PURCHASE OF PROPERTIES BY SENIOR MINISTER AND DEPUTY PRIME MINISTER BG LEE HSIEN LOONG

[Mr Speaker in the Chair]

Debate resumed.

Mr Heng Chiang Meng (Cheng San GRC): Thank you, Mr Speaker, Sir, for permitting me to join in this debate.

First, I would like to declare my interest as a property developer. I am also the current President of REDAS (Real Estate Developers' Association of Singapore).

Allow me, Sir, now to bring this Chamber back to the days of 1994 and 1995. It is only when we know the then circumstances of the property market that we may better understand the context within which the transactions of Senior Minister and the Deputy Prime Minister, BG Lee, took place.

Sir, the property market slowly strengthened after the Gulf War, but it was really in 1993, when it took off in tandem with high economic growth and low interest rates, amidst the rediscovery of Asia and the revaluation of Asian assets by the rest of the world, especially from Western investors. This escalation continued into 1994. However, by the end of 1994, the market already showed signs of cooling off.

By early 1995, developers were more cautious and less confident. Increased Government land sales attracted thin bidding and prices were below market s expectations. Developers were faced with decreased sales and lower prices. They also had to contend with the impending completion of a large number of units coming onstream, yet more Government land sales and rising costs.

Sir, at this point, I would like to seek your indulgence and also the indulgence of Members of the House for me to read some of the newspaper headlines during this period. It is necessary to get the full flavour of the times then, although, Sir, it might be a bit tedious. I must say that what I have here is just a very small sampling of another larger sampling of really my whole office records on newspaper headlines on the property market in 1995.

Business Times on 12th January 1995: "Prices down 17% at URA's first land auction this year." South China Morning Post in Hong Kong on 25th January 1995: "Bull run begins to lose steam in Singapore. Residential value tipped to fall 10%." 28th January 1995, Business Times: "URA's figures point to peaking of private property market." The Straits Times on 9th February 1995: "Private housing rental fall 2.6% in third-quarter. High-rise apartments took most of the decline by IRAS." Lianhe Wanbao on 13th February 1995 reports: "Private residential property prices will reduce by about 20% this year." On 30th March Business Times: "Analysts cool to URA's sale of sites for landed development." Lianhe Zaobao on 25th April 1995: "Prices of private residential properties are now at more reasonable level after consolidation. A 10% further reduction is possible before the end of this year." In the Straits Times issue of 25th April 1995: "Lecturer predicts 10% fall in private property prices."

Sir, there are many more such news reports. However, as I do not want to waste the time of the Members of this Chamber, I will now go straight to the period leading to October 1995. On 10th July 1995, this is from the Shin Ming Daily news: "As a thousand condominium units are to be launched, the trend of selling price has become market concerns." In the South China Morning Post on 12th July 1995, in an article on Singapore property, it states:"Residential property prices have eased by an average of 5% to 10% from first quarter levels." In the Business Times on 18th July, it states: "Residential property market slows further. Trend may continue." In August 1995, in the Straits Times: "Private residential prices cool even further." In the South China Morning Post, again in Hong Kong on 9th August 1995: "Prices flatten out in private residential sector." In the Lianhe Zaobao on 10th August 1995: "Developers sell residential units at reduced prices." On 16th August, Business Times states: "URA data show private residential property softening." There are a few more like this. I show all this to show that these two periods in general, both the period leading up to April 1995 and also the period leading to October 1995, the market was bearish. Here, I would like to ask your permission, Sir, to distribute two graphs showing changes in the property indices issued by URA, and here Members will get a very much better overall picture of the market then. [Copies of Graphs distributed to hon. Members.]

As can be seen from the graphs, Sir, the rate of increase in the property prices began to drop from the middle of 1994 very rapidly till the fourth quarter of 1995, where it stabilised at about 5%. Sir, I would like to remind Members that these rates are not on a quarter to quarter basis, but on a year to year basis. I have spent some time on the market conditions and sentiments in late 1994 and 1995. The market then was bearish and developers were worried about price trend edging downwards. Developers were worried that they could not sell their products. They were worried to the extent that an independent study on the supply and demand of private residential property in Singapore was commissioned by REDAS sometime in June 1995.

The study was done by the Applied Research Corporation, a research company owned by the Government. The general conclusion of the study was that there was a possible over-supply situation with attendant falling occupancy rates and negative impact on prices. In other words, the report which was completed in late August 1995, gave a bearish outlook of the market.

Sir, the dates of the purchases by Senior Minister and Deputy Prime Minister were as follows:

For Nassim Jade, April 1995. For Scotts 28, October 1995.

Sir, these purchases were made when the market sentiment was bearish. There were no long queues. There was no speculation. Least of all, there was no frenzy connected with excessive speculation.

As a former banker and currently a property developer, I ask myself this question: Why would anybody want to buy properties when the market sentiment is bearish, unless it is for long term investment? In fact, had the purchases been made public at that time, for example, immediately in April, after the purchase of the two apartments in Nassim Jade, I believe that both SM and DPM would have been applauded. They would have been seen as confidence boosters for property values in Singapore. They would have been seen as putting their money where their mouths and hearts are. Instead, what do we get today? Disclosure came about one year later; not their fault, as they had nothing to do with the mechanics of such disclosure. Unfortunately, a year later was too late as, by then, the market had turned bullish. Prices were higher, speculation was beginning to be excessive and all of a sudden there was something not so right, something sinister about their purchases. Would they be so judged had these purchases been disclosed amidst the bearish sentiment of 1995?

The Prime Minister and the Senior Minister had already mentioned why developers have higher list prices and lowered them by giving discounts. They are not wrong in their analysis. Selling properties is not like selling oranges and television sets where a mark-up over costs is the normal practice. Developers have to sell their products at market prices, regardless of cost of structures. When the market is good as during the past five or so years, profit margins are high. However, when the market is bad, as during the 1985-1986 recession, losses are rampant and many property companies then went under. Market demand, and not cost, determines selling prices of properties.

