IN THE HIGH COURT OF THE REPUBLIC OF SINGAPORE

Suit No. 172 of 1997

Between

1. LEE KUAN YEW (NRIC No. S0000003E)

2. LEE HSIEN LOONG (NRIC No. S0016646D)

.. Plaintiffs

And

1. TANG LIANG HONG (NRIC No. 1096110F)

2. TEO SIEW HAR (NRIC No. 0531156Z)

.. Defendants

DEFENCE OF THE FIRST DEFENDANT

1. The First Defendant contends that this suit, along with Suit Nos. 2523, 2524 and 2525 of 1996 and Suit Nos. 70, 76, 82, 181, 182, 187, 188 and 244 of 1997 ("the related actions") is an abuse of the process of the Court and should be struck out or stayed. Moreover, the First Defendant will contend that the matters complained of herein should have been included as a particular to the claim for aggravated damages in Suit No. 1116 of 1996. This Defence is served without prejudice to these contentions.

2. Paragraphs 1 and 2 of the Amended Statement of Claim are admitted.

3. It is admitted that the words set out in paragraph 3 of the Amended Statement of Claim were spoken by the First Defendant. However, it is denied that they were spoken of and concerning the Plaintiffs. It is averred that the failure to plead particulars of reference, linking the words complained of to the Plaintiffs, results in the Amended Statement of Claim disclosing no cause of action regarding this publication.

4. Paragraph 4 of the Statement of Claim is not admitted.

5. It is denied that the words spoken by the First Defendant bore the natural and ordinary or the innuendo meanings alleged in paragraph 5 of the Amended Statement of Claim.

6. It is admitted that the words set out in paragraph 6 of the Amended Statement of Claim were spoken by the First Defendant. However, it is denied that they were spoken of and concerning the Plaintiffs. It is averred that the failure to plead particulars of reference, linking the words complained of to the Plaintiffs, results in the Amended Statement of Claim disclosing no cause of action regarding this publication.

7. It is denied that the words spoken by the First Defendant bore the natural and ordinary or the innuendo meanings alleged in paragraph 7 of the Amended Statement of Claim.

8. It is admitted that the words set out in paragraph 8 of the Amended Statement of Claim were spoken by the First Defendant. However, it is denied that they were spoken of and concerning the Plaintiffs. It is averred that the failure to plead particulars of reference, linking the words complained of to the Plaintiffs, results in the Amended Statement of Claim disclosing no cause of action regarding this publication.

9. Paragraph 9 of the Statement of Claim is not admitted.

10. It is denied that the words spoken by the First Defendant bore the natural and ordinary or the innuendo meanings alleged in paragraph 10 of the Amended Statement of Claim.

11. Further or alternatively, the words spoken by the First Defendant, as set out in paragraphs 4 (excluding the last sentence), 6, 8 and 9 of the Amended Statement of Claim were fair comment on a matter of public interest, namely the conduct of individuals holding high governmental office in Singapore. The First Defendant contends that the words constituted the following comment: that the circumstances under which the Plaintiffs acquired apartments from Hotel Properties Limited ("HPL") were such as to merit an independent investigation into their conduct.

P A R T I C U L A R S

The First Defendant repeats the particulars contained in paragraph 15 of the Re-Amended Statement of Claim in Suit No. 1116 of 1996.

(1) The first and second Plaintiffs were, at the time of publication, the Senior Minister and the Deputy Prime Minister of Singapore respectively. The first Plaintiff was Prime Minister of Singapore from 1959 to November 1990, and thereafter, in his capacity as Senior Minister, continued to supervise his ministerial colleagues. In 1995, both Plaintiffs owned houses in Singapore where they lived with their families.

(2) In early 1995 residential property prices in Singapore, already perceived to be very high, were rising.

(3) In April 1995 HPL, a publicly quoted property development company, of which the first Plaintiff's younger brother and second Plaintiff's uncle, Dr Lee Suan Yew, was at the material times a non-executive director of HPL, prepared to offer for sale apartments in a residential development project called Nassim Jade. HPL issued a price list in respect of the Nassim Jade apartments, specifying the prices at which each apartment would be offered for sale.

(4) The apartments were due to be put on the open market on 17 April 1995. On 14 or 15 April 1995, while the apartments were being offered for sale in a "soft launch" (a marketing exercise in which HPL offered the properties to a small group of selected potential customers), the wife of the first Plaintiff, an experienced conveyancing and property solicitor, visited HPL offices and chose an apartment to buy. She was quoted, and for the first Plaintiff accepted, a price of $3,578,260-00 , or $1,583-00 per square foot, which price included a 7 per cent discount on the list price. That discount was substantially in excess of the 5 per cent discount normally given to early bird buyers.

