SINGAPORE – The Corrupt Practices Investigation Bureau (CPIB) on Wednesday issued a report following a probe into the rentals of Ridout Road state properties by Cabinet ministers and their families.
The report detailed how Law and Home Affairs Minister K. Shanmugam’s wife and Mrs Joy Balakrishnan – Foreign Minister Vivian Balakrishnan’s wife – came to know of the vacant state properties they subsequently rented, as well as how much each party, including the Singapore Land Authority (SLA), paid to spruce up the properties.
Here are the events that led to the state properties being leased to the two ministers and their families.
26 Ridout Road (leased by Mr K. Shanmugam’s wife)
January 2017
Mr Shanmugam asks the then deputy secretary of the Ministry of Law for a list of “a few properties available to the public to rent”.
Mr Shanmugam visits some of these properties, including 26 Ridout Road, which has been vacant since December 2013. All the properties he visits have a “For Lease” sign displayed prominently at their gates, said the Corrupt Practices Investigation Bureau (CPIB).
January 2018
Mr Shanmugam appoints a property agent to represent him to rent 26 Ridout Road. CPIB says that by then, the 9,350 sq m property has been vacant without attracting any bids for more than four years.
The bureau’s report said that during a site visit, Mr Shanmugam noticed “thick and overgrown vegetation on an empty slope of land adjacent to the property”. He told the Singapore Land Authority (SLA) he is concerned that the overgrown vegetation “might pose public health and safety risks from snakes, mosquitoes, fallen trees, etc”.
Through the property agent, Mr Shanmugam negotiates with SLA on clearing the adjacent land before leasing the property.
CPIB said the minister “was not confident that the adjacent land would be maintained in a way that would keep the place free of health and safety issues”, and thus offered to maintain the land at his own cost.
The land authority’s view is that it is not the tenant’s responsibility to maintain an area beyond his property boundary.
Thus, if Mr Shanmugam – as the tenant – is to maintain adjacent land at his own expense, the plot would have to be included into the tenancy of 26 Ridout Road.
SLA then fences the property at 26 Ridout Road to include the adjacent land, which results in 26 Ridout Road’s land size increasing from 9,350 sq m to 23,164 sq m.
SLA pays $172,000 for site clearance, replanting of greenery and fencing, which would be recovered from the tenant’s rent.
The cost of maintaining the additional land – about $25,000 a year – is incurred by Mr Shanmugam.
Mr Shanmugam’s agent studies the rental of comparable neighbouring properties, and independently determines and values the rent for 26 Ridout Road. Neither Mr Shanmugam nor his agent knows SLA’s guide rent for the property.
“Minister Shanmugam instructed his property agent that he should not be paying less than his neighbours,” said CPIB.
The final negotiated rent is $26,500, which meets SLA’s minimum rent, and is more than the $26,000 rent collected for a neighbouring unit.
CPIB said that as the property had not been in use since 2013, “substantial repairs were needed”. These cost SLA $515,400.
Mr Shanmugam pays $61,400 to build a car porch, and states in an interview with CPIB that he has paid more than $400,000 for additional improvement works not covered by SLA.
Without giving specific dates, CPIB also noted that the following occurred:
Mr Shanmugam informs the then deputy secretary at the Ministry of Law that he would recuse himself from any discussion related to the property’s rental.
The minister directs the deputy secretary to approach Ms Indranee Rajah, then Senior Minister of State for Law, in the event that any matter has to be referred to the minister.
Mr Shanmugam also tells Senior Minister Teo Chee Hean that should the matter have to go beyond Ms Indranee, she would approach SM Teo.
June 2018
Mr Shanmugam’s spouse signs a tenancy agreement of three years, with the option of renewal for another two periods of three years each.
CPIB said no matter was raised by SLA to the Law Ministry during the entire rental process.
June 2021
The tenancy is renewed for a second three-year term, with rent maintained at $26,500. This sum is determined by SLA, considering the prevailing market conditions then.
May 12, 2023
In response to Mr Kenneth Jeyaretnam’s social media posts on the rental of 26 and 31 Ridout Road, SLA issues a statement which says Mr Shanmugam made an offer “higher than the guide rent”.
In its report published on Wednesday, CPIB said there was “a lack of precision” in SLA’s use of the term “guide rent”.
As a result, the May 12 statement was incorrect, said CPIB, which clarified that the $26,500 rental Mr Shanmugam paid was equal to the guide rent, and not higher.
CPIB said this lack of precision had occurred as SLA’s May 12 statement was written with a guide rent of $24,500 in mind, which did not include the amortised cost of works to clear and incorporate the additional land on which the overgrown vegetation was standing.
With the additional cleared land, SLA had intended to charge the tenant another $2,000 per month, which would bring the guide rent – the minimum rental to be achieved – to $26,500.
This lack of precision carried over into the second valuation for the renewal of the lease, and was discovered when CPIB investigated the matter. Despite this issue, SLA did ensure that the minimum rental rate was paid by Mr Shanmugam, said the bureau.
31 Ridout Road (leased by Dr Vivian Balakrishnan’s wife)
July 2018
An unsuccessful bid of $12,000 per month – below the prevailing guide rent – is made for the 9,157.36 sq m property, which has been vacant since July 2013.
August 2018
Another unsuccessful bid of $5,000 per month is made for the property.
Sept 11, 2018
Dr Balakrishnan’s wife Joy contacts SLA’s managing agent for 31 Ridout Road after coming across a “For Lease” sign at the property. They negotiate on a rental price. The agent names an asking rent of $19,000.
Mrs Balakrishnan offers $19,000, which would include the agent paying for essential repair works and toilet upgrading.
The agent rejects toilet upgrading as this is considered improvement works, and Mrs Balakrishnan subsequently agrees to pay for toilet upgrading.
CPIB said the asking rent for the property was determined independently and valued by the managing agent, and added that neither Dr Balakrishnan nor his wife was aware of the guide rent.
SLA accepts the lease proposal, as the rent of $19,000 is above its prevailing guide rent for the property – $18,800.
The agency pays $570,000 to restore the property, and Dr Balakrishnan told CPIB that he paid more than $200,000 on additional works to the property.
October 2019
Mrs Balakrishnan signs a tenancy agreement of three years, with the option to renew her tenancy for another two periods of two years each.
2022
After the initial three-year term is up, Mrs Balakrishnan requests and is granted renewal of another three years, with the option of renewal for a two-year term. This is instead of the two-plus-two-year renewal term granted initially.
For the second three-year term, Mrs Balakrishnan’s rental is increased by $1,000 to $20,000 per month, based on prevailing market conditions.