Hence, trying to get the price right is an art; even if one has much experience. The normal practice is to have higher list prices, and through discounts bring the final prices as close as possible to the market. Sometimes, one gauges the demand wrongly and the discounts are then adjusted accordingly to vary the final prices. The Finance Minister earlier mentioned that the normal discount for early birds is 5%. I would like to say here that in the market there is actually no such thing as a normal standard discount for early birds, in the sense that they vary quite a lot. But if there were, it will be closer to 10% , rather than 5%.

Sir, property units are also not homogenous products. They have differing value factors, such as height, facing, shape, etc. Sometimes, one gets the pricing for particular units wrong. When priced too low, they would be sold or snapped up before adjustments could be made. On the other hand, if priced too high, they normally remain unsold. Higher discounts would then have to be given. Hence, the situation of varying discounts for different units in the same development.

Sir, I had gone into the reasons for discounts to show that selling new properties through the mechanism of discounts is very much part and parcel of the marketing practices of developers.

In such an environment, giving a higher discount to keep a desirable potential customer or to prevent possible complaints, especially to the Controller of Housing, for mistakes made by developers is not uncommon. The extra 5% that was given to the DPM by the developer must therefore be seen in this light, especially since DPM gave up a unit on which he already had an option. Most buyers would insist on having the original unit they selected.

From this morning's press report, it was obvious that the particular unit was double booked. In such cases, normally, the developer, having made a mistake, would try to get out of the situation by asking both buyers to select another unit. If both do not agree, then the developer would have a problem. Hence, it is in the developer's interest to induce at least one to give up the selected unit, and in this case, normally a higher discount would be given for the alternative unit. From the press report, it is not clear whether or not HPL asked both parties of the particular unit. What is clear is that DPM was prepared to give up his unit. Hence, I believe the higher discount was given to him.

Sir, I really do not see anything wrong with it. As a developer myself, I would have done the same for any customer, let alone the DPM, ie, giving an additional discount to one or the other customer since double booking would certainly have to be the developer's mistake.

If what they had done is not improper and above board, what then is this debate about? That they shoud not have purchased properties at all? Surely, as the Senior Minister has said, this is not what we want; that Ministers and Government leaders cannot own properties in Singapore. Surely they should be like anyone of us in Singapore, free to purchase property with their own money, especially so when it is through their leadership that property values in Singapore have appreciated.

True, being in charge brings a responsibility of having to be circumspect with one's personal dealings and having the integrity of not abusing one's high office. And, Sir, that is what this debate is all about. In this particular case, it is because of the integrity of the Senior Minister, the integrity of the DPM, and the integrity of the Prime Minister and of all those involved in the Government that we are having this debate. This debate need not have happened. That it is brought up into the open by our leaders themselves speaks a lot for them, for our system and for our country.

Sir, in the midst of the details surrounding this debate, let us not lose our way and forget this important fact. I share the Prime Minister's view that nothing improper took place with regard to the purchases by SM and DPM. I also hope that the PM in coming up with new rules and guidelines for Ministers, MPs, and senior civil servants - something which he said that he would do - he would not opt for drastic changes. Our present system has served us well and, if changes are needed, they should be evolutionary and not revolutionary. In the final analysis, Sir, it is still the election and appointment of people of character, integrity and capability that is the key to good and honest government; not more rigid rules and regulations.

Sir, before I sit down, may I say that I notice that the unofficial Leader of the Opposition, the hon. Member for Bukit Gombak, Mr Ling, is not present in this House. I am also surprised to find out that he is not listed down to speak on this subject. As he is the unofficial Leader of the Opposition, I am sure that Members of this House, and indeed members of the public, will be most interested to hear his views and comments. Does he think that there was impropriety or does he agree with the Prime Minister that the transactions were all above board and not improper? I sincerely hope to hear Mr Ling in the House tomorrow on this topic.

Mr S. Dhanabalan (Toa Payoh GRC): Mr Speaker, Sir, I would like to first declare that I work in a corporation whose shareholders own property development companies in Singapore.

Mr Speaker, Sir, there has been quite a stir of excitement, quite unjustified in my view, over the discounts given to SM and DPM Lee Hsien Loong in their purchases of units in Nassim Jade and Scotts 28. Even though about one-fifth of the buyers in these two developments were also given varying discounts, the whole matter is being treated as an extraordinary affair.

Sir, I would not pretend that their purchases should arouse no interest nor attract any attention at all. SM's actions especially, however mundane, are bound to attract attention but the degree of interest and gossip in this instance has exceeded normal curiosity. Why? Is it so unusual for developers to sell properties at a discount? It has been explained to us by both Senior Minister as well as Mr Heng Chiang Meng that this is very common. And Members of the House and members of the public who have had any experience of buying properties at all must know that discounts are very common in the property market.

Developers who aim to build a business which would support a steady stream of new developments over a long period of time make sure that their design, quality, and their sales and pricing policies are able to sustain a long term business with maximum profits. And discounts are part and parcel of their sales and pricing policies. They give discounts for the same reasons that any business gives discounts - they want to generate more sales and more overall profits.

There are many kinds of discounts, some of which have already been touched upon. These are early bird discounts. There are also discounts if a company or institution can gather together 10 or 20 buyers and make a block booking. I remember, Sir, when I bought my first house in 1965, 10 of us who worked in EDB made a block booking and we were offered a 5% discount. Developers also pitch their prices as high as they dare and then they test the market with discounts at soft sales and vary the discounts according to the response.

A discount is also given, very often, to a small number of buyers who are known in society to be careful and discerning in their purchases. Purchase by such buyers becomes a seal of quality and reliability of the development and the developer. Developers spread word about such buyers to sell the units at a higher price. I am sure Members who have had occasion to go and look at developments would have been told that so-and-so bought that house, or so-and-so has booked this house. So developers know that some people command respect in the market and others would take their actions as a guidance for their own actions. SM and DPM would certainly fall into this category, and their judgment would have a strong influence on others. I am sure that Members would agree that it would be absurd to suggest that because their purchases would influence others, they should keep out of the market or purchase secretly behind the names of nominees.