(5) At about the same time, in April 1995, the second Plaintiff was sent by his mother a copy of a brochure and price list for the Nassim Jade development. The second Plaintiff contacted Mrs Pamelia Lee, wife of his uncle Dr Suan Yew, and told her that he and his wife were interested in buying a unit. Subsequently, Mrs Pamelia Lee telephoned the second Plaintiff at home and offered him an apartment in Nassim Jade at a price of $3,645,100, which price (as would be apparent from the list price) allowed the second Plaintiff a discount of 12 per cent, that is $437,412, on the asking price. The second Plaintiff accepted the offer.

(6) In October 1995, the first and second Plaintiffs each bought a second apartment from HPL in a development called Scotts 28. The first Plaintiff paid $2,791,500 for his unit; the second Plaintiff paid $2,776,400. Both Plaintiffs received a 5 per cent discount on the list price of the apartments.

(7) As a result of their purchases at a discount, the first Plaintiff received, or might reasonably be regarded as having received, from HPL a financial benefit worth about $416,252, and the second Plaintiff received, or might reasonably be regarded as having received, a benefit worth $643,185 from the company. No publicity was given to the Plaintiffs' purchases.

(8) The first Plaintiff's daughter, brothers, sister, sister-in-law, and his wife's niece also bought apartments in the two developments in 1995.

(9) At no time did HPL seek shareholders' approval for the sale of apartments to the first Plaintiff, despite the fact that such approval was necessary pursuant to clause 1010 of the SES Listing Manual which required approval to be obtained for transactions involving "connected persons" of the Company and those persons' associates. The first Plaintiff, as brother of a director, was an associate of a connected person as defined by the rules. Instead, HPL sought and obtained from the SES a waiver of the requirement to obtain shareholders' approval.

(10) On 22nd April 1996 the Stock Exchange of Singapore ("SES") released a statement censuring HPL for delaying for 11 months before seeking shareholders' approval for the sale of two Nassim Jade units to Dr Lee Suan Yew, a non-executive director of HPL, and Mrs Mary Fu, wife of Peter Fu, a director and substantial shareholder. The first Defendant relies on the whole of the statement issued by the SES and in particular upon the observations of the SES that (a) some of the discounts given to directors and their relatives in respect of the Nassim Jade units were higher than those given to non-related buyers, and that (b) publicly-listed companies have a duty to obtain the best price so as to maximise the return to shareholders.

(11) On the next day, 23 April 1996, the Plaintiffs disclosed publicly that they too had bought HPL properties at discounts the previous year. That disclosure, following closely the SES's censure of HPL, led to widespread public debate concerning the Plaintiffs' purchases at a discount of HPL properties.

(12) Finance Minister Hu recommended to the Prime Minister that the Plaintiffs should consider giving back the difference between what they received in discounts and what the public would perceive as normal discounts of around 5 per cent usually given to early-bird buyers. The Plaintiffs, after much deliberation, responded by sending to the Prime Minister cheques to the value of the difference between the list price of the properties they bought and the prices they paid, but PM Goh directed the Accountant-General to return their cheques to the Plaintiffs.

(13) An investigation into the circumstances and propriety of the sales was necessary because (a) as explained to the first Plaintiff on 1 April 1996 by the Prime Minister, there was a public perception of impropriety (or risk or appearance of it) and (b) as Finance Minister Richard Hu subsequently stated in Parliament, the government faced "a public perception problem"; that is, that given the Plaintiffs' high public offices, questions had arisen as to the propriety of their conduct which had to be, and had to be seen to be, thoroughly and fully investigated. In order to reassure the electorate at a time when a general election was pending, it would have been desirable and/or necessary that such investigation should be conducted by an independent and experienced body such as the Commercial Affairs Department ("CAD"), which is charged with investigating company and commercial irregularities and misconduct, or the Corrupt Practices Investigation Bureau ("CPIB"), whose remit is to carry out investigations with a view to the prevention of corruption and misconduct. It was especially important that the investigation should be conducted independently of the administration in order to dispel any notion that the government was or might appear to be more concerned to avoid any possible effect on the election than to ensure a rigorous examination of the facts and issues relating to the purchases.

