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FILE PHOTO: Singapore Prime Minister Lee Hsien Loong speaks at the International Conference on The Future of Asia in Tokyo, Japan, September 29, 2016. REUTERS/Kim Kyung-Hoon

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By Fathin Ungku

SINGAPORE (Reuters) - Singapore's Prime Minister Lee Hsien Loong said on Monday he wanted to avoid suing his brother and sister for defamation over allegations that he had abused his power in a dispute with them over what to do with their late father's house.

The bad blood between the heirs of Lee Kuan Yew, Singapore's first prime minister, has gripped the city-state since mid-June, when the younger siblings launched a series of attacks on their elder brother in social media postings.

"In normal circumstances, in fact, in any other imaginable circumstance than this, I would've sued immediately," Lee said in a statement to a rare special sitting of parliament, before taking questions from lawmakers.

He said any such action would "further besmirch my parents' names", while drawn-out legal proceedings would distract and cause distress to Singaporeans.

"Therefore, fighting this out in court cannot be my preferred choice," the prime minister said.

The prime minister's younger brother and sister, Lee Hsien Yang and Lee Wei Ling, allege Lee Hsien Loong has abused his power in the dispute over the old family home at 38 Oxley Road, and fear that he would use the organs of the state against them.

Lee Hsien Yang has said he and his wife, lawyer Lee Suet Fern, would be leaving Singapore because they felt closely monitored and hugely unwelcome.

The prime minister has consistently denied the allegations, and said he was very disappointed that they have chosen to publicise private family matters.

Monday's parliamentary session was extraordinary for Singapore, a small but wealthy island nation that prides itself on being a rock of stability in Southeast Asia.

The accusation of abuse of power prompted Lee to call for the special sitting of parliament in order to defend the integrity of his government.

In a rare move, Lee removed the Party Whip for the debate, allowing lawmakers from the ruling People's Action Party (PAP) to question their own cabinet regardless of the party line.

PAP controls 83 of the 89 elected seats in parliament, and lawmakers submitted their questions in writing at the end of last week. More than 30 lawmakers are due to put questions over the course of Monday and Tuesday.

Lee Hsien Yang said in a Facebook post at the weekend that parliament was an inappropriate forum for airing the dispute because his brother would be legally protected by "parliamentary privilege" to say what he wants.

Lee Hsien Yang and his sister, Lee Wei Ling, say they want to honour their father's wishes, expressed in his will, for the house to be demolished once Lee Wei Ling vacates the property, rather than it be turned into some kind of museum.

Prime Minister Lee has questioned the will, while a government committee, from which has recused himself, considers whether the old family home should eventually be turned into a heritage site.

He has said his personal view is that the house should be demolished in accordance with his father's wishes, but the decision rests with the government. His siblings suspect him of being disingenuous and have suggested he wants to preserve the house for political reasons, but Lee insisted that was untrue.

"Regarding the house, and how its continued existence enhances my aura as PM, if I needed such magic properties to bolster my authority even after being your PM for 13 years, I must be in a pretty sad state," he said. "And if such magic can work, Singapore must be in an even sadder state."

(Writing by Simon Cameron-Moore; Editing by Lincoln Feast and Paul Tait)

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