In all discount schemes, the developer is very selective as to who and how many people get discounts. This is in the very nature of their sales policy. These practices have always existed and discounts are not given as a favour to the buyers but as part of a sales strategy to maximise profits for the developer. In the cases of Nassim Jade and Scotts 28, about one-fifth of the buyers were given discounts. No developer would underprice such a large number of units in order to give these buyers a huge profit. In this case, the pricing policy was obviously one to test the market and to continue to adjust the prices upward according to demand. So what is the reason then for this sense of indignation that SM and DPM have bought units in Nassim Jade and Scotts 28?

The reason, Sir, is the fever, like a feeding frenzy, that seems to exist now in the residential property market in Singapore. Speculation has become a very strong feature of the market. The majority of buyers may intend to live in the property or hold it as a long term investment. But the proportion of speculators who book units to make a quick profit is very significant. Developers, in fact, would not mind if a few of their buyers make such speculative profits so that all their other buyers who intend to hold their properties would feel happy that they have properties with much more value than what they have paid. This would also, of course, help developers in their future projects. But if a large number of buyers in a housing project can turn around immediately and sell, and make huge profits, it shows clearly that the developer was unable to foresee the market strength and therefore underpriced his house, because no developer would underprice such a large proportion of his development.

Prices in the residential property market have been moving up over the last 10 years. There have been, of course, periods of flats and dips, but on the whole, it has been rising steadily. And many think that there is no end in sight to the steep rise, although the measures recently announced by the Government to curb speculation should have a sobering effect.

Now in this buoyant market, in this fever, those who bought units in Nassim Jade and Scotts 28 seem to have done well, that is, if one goes by the stories of those who have sold their bookings and made huge profits. But could anyone have guaranteed at the time the buyers committed themselves that the market would continue to rise? Mr Heng Chiang Meng has already shown that it was, in fact, a period when the sentiment was bearish. It is only on hindsight that one can say that these properties were initially sold at attractive prices. But at the time of the initial sale, the prices even after discount were high, compared to similar properties.

I can quote one piece of evidence that shows that the price was indeed high and was not considered a bargain. Sometime in March 1995 when Nassim Jade was coming on the market, a company that is associated with the company I am working for, seriously considered buying the whole development as an investment for rental. A price of $1,500 per sq ft was offered to the agent, who was trying to broker the deal, but the developer wanted $1,600 per sq ft. No deal was done. The final selling price of Nassim Jade averaged well above $1,500 per sq ft, even after discount.

So here clearly was a different judgment as to what was an acceptable and attractive market price at that time. With hindsight, it is easy to say that those who bought units in Nassim Jade obtained attractive prices. The market, however, is not so predictable. Even in the last 10 years, as I mentioned, there have been periods of flat prices and even dips in the price. These flats and dips were temporary, but that they were temporary is only clear on hindsight. Nobody knew at that time that they were temporary.

For example, those who purchased units in DBS Realty's Aspen Heights in October 1994 know this. Though there was strong interest before the sale was launched, the actual take up was below expectation. The market took a pause and for sometime, prices in Aspen Heights hardly moved from the initial sale prices. I know this, because I invested in a property in Aspen Heights in October 1994. And after about a year, I wanted to sell the property as I had found a better property to buy and hold. I could not even get a price that would cover my interest and other costs. It was only this year when prices began to move that I managed to sell it at a small margin. In this development, DBS Realty, in fact, decided as a result of market sentiment, to divide the sales into phases. The point I want to emphasize, Sir, is that there is no certainty of profit in property purchases.

All these feelings of indignation, unease about the purchases by SM and DPM do not arise, I think, out of any perception that gratification has been given for favours done by them, or favours that will be done by them in the future. Singaporeans, whatever their cynicism, do not believe that SM or DPM has done anything illegal or improper. But the perception is that they had got a good bargain because of who they are and this is considered unfair. Senior Minister has already very graphically shown that there is no such thing as a level playing field. But even if you look at the price that they paid, was this a discount? Was this discount a bargain? I have already said that at least one serious investor judged that the price above $1,500 per sq ft was too high. Both SM and DPM paid prices that were well above $1,500 per sq ft. Moreover, no developer would sell one-quarter of his development at bargain prices. Mr Ong Beng Seng is not in the business of charity. The fact that the prices today, barely a year after the initial sale, are so much above the developer's selling prices, shows that the developer was not able to foresee the escalation of prices. Hotel Properties Limited would surely have fixed a higher price, or even delayed sales, if they had known how the prices would move. At the time of the initial sale, Hotel Properties pitched their price at a level that they judged would meet the affordability of the small group of investors that they were targeting for their development. Buyers like SM and DPM had to make a judgment at that time whether the high prices that were being asked were sustainable. They turned out to be right. They had no privileged information about how the market would go and as to them being right, I think the jury in fact is still out. Who knows what will happen in the next few years?

Another source of envy is that while they may have paid the same price as many others, it is unfair because they had the inside track in getting an opportunity to buy. This again has already been explained extensively by the Senior Minister. Of course, it is true that they have inside track. This will be so with any Minister. Even in normal times, without a property fever, good developments in choice sites will have a demand that exceeds supply. No developer has such a perfect knowledge of the market that he can fix the price at a level that will exactly clear his supply without any queue whatsoever. The developer will set his price so that it will result in slightly more demand than supply. In such a situation, some people like architects, lawyers and other professionals associated with the development will be on the inside track. And so would Ministers and certainly SM and DPM. Is there something wrong or improper about this? The only way that Ministers can avoid the situation would be for the developers to discriminate against Ministers. Or, alternatively, Ministers must only buy properties where the demand is so low that there are no queues, ie, they must only buy dud properties. This is patently absurd. What is important is that Ministers and civil servants who may have dealings with a developer must make sure that there is no hint that they have been singled out for special favours so that they will be obligated to the developer. Like Caesar's wife, they must be above suspicion.