(14) On or about 22 March 1996, the Prime Minister, Goh Chok Tong, appointed the Finance Minister, Richard Hu, to investigate the matter; and Richard Hu was helped in his investigation by the deputy managing director of the Singapore Monetary Authority ("MAS"), Koh Beng Seng. Richard Hu is a ministerial colleague of both Plaintiffs and the first Plaintiff has responsibility for advising him on any of the subjects under his (Richard Hu's) charge as Minister; Koh Beng Seng was and is directly answerable to Richard Hu. The first Defendant will contend that it was inappropriate, if legitimate public concern about the purchases was to be allayed, that the investigation should be by persons who were not independent and not seen to be independent of the administration. Neither Richard Hu nor Koh Beng Seng was independent of the administration or of the Plaintiffs.

(15) On 26 April 1996 the Prime Minister publicly announced that there had been no impropriety in the Plaintiffs' conduct. On 21 May 1996, at the commencement of a three-day Parliamentary debate on the issue, the Prime Minister made a statement in Parliament to the same effect. He told Parliament that the debate had been arranged so that the Plaintiffs could be questioned about the circumstances of their purchases. The Finance Minister Richard Hu and the Plaintiffs also made statements in Parliament exonerating the Plaintiffs. No other factual or legal assistance was provided to Members of Parliament to help them with their examination of the issue.

(16) Richard Hu and Koh Beng Seng did not make or submit to Parliament a written report as to the scope or the findings of their investigaton, despite the gravity of the questions in issue.

(17) The conclusion of the investigation, as reported to Parliament, was based solely on the accounts given to Richard Hu and Koh Beng Seng by the Plaintiffs and/or by HPL, that is, by the participants in the sale and purchases of the apartments. Neither Richard Hu nor Koh Beng Seng can lay claim to any specialised knowledge or exertise in the practices or operation of the property market or in carrying out such an investigation.

(18) Richard Hu and Koh Beng Seng accepted without further inquiry that the Plaintiffs, when they accepted HPL's offers, had not addressed their minds to the size of the discounts they received despite the fact that (a) contrary to the statement of Ong Beng Seng, the Managing Director of HPL, the second Plaintiff had been given by his mother, the first Plaintiff's wife, and had had in his possession at the time of his Nassim Jade purchase a copy of the price list for the units, and (b) the Plaintiffs had bought the properties for investment purposes.

(19) Richard Hu and Koh Beng Seng did not claim to have sought or obtained information from Dr Lee Suan Yew or his wife as to their apparently pivotal roles in the purchases, especially the second Plaintiff's Nassim Jade purchase.

(20) Richard Hu and Koh Beng Seng did not claim to have undertaken any investigation into the fact or circumstances of the purchases by the Plaintiffs' extended family of HPL units in Nassim Jade and Scotts 28 in 1995.

(21) No or alternatively no adequate explanation was given as to why HPL had failed to seek shareholders' approval for the sales to the first Plaintiff, but had instead sought and obained a waiver from the SES of the requirement to seek approval. An explanation was called for especially in the light of the fact that the SES had censured HPL in April 1996 for delaying in seeking shareholders' approval for the sales in 1995 of apartments to its directors and other connected persons.

(22) On 23 May 1996 at the conclusion of the Parliamentary debate on the issue the Prime Minister announced new rules requiring ministers to declare all property purchases, including the prices they were paying and any discounts or preferential terms received. The Prime Minister stated that the reason for the measure was that otherwise the public would perceive that "the government's standard of integrity had dropped".

(23) Nothing in these Particulars is to be read as alleging or impliedly alleging that either Plaintiff was in fact corrupt or guilty of any impropriety. The first Defendant makes no such allegation; but in the premises, the circumstances of the acquisition of the said properties by the Plaintiffs were such as to raise questions as to the propriety of their conduct. As the Prime Minister said in Parliament (Official Report, 23 May 1996, column 365): "This episode has shown how sensitive the public is to perceived privileges and advantages enjoyed by Ministers who buy properties at soft launches or at discount, especially when the market is hot. The public thinks people in positions of power have the inside track and enjoy advantages, which they do not." The Prime Minister recognised that an investigation had been necessary or appropriate and in fact specifically instructed Finance Minister Richard Hu to "investigate and report" (Official Report, 24 May 1996, column 174). The reasonably appropriate investigation, in order to allay public anxiety, would have been by an independent body such as the CAD or CPIB rather than by Richard Hu and Koh Beng Seng, who were not wholly independent of the administration (including the Plaintiffs) and who were not equipped to and did not in fact carry out or were not seen to have carried out the thorough investigation which the circumstances required.

