CPIB Reports Find No Corruption Or Preferential Treatment In Ridout Road Rentals
After a month-long review, the Corrupt Practices Investigation Bureau (CPIB) published its findings on the Ridout Road properties rented by ministers K Shanmugam and Vivian Balakrishnan.
The review, headed by Senior Minister Teo Chee Hean, reportedly found no evidence suggesting corruption or criminal wrongdoing regarding the rentals of both properties.
Both ministers and their spouses also did not receive preferential treatment and access to privileged information in their respective rental transactions.
The Attorney-General’s Chamber (AGC) has since concurred with CPIB’s findings and recommendations, stating that no further action is required as none of the parties had committed any offences.
26 Ridout Road: Shanmugam instructed agent he should not be paying less than his neighbours
The report stated that 26 Ridout Road, a state property measuring 9,350 sqm, was vacant since December 2013.
Source: Google Maps
In January 2018, Mr Shanmugam appointed a property agent to represent him for the rental transaction of the property, instructing that he should not be paying less than his neighbours.
The agent studied the rental of similar properties around 26 Ridout Road and independently valued the rent.
The final negotiated rent came to S$26,500 per month, which met the minimum rental to be achieved by SLA.
In June 2018, Mrs Shanmugam signed a nine-year tenancy — split into three terms of three years — agreement for the property.
The signing was reportedly done after due diligence checks. Key personnel from SLA and the law ministry had eliminated conflict of interest from the transaction and ensured that the rental was according to the market rate.
After the conclusion of the first term, the tenancy was renewed in June 2021. The property’s monthly rent was also maintained at S$26,500, an amount determined after considering prevailing market conditions.
The report noted that Mr Shanmugam had told the then-deputy secretary of the law ministry that he’d recuse himself from discussions about the rental of 26 Ridout Road.
He also instructed the deputy secretary to approach Ms Indranee Rajah, who was then serving as Senior Minister of State at the Ministry of Law, if any matters required referral to the minister.
31 Ridout Road: vacant for five years before Balakrishnans rented property
As for the state property at 31 Ridout Road, the report stated that Mrs Balakrishnan came across a “For Lease” sign at the property before approaching its managing agent (MA) in September 2018.
Source: Google Maps
Before this, the 9,157 sqm property was vacant for five years since July 2013.
After some back and forth, Mrs Balakrishnan and the MA arrived at a monthly rental fee of S$19,000. The SLA Leasing Department subsequently accepted the proposal.
Mrs Balakrishnan signed the tenancy agreement in October 2019, similarly split into three portions — 3+2+2 years.
After the first term, Mrs Balakrishnan requested for the remaining two terms of 2+2 years to be amended to 3+2 years. The request was later granted.
However, the monthly rental for the second term was increased from S$19,000 to S$20,000 after factoring in “prevailing market conditions” in 2022.
Teo Chee Hean’s report: ministers followed processes to prevent conflict of interest
In SM Teo’s report, he gave a broader review of the findings and established the facts surrounding the rental of both 26 and 31 Ridout Road.
He also wanted to see if there was any wrongdoing, such as abuse of power or conflict of interest, from the ministers.
Lastly, he wanted to establish whether the policies and processes for renting out black and white bungalows were followed and if there were any gaps or lapses.
As Minister for Law, Shanmugam also oversees SLA, the report stated. As such, he removed himself from the chain of command and decision-making process.
As for 31 Ridout Road, Dr Balakrishnan’s official responsibilities did not include SLA, so there was no conflict of interest.
CPIB also found that no preferential treatment was given during the rental process.
There was no policy for VVIPs, and all prospects and tenants were to be treated equally.
The report stated that both the ministers and public officers declared a potential conflict of interest and followed proper processes to prevent that.
CPIB found no preferential treatment given to the Ministers and their spouses, and no disclosure of privileged information in the process of the rental transactions. There was no evidence to suggest any abuse of position by the Ministers for personal gain.
Ministers didn’t benefit from privileged information in Ridout Road rentals
In 2018/2019, both properties were available for lease and made known to the general public.
Both had advertisement signs displayed prominently at the gates of these properties. No. 31 was also listed on the State Property Information Online website.
Both 26 and 31 Ridout Road had low demand, so they came under direct tenancy rather than open bidding.
This is where the prospective tenant would be considered if the submitted bid wasn’t below the guide rent and the prospective tenant met the financial and letting criteria.
The prospective tenant can talk directly with SLA or an appointed managing agent. The tenant can also appoint a property agent.
The report established that the rental rates paid by both Ministers were at fair market value and not below market valuation.
Mr Shanmugam paid S$26,500 a month, while Dr Balakrishnan paid S$19,000 monthly.
Dr Balakrishnan had paid above the guide rent, while Mr Shanmugam received a rate equal to what the guide rent should have been, even though this amount was not stated correctly initially.
SM Teo also compared the rentals paid with other properties in the area, which were similar.
Tenancies for Ridout Road bungalow rentals were not longer than allowed
On whether the ministers got unusually long tenancies, the report stated that both ministers had been offered 3+3+3 years for residential properties.
SLA grants either two- or three-year tenancies.
Generally, SLA allows tenants to renew tenancies upon expiry unless:
- the government has other plans for the site, or if,
- the tenant has a poor track record (e.g. the tenant was in rental arrears or breached tenancy rules).
Both tenancy periods fell under the maximum allowable tenancy of 3+3+3 years at any one time.
“For 26 Ridout Road, SLA granted a tenancy of 3+3+3 years because Mrs Shanmugam had committed to undertake improvement works at a cost in excess of $400,000,” according to the report.
“As for 31 Ridout Road, SLA had granted a tenancy of 3+2+2 upfront as Mrs Balakrishnan had committed to undertake improvement works totalling over S$200,000. At the first renewal, Mrs Balakrishnan requested for, and SLA agreed, to an extension of 3+2 years.”
This was also within the cap of 3+3+3 years tenancy that SLA can grant at any one time.
Works SLA took were not beyond usual practice
The review also checked whether the works SLA undertook for 26 and 31 Ridout Road were beyond the usual practice for other state properties.
“Having examined the policies and practices in SLA’s management of residential properties, the Review concludes that the works done for the properties at 26 and 31 Ridout Road were in keeping with SLA’s general practices.”
As the landlord, the role of the SLA is to ensure that the properties rented out are in reasonably good condition so that tenants can reside in these properties safely.
For properties that SLA directly manages, SLA will spruce up the property generally to prepare it for handover.
The MAs will do the same for the MA-managed properties. Site clearance prior to the tenant moving in is required in some instances.
In the case of the property at 26 Ridout Road, SLA allowed the adjacent land plot to be cleared because of the “significant disamenities” arising from the vegetation, which could affect the safety of tenants at Ridout Road.
Mr Shanmugam also offered to maintain the land at his own cost. Ordinarily, SLA would have borne the cost.
The other works done by SLA were “not unusual” compared to those done for other State properties before the tenant moved in.
For example, partial site clearance was carried out for a Black and White bungalow in Dalvey Estate even after the tenancy started, as there was feedback from both the tenant and surrounding neighbours on mosquito breeding.
“The preparatory works that SLA agreed to undertake [on 31 Ridout Road] were not excessive,” the report stated.
“They comprised works relating to roof repair, plumbing and electrical checks, amongst other essential repairs, to ensure the property would be in a functional state for the tenant to move in.”
Additionally, Mrs Balakrishnan also committed to making significant improvements to the state property.
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Featured image adapted from CNA and Ministry of Foreign Affairs.