The only legitimate question that can be raised is whether it is politically expedient for SM and DPM to openly buy properties in what are clearly high profile developments. Opinions can vary on this question. Should they have resorted to disguise and secrecy when buying these properties? To have tried to camouflage their purchases would go against the very grain of their character, especially since there is nothing illegal or improper about it. It has always been SM's philosophy to be open about his dealings. I am glad that instead of allowing the rumour mill to add juicy embellishments to the truth, we can put the record straight openly in Parliament. The investigation by PM, the statements by PM, SM, DPM, the Stock Exchange of Singapore, Hotel Properties Ltd, the public discussion, the proceedings in Parliament today, must all arouse considerable astonishment in outside observers of the Singapore scene. They must be wondering what is the fuss all about. But the public airing underlines the high standards Singaporeans have set for their leaders and the leaders have set for themselves.

I know, Sir, that this exercise is irksome and time-consuming, but it should serve to emphasize that no one in Singapore is above examination. And this can only be good for our future.

The Deputy Prime Minister and Minister for Defence (Dr Tony Tan Keng Yam): Mr Speaker, Sir, having been Chairman and CEO of OCBC, I would like to speak on whether it was proper or improper for Senior Minister and DPM Lee Hsien Loong to purchase a unit each in Nassim Jade and Scotts 28.

First, a little background. During the period, January 1992 to July 1995, when I served as Chairman and CEO of OCBC, the Bank sold the following properties:

(a) 87 apartments in a condominium development at Tanjong Rhu. These apartments were sold by private treaty to various members of the public;

(b) 156 terrace and semi-detached houses in a landed-property development along Lentor Avenue. The houses were sold in two phases. The first phase comprising 81 properties was conducted on an open launch, first-come-first-served basis. In the second phase, 51 properties were sold by closed tender and 24 properties were sold by private treaty to various members of the public.

In the above sales, OCBC, when necessary, gave discounts to list prices to effect sales, but no director or employee of the Bank was allowed to book units ahead of the public or given discounts which were not available to the public. This was in line with OCBC's established policy which seeks to maximise the return to the Bank in respect of properties sold by the Bank.

Sir, the purpose for my relating how OCBC sells properties is not to promote OCBC but to make the point that developers use a variety of methods to sell their properties in order to get the maximum return. Buying and selling of properties is an inexact art, not a precise science. And even experienced developers find it difficult to read the market accurately.

Sir, I was away from Singapore when OCBC launched the first phase of the landed development at Lentor Avenue, the Countryside. At that time, I was Chairman of OCBC and the OCBC Property Department faxed a message to me saying that people had been queuing up for three days in order to buy the properties and all the properties in the first phase had been sold in one day. My reaction was what a mistake we had made. Obviously, we had underpriced the properties. And so in the second phase, I told the property development people to try and sell it by closed tender so as to try and get a better gauge of market prices. The point, Sir, is not to denigrate the property development people at OCBC who are a very experienced lot of developers, but to point out that no one can read the market with accuracy and properties which may appear today to be underpriced would not have seem so at the point of sale.

Different boards of directors will have different polices and adopt different practices. Each property development company is entitled to pursue its own approach to selling properties but all companies have to operate within the provisions of the Companies Act and listed companies additionally have to abide by the regulations of the Stock Exchange. If a company or a director is suspected of contravening the Companies Act, or the Stock Exchange regulations, or if there is any suspected irregularity in the sale of properties by any property development company, then it is the responsibility of the proper authorities to investigate the matter thoroughly and take the necessary action as we are doing today in this debate.

Sir, with regard to HPL, the Prime Minister has explained carefully how he investigated the circumstances of the purchase by Senior Minister and DPM Lee of units in the two HPL developments. The Prime Minister has kept me informed of the developments in his investigation which my colleagues and I considered to be necessary to maintain our clean and honest system of Government even though the investigation involved the Senior Minister and DPM Lee. Having access to all the facts of the purchases, I am confident that no one can disagree with the Prime Minister's judgment that there was no impropriety in the purchase by Senior Minister and Deputy Prime Minister Lee of a unit each in Nassim Jade and Scotts 28.

That being the case, I see no reason for the Senior Minister and DPM Lee to return the discounts they have been given to the Government, whether this is in the form of "unsolicited gifts" or otherwise. I expressed this view at a meeting with the Prime Minister, Senior Minister and DPM Lee shortly before the Prime Minister released his statement on 26th April. I see no reason to change my view.

Sir, I have focused my remarks today on whether it was proper or improper for the Senior Minister and DPM Lee to purchase units in HPL's two developments. The reason I have done this is because the integrity of two senior Ministers in the Government has been questioned and I feel that the issue of propriety has to be settled first. Members should not allow this issue of propriety to be clouded by the wider questions of how to ensure fairness in property sales and whether it is appropriate or inappropriate politically for Ministers to be given discounts from list prices or priority in bookings by property developers or participate in soft launches of property projects. These wider questions are, of course, important and should be discussed. But they should not be allowed to confuse the issue of the propriety of Senior Minister's and DPM Lee's purchases. If necessary, Sir, and if there is not enough time in this debate, we can, I suggest, discuss these wider questions in another debate in this House.

[Mr Deputy Speaker in the Chair]

6.10 pm

Mr Cheo Chai Chen (Nee Soon Central): ( In Mandarin): Mr Deputy Speaker, recently, the purchase of private property at discounted prices by the Senior Minister and Deputy Prime Minister Lee has caused a storm of disquiet among the people. Singaporeans are beginning to consider one question, that is, can Ministers, including the Prime Minister, Senior Minister and Deputy Prime Minister be allowed to buy other private properties or to invest in property.

My personal view is that the Government should legislate to stipulate that any Minister who is in office shall be allowed to buy and own not more than one private house for his own use and that he shall not be allowed to buy another property for investment purpose. If the Minister has to sell the house during his term of office and buy another new house, he must first inform Parliament and must obtain the approval of Parliament before he can proceed to do so. This is because Ministers possess the power of policy-making and law enforcement. This measure can minimise the possibility of Ministers abusing their power and influence to make huge profits from property transactions. In addition, the Ministers' immediate family members should also own only one private property each.

Mr Deputy Speaker, Sir, the duty of Ministers is to serve the people and not to make money for themselves. In order to command their confidence of our local people and foreigners for the leadership of our Government, I suggest that the Government should require Ministers to make written declarations of their assets and sources of income to Parliament annually and have them gazetted in the Government Gazette. I feel that declaring to the Prime Minister alone is not good enough.