12. If and so far as is necessary the First Defendant will rely on Section 9 of the Defamation Act.

13. Further or alternatively, the words spoken by the First Defendant, as set out in the last sentence of paragraph 4 of the Statement of Claim were true in substance and fact. PARTICULARS OF MEANING

That the First and Second Plaintiffs combined with others falsely to attribute to the First Defendant views which he does not hold, presenting him as a chauvinist who is against a certain religion.

PARTICULARS OF JUSTIFICATION

13.1 The First Defendant is not a chauvinist and is not against any religion. On the contrary he is, and was at all material times, a firm believer in religious, racial and cultural harmony.

13.2 In or about August 1994 the First Defendant gave a talk to the Zeng Yi Association at a National Day dinner, which was attended by Teo Chee Hean, about religious harmony and the steady development of society. Nothing in the talk could possibly warrant the conclusion that the First Defendant was a racist or held any of the views referred to under the Particulars of Meaning.

13.3 In December 1996 the First Defendant was nominated as a candidate in the forthcoming General Election on behalf of the Workers' Party ("the WP"). He stood as a candidate in the Cheng San GRC. The Plaintiffs in this action, the Plaintiffs in the related actions referred to in paragraph 1 of the Defence and those persons named in the police report, are all prominent members of the Peoples' Action Party ("the PAP"). It is their fervent wish to prevent by all possible means the election of any opposition Member of Parliament in Singapore. In support of this allegation the First Defendant will rely inter alia upon statements made on behalf of the PAP by Prime Minister Goh and reported respectively in the issue of the Straits Times for 30 and 31 December 1996 to the effect that of course he was biased and wanted to keep the First Defendant out of Parliament; that he was so determined to stop the First Defendant getting into Parliament that he was himself standing in the Cheng San GRC constituency and that the fact that the First Defendant appeared to be a reasonable man of moderate means was "a difficulty that they (viz the PAP) were going to solve and that they had to plug away and tell people there is a danger".

13.4 As the election campaign in the said constituency proceeded, the indications were that the First Defendant was a popular candidate who had every prospect of succeeding in being elected. The First Defendant will rely in particular of the numbers of those attending WP rallies and (after discovery) on the surveys of voters' intentions carried out on behalf of PAP.

13.5 The First Defendant will invite the Court to infer that the senior members of the PAP, including most if not all of the Plaintiffs in this and the related actions, became concerned at the prospect of the First Defendant being returned as a Member of Parliament and deliberated how best to ensure that he was discredited and in due course defeated. The First Defendant will give further particulars of this allegation after discovery and/or interrogatories and/or service of witness statements.

13.6 As a result of the deliberations referred to at paragraph 6.5 above, the Plaintiffs along with the Plaintiffs in the related actions over the period from 25 December 1996 until the General Election made a large number of public statements concerning the First Defendant in which he was variously described as

13.7 In support of the contention in paragraph 6.6 above the First Defendant will rely by way of example on the following statements made by the Plaintiffs, the Plaintiffs in the related actions, and the persons named in the police report, in the run-up to the General Election (all of which received, as their authors knew and intended, the widest publicity in the press and were read by the electors in the Cheng San GRC constituency):

13.8 The First Defendant had not in truth expressed extremist views either at the dinner in 1994 or on any other occasion; he is not a racist or a chauvinist; above all, he wants to achieve harmony in the multi-ethnic Singaporean community. He had given the Plaintiff no reason to suppose otherwise. The First Defendant repeats paragraph 13.1 of these Particulars.

13.9 Accordingly there were no basis in truth for the defamatory charges levelled against the First Defendant by the Plaintiff.

14. The Defendant will, if necessary, rely on Section 8 of the Defamation Act.

15. Paragraphs 11, 12 and 13 of the Statement of Claim are denied.

16. Without prejudice to the generality of the denial of paragraph 13 herein, the First Defendant will contend that paragraph 13 (g) and (h) disclose no entitlement to aggravated damages because there is no allegation that these matters caused injury or hurt to the Plaintiff.

17. Pursuant to Section 16 of the Defamation Act, the First Defendant will rely on the fact that the Plaintiffs have settled their claim in Suit No. 1116 of 1996 against the Second and Fourth Defendants and recovered from them damages for libel in respect of similar allegations in the amount or approximate amount of $4,620,000. The First Defendant will further rely on any award of damages to the Plaintiffs resulting from similar allegations.

18. Save as herein expressly admitted or averred, every allegation in the Amended Statement of Claim is denied.

Dated this 20th day of February, 1997

Sgd.

Tang & Co. Solicitors

for the First Defendant To the above

Plaintiffs and their solicitors, LEE & LEE