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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

SINGAPORE
No Discounts, Please

Lee Kuan Yew and his son act to allay misimpressions

Tim Healy and Santha Oorjitham / Singapore


ALMOST ANYWHERE IN ASIA, few would have cared. But this was Singapore, which takes pride in its image of incorruptibility. Thus, on April 23, Senior Minister Lee Kuan Yew and his son, Deputy Prime Minister Lee Hsien Loong, released a statement saying they had received "unsolicited" discounts of between 5% and 12% on two pairs of expensive, new condominiums each had purchased last year. Shortly after that, the two said they would treat the discounts as unsolicited gifts and give them to the government.

The Lees' first statement came a day after the condo developer, Hotel Properties Ltd. (HPL), got a stinging rebuke from the Stock Exchange of Singapore. The watchdog SES said HPL had withheld details of discounts granted to a board director, Lee Suan Yew, the senior minister's brother, and to the wife of another director. The stock authority said while HPL had not apparently broken any laws, it "was not forthcoming in responding to the Exchange's requests for information." Senior Minister Lee later said there was no good reason for HPL to have withheld or delayed supplying information. The delays, he said, "created an impression of secrecy and impropriety when there was none."

The Lees' disclosures seemed intended to preempt any such impressions in the wake of the SES censure. According to their statement, the Lees made two sets of discount transactions. The first, in April 1995, involved apartments in the 39-unit Nassim Jade condominium project. One property analyst said an average 175-square-meter unit there probably sold initially for $2.2 million. HPL, said the Lees, granted discounts of 7% to the senior minister for one flat and 12% to his son for another apartment.

Last October the Lees bought a second set of condominiums in another HPL block called Scotts 28, in which they each received 5% discounts, their statement said. "Neither the SM nor the DPM sought any preferential treatment from HPL in these purchases. HPL and its associates have not sought any favors from the SM or the DPM." The younger Lee learned of the Scotts 28 discount just a few weeks ago, said the statement, when he asked lawyers to check on the purchase price. Since they were bought, the units have appreciated by an estimated $2,300 a sq meter.

The Lees' revelation, front-page news in the April 24 Straits Times newspaper, said even the discounted prices for the Nassim Jade condos were higher than prices for similar properties in the area. The Nassim Jade and Scotts 28 flats, all still under construction, are known to be highly prized. In its initial statement, the stock exchange had chastised HPL for selling seven Nassim Jade units at discount to directors of the company and their close relatives. "Although HPL did not violate any SES rules," the exchange stressed that company directors "have a duty to obtain the best [highest] price so as to maximize the return to shareholders."

HPL is headed by Malaysian-born tycoon Ong Beng Seng (net worth: over $700 million). His group's wide-ranging empire includes classy hotels, a securities firm, and franchises for Häagen-Dazs ice cream, Planet Hollywood and Hard Rock Cafe in several Asian countries. Besides Lee Suan Yew, HPL's board includes Peter Fu, Ong's father-in-law and ex-boss. Fu's wife, Mary Fu, was also named by the SES as having purchased a Nassim Jade apartment at a discount.

On April 25, Prime Minister Goh Chok Tong cleared the Lees of any wrongdoing. "They had agreed with the purchase prices and did not know what prices were quoted to or paid by other purchasers," Goh said. "There is nothing wrong with cabinet ministers purchasing properties to live in or for investment, or selling their own properties." But the premier noted that it was a relatively new occurrence for ministers to buy real estate before units were offered to the public. From now on, he said, all such transactions should be cleared with him. The Lees issued another statement. Given the PM's "further rule of prudence," they would submit their purchases to him for retrospective scrutiny, and give the discounts to the government.

What did Singaporeans make of all this? "I'm not questioning the discounts," said one HPL shareholder. "They may be within industry practice." But he was unhappy that all 39 Nassim Jade condos were sold without a public launch. "Some should have been open to the public," he said. "What if I had wanted to buy one?"

In part, this is what may have made an apparent molehill grow: Singapore's real-estate market has become increasingly tight. One analyst said prices in upscale neighborhoods where Nassim Jade and Scotts 28 are situated seem set to rise rapidly. "It's a recent phenomenon," said one analyst. "Several years ago, property didn't sell out so quickly. Now the panic syndrome is setting in: people are afraid if they don't commit now, they won't be able to afford property later." That may stir resentment toward those with an inside track on favored developments. In such a market, no wonder cabinet ministers want to leave nothing to speculation.


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