As for the purchase of private condominium units by the Senior Minister and the Deputy Prime Minister, the parties concerned, including the Senior Minister and the Deputy Prime Minister, have already made their explanations. I think we should leave the matter to the people to ponder over it.

Mr Chiam See Tong: Thank you, Mr Deputy Speaker, for allowing me to join in the debate.

There was a big fuss just because the Senior Minister and the Deputy Prime Minister purchased properties. I am trying to fathom what this fuss is about and what are the real issues. I think most people in Singapore - I should say most thinking people and people who are in the know - and as a newspaper editor has mentioned, there is no question of illegality or improper behaviour by the two Ministers. As I can see it, the problem probably relates to the income of Ministers. I think these two issues are tied together. Because, last year, when we debated on the increase of Ministers' income, there was talk of Singapore Ministers not receiving any other income except their salaries. And therefore they are justified in pegging their salaries to the highest officers in the private sector.

It was also mentioned that although other Ministers in the region received smaller salaries than Singapore's, they benefit from side incomes, perks and other favours and they live a good life. So after the PAP Government has given to the people this kind of a mindset, now suddenly it was revealed that Ministers are given preference to buy properties, especially in this hot property market and they make big profits. Everybody is calculating, "Oh, 12% discount, property is $3 million, $360,000, just with a stroke of a pen, just to sign the agreement." This kind of a thing stirs up people. They say that $360,000 is a lot of money, seeing that the average worker earns only about $2,000 a month in Singapore. It is going to take him 20 years or so to earn that sort of money.

So if we do not lose touch of the ground, this is how the men-in-the-street will react. Ministers are dealing with millions and sometimes billions of dollars and they forget what the ground is thinking, what they are looking at. Everybody seems to be making a fast buck, good money, in property speculation. It is called a property casino now in Singapore. And suddenly now we read Ministers are also playing in the casino. This kind of a thing will definitely bring up discontent.

Mr Lee Kuan Yew: A clarification, Sir.

Mr Deputy Speaker: Mr Chiam, will you give way?

Mr Chiam See Tong resumed his seat.

Mr Lee Kuan Yew: The houses that I and DPM purchased have not been sold. What casino is he talking about? And I have explained earlier that the purchases were made not based on DPM's salary nor my salary. The two purchases came to more than $10 million. May I add, before the Member goes too far, I asked my brother the night before - if it came to this as I thought it would - whether he would mind if I disclosed how much he had earned as a lawyer and the business he did. He is two years younger than I am. And when we started the firm of Lee and Lee, there were four partners, myself, my brother, my wife and Mr Barker. My share was twice that of each of them, because I had the market pulling power. So they took one share each and I had two shares. When I left, they carried on with equal shares. I pulled Mr Barker out to join us in Parliament. My wife and my brother carried on, one share each.

It was and has been and is a very competent and successful legal firm. So I asked him if this issue cropped up, would he mind if I told the world how much he has made and saved. He said, "Not at all."

I said, "What is your worth now?"

He said, "Well, shares more than $20 million; properties, more than $40 million."

I said, "You are not afraid of kidnapping?"

He laughed and said, "No, I don't go to countries where there are kidnappings."

I would add that my wife did not go into business with him because she did not want to get me into trouble. But let me add that she earned as much as my brother did. And if we are to sell our properties now and realise the assets, it would easily come to at least a third of what my brother has. So please be under no misapprehension that we are depending on our Ministerial salaries. The point I made was, I was able to do this all these years for a pittance because my family was being paid for and catered for by my wife. And I told the Prime Minister that he was also in the same position because his wife is a partner of Lee and Lee and also able to support him and his family. But you cannot go on to the next Prime Minister in the hope that that would be so. And let us face it. The men that we have assembled here, if ever they go to the private sector, are going to be paid higher than us. They are top minds, sound judgment, high helicopter quality. Any head hunter will go for them.

I do not know whether my son and his health would make him a Prime Minister. He will not have the advantage of a wife who is a lawyer. He has to live with a wife who works in Singapore Technologies and that is a Government-owned company and the bonuses are meagre.

You can go on to the other Ministers. Some have wives who are lawyers and who may be as successful as my wife, but no country can run on that basis. Lim Hng Kiang, George Yeo, Teo Chee Hean, leave out Lee Hsien Loong. I saw them when they were President's Scholars in 1972 or 1973 in a group of seven or eight. They went on to Cambridge and to Manchester and came top of the class. Lim Hng Kiang had a First with a star, that means not only a First Class Honours but a mark of special distinction. George Yeo had a First. George Yeo went to do a Harvard MBA and came out with high distinction. Teo Chee Hean went on to London to do a computer course and came out with distinction.

If you do not have this quality of men and you expect them to depend on their wives, Singapore will go down. Why should they be doing this? Because somebody, some group of men, must assume this responsibility. The Prime Minister persuaded them and I helped the Prime Minister to persuade them, especially Teo Chee Hean. He was quite happy to stay on in the Navy and later on go to the private sector. But we must have quality men.

You look at the incomes in the private sector in a booming Singapore, in a booming region, it is stupidity to believe that you are going to get good government paying them miserable salaries. This is one social milieu. Their wives meet other wives. My wife has told me several times, "Why do you fret so much over Singapore? Why not just take it easy and do something else?"

I feel very guilty today about Mr Barker, my friend Eddie. I robbed him of at least $30 million had he stayed in Lee and Lee. Had he gone into business with my brother, he would have had easily $60 million. When he left, all I could give him was a pension which he could commute. And he wanted to leave, from the 1970s, the moment the Government was stable, he said, "Can I leave now, Harry?" I said, "Who have I got?" He was honest. He was capable. He was honourable. I trusted him. He ran the Ministry of National Development. He ran the Ministry of Law and he ran it with competence. His wife was not a lawyer. He had only his salary. Can I repay him now? All I could do was to ask the Prime Minister, "Will you consider giving the old guards a little token of recognition?" It is too late. By the time he retired in 1988, time had passed, his energy levels were lower.

