 28.
In his speech to Parliament, Shanmugam shared that he reviewed his finances in 2016 as he was approaching his sixties.
“[I] realised that too much of my savings were tied up in my family home,” he said, adding that he had bought the property using his previous income as a lawyer.
“I was advised that it would be wiser not to have most of your savings in one asset. So I decided to put [it] for sale.”
But Shanmugam pointed out that he did not consider selling his own home due to a “financial need”.
“I also do not regret having forgone my previous earnings as a Senior Counsel. It’s a privilege to be in public service.
“And if I’m asked, I will make the same choice again”.
‘I liked black-and-white bungalows’: Shanmugam
The CPIB report found that in January 2017, Shanmugam asked the then deputy secretary of the Ministry of Law for a list of “a few properties available to the public to rent”.
In his speech in Parliament, the minister said that he looked at several rental properties including black-and-white bungalows.
He decided to make an offer for 26 Ridout Road in 2018 since he has “long liked black-and-whites”.
Echoing CPIB’s findings that he did not know SLA's guide rent for the property, Shanmugam said that he told his agent to assess what the offer should be, and that he shouldn’t be less than what his neighbours had paid.
The minister added that he initially offered $25,000 after his agent advised that it would be “fair”.
“SLA came back with a counter-offer of $26,500, which we accepted without further negotiation.”
‘Net deficit’ when paying for 26 Ridout Road rent
The minister also refuted allegations that he profited by renting out his good class bungalow — which was put on the market in November 2021 — to live at 26 Ridout Road.
In fact, Shanmugam shared that there was a net deficit when paying for the rental of the state property, after taking into account property tax since the family home is now non-owner occupied, as well as income tax on the rental proceeds.
“I am in essence, using my previous lawyer’s income to pay for the rental of 26 Ridout Road,” Shanmugam said.
"I am not making any money in the difference in rentals".
Adding that he spent more than $500,000 of his own money on improvements to the black-and-white house, Shanmugam shared that he “knew that he would not benefit from them” once the lease was over.
“That’s the deal when one rents a black-and-white bungalow, and I knew that.”
Shanmugam ‘happy’ to give up additional land
The minister also addressed CPIB’s findings on the land size of his rented property increasing from 9,350 sq m to 23,164 sqm.
The report said that Shanmugam negotiated with SLA on clearing the adjacent land before leasing the property. He had voiced concerns that the overgrown vegetation there “might pose public health and safety risks”.
The minister said that his concerns “are not theoretical”, highlighting a past incident where a woman died after a tree – previously inspected and assessed to be healthy – fell on her at the Botanic Gardens in 2017.
While he offered to maintain the adjacent land to the state property at his own cost, Shanmugam said he did not want it as part of the lease.
“I didn’t need the land, and I didn’t want it,” he said, adding that he didn’t negotiate with SLA when they said the plot would have to be included into the tenancy.
“I would be happy to give it up [if SLA now agrees to take back the extra land].”
'I did not enter public service to maximise earnings'
Rounding off his speech, Shanmugam said he was sorry that Parliament's time had been taken to address the issues which arose from "his personal decision" to rent the state property.
"I did not enter public service to maximise my earnings or try and pay less than I should," the minister said.
"I am fully committed to working with Singaporeans to address issues that matter to them," he added.
Earlier in Parliament, Senior Minister Teo Chee Hean said that the Ridout Road bungalow case will be used by the Public Service as an "additional example" to reinforce the importance for public officers to act with integrity.
"All public officers must take an annual Code of Conduct quiz and make the necessary declarations such as being free of financial embarrassment, investments in non-owner-occupied properties, and investments in private firms," said Teo in his statement.
"They are also required to make ad hoc declarations of purchases of private residential properties, commercial properties, and land."