I speak and I hope the MPs would not mind it. You ask Davinder Singh whether he would want to be a Minister. Or Shanmugam. What for? With their capabilities, with Singapore's prosperity and the legal profession playing an important role in Singapore as a financial and an economic centre, they will surpass my brother's accumulation when they retire, provided there is a good government. With that gone, your properties will go down, your businesses will scatter. We will be worse off than we were before.

Ask yourself, Mr Chiam, be honest. We are going to have an election soon. You are an honest man. I hope you will be re-elected. Because at the end of the day, you are basically an honest man. Do not deceive people. You say, "Declare this." Mr Cheo says, "Announce everything." Mr Chiam, would you like to declare your income, although it is known to Inland Revenue? Would you like to declare your assets? No candidate would join the PAP, especially a successful one, if he has got to do that. Maybe Mr Low Thia Khiang would be prepared to do it because he has been having a pretty lean time. He has not been a lawyer. So he can show, "You see, how poor I am." But Mr Chiam, let us be honest, and then maybe you will still win Potong Pasir.

Mr Chiam See Tong: Sir, just as the Senior Minister, I am also concerned about the survival of Singapore. My perception is that salary cannot be everything. We want good men. Sure, we want honest people. I know it is difficult to get them. I also have had bitter experience in dealing with people in my Party.

With due respect to the Senior Minister, he is certainly the George Washington of Singapore, he has built up Singapore. But people do change, and great leaders do change with times. I was wondering whether if we just concentrate on the incentive of high salaries, without hoping that people would also have values with them, even without the high salary, that they can still work for Singapore. I think that would be the ideal. Because you are also talking about the long-term interest and survival of Singapore. I am also talking about the long-term survival of Singapore. If we depend entirely on the incentive of money, my view is that in the long-term of Singapore we may not succeed, with due respect to the Senior Minister. I have my own ideals.

We talk of property. Dr Tan Cheng Bock asks whether I would be willing to declare. Sure, I would be willing to declare what properties I bought.

I will tell Members of one incident. I was a school teacher. In the 1960s, I was in the Singapore Teachers Union. I came to know that there was this Teachers' Housing Estate project. They built terrace houses especially for teachers. I booked a corner unit. It was a very good unit, with a basement below. I arranged with the principal for a loan. I put out some money and I was successful in purchasing that property. But at that time I already had two flats. I was living in one and renting out the other. I was a single person at that time, and being a bachelor I did not want to live in a terrace house all by myself. I had to rent it out. I asked myself what would happen if other teachers got to know. You are depriving them of one house. You are buying it to rent it out and they have a family and they do not have a house to stay in. So I gave up that purchase. That is the sort of principle that I have. Because I gave that up, I probably would lose by now over a million dollars. I do not know how much it costs now, but at least over a million dollars. That is the sort of values that I hope can be inculcated among Singaporeans. Sure, we want high salaries. We want a good living. We want money for our children to be educated. But at the same time we must have dedicated and committed people in Singapore. It is not just because of the salaries that I come to serve Singapore. We may differ in our views. Of course, we must give people good salaries and at the same time a decent living.

Mr Lee also talks of the British standards. I also admire the British people. I have worked in Malaysia for a while in a rural place. I gave two years of my service to teach in Malaysia with a very low salary. Nobody asked me to go there, but I had my own peace corps values and I went to serve in Malaysia for two years. I discovered that there were old British spinsters who had dedicated their whole life to be, first, a teacher, and then a principal in a rural school. Then I heard that when they retired they went home to England and some old pupils of the schools went to see them. Were they living well off? No, they were living in an old aged home, after serving all their life in Malaysia. This is the sort of dedicated people they have in England that built the British empire. So do we have such people in Singapore to keep Singapore going for the next 100 years? If we just depend on salary alone, this country is going to be like China sooner or later. Everybody just crazed for money. That is my point of view.

I have given up my time and energy for 20 years to be in politics, hoping that I can contribute. I think I have contributed something to Singapore. I think I have set an example, hopefully, that others will follow me when they are in the Opposition. We have also to help Singapore grow and be strong. It is not only the duty of the Government. It is also the duty of the Opposition. We are also nation builders.

Mr Lee Kuan Yew: Hear, hear! What about Mr Cheo? He has no opinion.

Mr Chiam See Tong: The issue in today's debate is not about the legality or whether Senior Minister and DPM have done anything wrong. I think people perceive that Ministers are already so highly paid and then here comes another second source of income. I am not saying that DPM and SM Lee have purchased the property to speculate. I do not think so.

The Senior Parliamentary Secretary to the Minister for Foreign Affairs (Encik Yatiman Yusof): But you say "playing in the property casino".

Mr Chiam See Tong: People have this perception. You may not buy them for speculation. But nobody knows, unless you tell them. They have this perception because everybody buys property to speculate and hoping to make a quick buck.

An hon. Member: What is your perception of the purchases by SM and DPM?

Mr Chiam See Tong: Yes, I know now that they buy them for investment. There is no doubt about it. I am quite certain in my mind.

Sir, the issue is whether or not Ministers can buy property. Of course, they can buy property. But they have a problem now because Senior Minister and DPM have given back their discounts and so they have set a precedent. They have viewed the discounts as unsolicited gifts. Therefore, they felt that it was not right to have them and handed them over to the Government. But the Prime Minister seems to have a different view. He says that there is nothing wrong and they can keep the discounts. But since they have set this precedent, I think it would be difficult for Ministers in future, when purchasing a property, to knowingly accept a discount.

Mr Lee Kuan Yew: Can I seek a point of clarification? Not only the Prime Minister but Dr Tony Tan, the Defence Minister, has said quite clearly that we were entitled to the discounts. I think I have to explain why, in spite of that, the discount was treated as a non-solicited gift.

There was a meeting at which my son, the DPM, the Prime Minister, myself, Finance Minister, Teo Chee Hean and Wong Kan Seng were present. This was a random group, representative of the Cabinet and, hopefully, representative of the outside opinion in Singapore. I have asked them whether they would mind - I knew this would come up - because it is better that people know why we did what we did. My old friends know me well. They know that when I am right, I dig my toes in, I slog it out to the end. So they said, "Look, why do you give back the money because I know you? You give people the impression, those who know you, that you have done something wrong." I said, "Hold on." We did a round robin. Richard Hu, the Finance Minister, said, "Completely correct. But DPM should give up his 5% because 12% was above the balance. For Scotts 28, no question of his propriety. Nassim Jade, 7% for me, no problem." That was the straightforward discount for the first eight, or whatever. But it became 12% for DPM. That is how the whole investigation started. So he thinks that although investigations did not disclose anything which was objectionable, he believed that it would be a good gesture if DPM gave up the 5% and took only 7% like everybody else. I think the Finance Minister will confirm that. [Dr Richard Hu indicated yes.]

Then Teo Chee Hean, who had been Minister of State for Finance, supported that point of view. Keep 7%, return 5%. I keep everything. Wong Kan Seng, who had met three top SPH pressmen, who were jumping around, said, "Injustice of it all. Give up the whole lot." Loong, my son, decided, "How can I give up 5% and keep 7%? It is ridiculous. If I want to keep, I keep all, or give up, I give up all." So he decided, because he is not me. He may not be able to have that same weight. He said, "No, I give it up, all." Once he decided that he would give up all, I decided I had to back him. I had to give up all. Because otherwise it will look odd. Father is more selfish than the son!

I have not the slightest compunction in saying that what I did was right. I will defend this anywhere and I also have not the slightest compunction to say that we can have any commission of inquiry, go into DPM's purchases, he will come out clear. But he decided this. I will not have it said that I am more selfish than my son. But to say that every Minister from now onwards cannot take a discount is an absurdity. Then they cannot buy any house at all, without paying a premium on the house. We have to have a sense of proportion. This problem arose because I was incapacitated - not incapacitated, but not able to be active. If I were, it could never have come to this stage. Those who know me know that I react, and react very quickly, and fight to put something right.

This having been done, I think we bring it all out. If you ask any more questions, I have more explanation because every step there was a reason, there was logic, there was good sense, there was good judgment. And I repeat again: for the long term future of Singapore, you cannot depend on Ministers having wives who are making incomes equivalent to the market. That may not be so. You look around you [referring to Mr Lee Yock Suan] he has not got a wife who is making a market income; he has [referring to Mr Yeo Cheow Tong]. [Referring to Mr Lim Boon Heng] I am not sure whether she is in a profession which will make money. Tony Tan's wife has retired to look after the children. Wong Kan Seng's wife retired to look after the children. Lee Boon Yang's wife was a music specialist, that is not a big money-making business.

So I could go on. But you want good men and you depend on the accident of their wives being willing to work and keep the family going, educate the children, make sure that you have enough to send them to university, make sure that when houses are phenomenal in 20 years' time that they can start off home with a house - these are thoughts that must go through every man's mind, every woman's mind. We live in this world. I feel sorry about the teachers that he has referred to. There are such people like Mother Teresa. But let me tell you what happens if you depend on Mother Teresa to save the world.

I have seen the British system when it was working in the 1940s. I now know one of the problems they face and it is populism, salaries. So their Ministers are under-paid, and because the Prime Minister and the Ministers are under-paid, their judges are under-paid. Every time there is a salary revision - I read the Economist and the London Sunday papers regularly - they concede for Division II, Division III, all the lower ranks, accept the recommendations. Every time they come to the senior civil servants, judges, Ministers, they reduce it drastically. The result: they could no longer get the best lawyers to be judges. My contemporaries are judges. I meet them when I go to England. Once upon a time, it was an honour to be a judge. You finished your Bar, practice, your last year as a silk was tax-free, which was a vast sum. Then you went on the Bench, easier life, prestige, position. But now you pay tax even on your last year. So there is no nest-egg. And the quality of judges has not been of the best. Judges who have gone on the Bench, gone up to the Court of Appeal, being promoted, have decided, unprecedented in the old days, to resign and become arbitrators where they are paid per diem. Think about it, Mr Chiam.

So the system is skewed. If we all have Mother Teresas, the world is a wonderful place. But we have only one Mother Teresa, that is why the Pope thought her wonderful, and so do all of us. In the real world, and Singapore lives in the real world, motivation, as Herman Kahn, the futurologist, once said to me: "God, glory, gold." It is very simple - GGG (God, glory, gold). Mother Teresa is God. Some people do it for glory. But in the end, you need gold to pay for houses, homes and other things. You need gold to have your children educated, go to a good university, have a home.

Therefore, when I said to this House at the time the salaries were being revised, and I urged the Prime Minister to revise them, I was convinced he would never be able to recruit the next generation. Tan Cheng Bock said to me, "No, no. I am surprised to hear that." My generation cannot be repeated. If you ask me to start all over again, I may never have done that. And if my wife did not earn the money she did, I might have packed up by the 1970s. As my brother told me, "You tell them you were earning twice what I did." Let us not do the Singaporean a disservice and confuse him. They are honest, honourable, committed men, but they are not Jesuits. They are not Mother Teresas. They have children who will grow up. Some will be successful; some may not be.

Why did my wife help my son specially, to set up home? Because he has a disabled son who may have to be looked after for the rest of his life - visually handicapped, and otherwise also handicapped. You mean you go around and go to Kuantan and carry on if you had that problem? Let me be quite candid. All the leaders that I have met in Australia, in New Zealand, in England, marvelled at the courage we had in taking that White Paper through, changing the rules and pegging it to the market. And they said to me, "I wish I could do likewise." He is no longer in office. I think Mr Keating would not mind if I said that. When I went to Australia, Mr Keating said, "Well, I wish I could do that." Because he has quality men too who could not carry on, and on, and on. Or you can run it like the American system. I do two years, I do four years, I've got the connections in government, I am a consultant, I am a lobbyist. We have run our system. It has worked. Good men stay in, continue to stay in, do good work, get the experience, have the expertise, and we are able to give everybody a better and better life.

Please do not unwittingly deceive people who may well listen and believe that there will be so many Chiam See Tongs who are so willing to sacrifice that they can run the government. That has not been so in any country in the world. You have seen Japan, the monies involved. You have seen Korea. You have seen Taiwan - what they call "black mafia". You have seen Italy. You know the British have run into all these sleaze problems which never happened in my days as a student then. It was unthinkable. But if you pay Ministers that salary, when they in private life can earn more, you force them to take holidays at their risk in Paris, on a house account, which does a Minister no good. Better our style, and I say it is an honourable straight system and we answer for it every time.

Mr Low Thia Khiang says we are afraid to reveal the salaries. Not at all. Why should I be afraid? Why should any of the Members here be afraid? We will publish to you every year the figures which their counterparts are making in the private sector, and it is going up, and up and up, because the economy is doing well and Singapore is well run, and we are well placed. It is an art, not a science. The art of government is to get the right people to the right places, and the right people often are the able and outstandingly energetic and sound, and they are the ones who will do well, whether in business, in the profession or in government. I took many years to learn that, that there is such a category that you can blanket across the board. So when I met the 100 CEOs at Williamsburg, many of whom I have met occasionally here, I recognise one quality - high energy levels, sound judgment, tremendous drive and confidence. You find them? They are not in government. They do not want to be. Only one of them - Mr Rubin, head of Goldman, Sachs, is now head of the Treasury, and he has ably defended the US dollar. He is paid a pittance. But he does it and, of course, thereafter the connections with the whole panoply of government. Do we want to run that system? Can we? No. So I honestly urge this House, say what you like, but don't demolish the system. It depends on two things - the future of Singapore -- having the right system, and having the right men in the key positions of that system, then we can have a lot of fun and games. Whether it is in Parliament, whether it is in the press, whether it is in radio or television, you need at the top a crucial man. Wrong man, system malfunctions.

Why are our journalists amongst the world's best paid? Ask them. When they go to any conference in ASEAN, are their counterparts paid their salaries? No. But we run a system that pays a man in accordance with his talent and his performance, not patronage. There are countries in Asia where the writer depends on being paid by the person he is writing about. You pay me, I write you good story. You don't pay me, I write you bad story. That is your choice. That is not for us.

So I would strenuously defend what we have done and I say, Mr Chiam, do not do a disservice. I hope he wins the next elections. I think he has done on the whole good for the House. I was wrong when I thought he was not going to do much good, but in his somewhat honest, bumbling way, he has been a voice of sanity, unlike his fellow MP, Mr Cheo. He knows what is right. He knows what is true, because he sits down next to me in the Members' Room, he knows that I am not a crook. But he said " (rang ren min pan duan). " (shi bu shi)? "Oh, let the people decide." He doesn't know. Having heard all of us here - Minister for Finance, Dr Richard Hu, Prime Minister, Deputy Prime Minister, me, Dhanabalan

(wo bu da dong) I do not know, that is a minus for Singapore. If you are wanting to be an Opposition on an issue such as this, take a stand, either say, "I think we call for a commission of inquiry. Or I demand a further investigation." But to say, (wo mei you yi jian), sad!

Mr Chiam See Tong: Mr Deputy Speaker, I will have to carry on from where I left off. Our leaders need to lead. They can only lead if they have the moral authority to lead. Once the people perceive that that leader has no longer any such authority, they would probably not follow what the leader says. So that is the reason why I think this issue has cropped up. People see the leaders are not sacrificing. The leaders are, in fact, paid well and by buying property, when property prices are going up, they see the leaders getting richer. So if a leader who is earning 100 or 200 times more than the working people, you tell them that they must sacrifice ---

Mr Lee Kuan Yew: Mr Chiam, I have just explained that I would not get rich with my salary. It is my wife's earnings.

Mr Chiam See Tong: We are talking about salaries comparable to the ordinary people of Singapore. I think this is the question. It is very subjective.

Mr Lee Kuan Yew: It is my wife who buys these houses.

Mr Chiam See Tong: I have asked the Prime Minister but I did not get the answer. So I cannot reply to him. There are people who say that Ministers own one or two condominium units. Could I ask the Prime Minister now how many Ministers in fact own condominium units, without naming them?

The Prime Minister: I gave him the answer. I circulated his question to all the Ministers and the answer was from 1992 to 1996, no Minister has bought condominium units under soft launches. So he has got the answer.

Mr Chiam See Tong: But have they bought properties outside those offers?

The Prime Minister: Yes, they have bought. But it was not his question. He never asked for it.

Mr Chiam See Tong: If I were to ask him now, would he be willing to answer? We go one by one, if he wants to. Does he not deny that in fact Ministers do have properties in addition to their own homes? [Interruptions]. So with these high property prices, people would perceive that, in fact, Ministers are not really sacrificing than what is made out to be. So this is the problem. And if Ministers are in that kind of situation, in future, it will be difficult for Singapore to have leaders with that moral authority. This is probably the issue. People feel that Ministers are public figures. They, in fact, should do some sacrifice and not benefit from their positions. Probably that is the reason why there is such a hue and cry and also because of the escalation of property prices. Some of them have missed out on the purchases in which they have intended to get but could not get it.

Mr Lee Kuan Yew: Mr Chiam, do I understand you that in order for people to respect me, I must be poor?

Mr Chiam See Tong: No. I did not say that at all. I say that they must have a good living. But people perceive that our Ministers now are the best paid in the world, for such a little island, and compared to the majority of wage-earners in Singapore, Ministers are earning the type of salary from public funds which is way beyond their imagination. Many people perceive that. This is one of the problems.

Mr Lee Kuan Yew: Do you believe that I have bought these properties with my salary, that I could have bought $3.7 million plus $2.8 million with my salary, which is about a million plus? Could I have bought it? And my wife has bought it without mortgage.

Mr Chiam See Tong: I really do not know.

Mr Lee Kuan Yew: I am telling you. Mr Deputy Speaker, Sir, I am stating a fact.

Mr Chiam See Tong: What fact? On the two properties or one property he is talking about?

Mr Lee Kuan Yew: Two properties. They were purchased at almost the same time.

Mr Chiam See Tong: That is all.