Singapore’s government on Wednesday strongly refuted speculation widely circulating online that suggested the Manpower Minister Josephine Teo had enriched herself from the development of temporary facilities to house migrant workers infected with Covid-19.

The government’s forceful rebuttal was accompanied by a statement by Teo’s lawyers describing the comments as “untrue, scurrilous and completely baseless”. The lawyers served a letter to two people, according to local media.

Local blogs in recent days had been highlighting posts by Facebook users who questioned the involvement of government-linked urban planning firm Surbana Jurong – whose international chief executive Teo Eng Cheong is Teo’s husband – in the conversion of the Singapore Expo, an exhibition centre, into a facility housing 8,000 beds.

The centre is among several so-called community-care facilities that Prime Minister Lee Hsien Loong’s government hastily developed in April as Covid-19 infections surged through cramped dormitories that house hundreds of thousands of low-wage guest workers.

Teo and Lee’s administration moved quickly to ramp up capacity for the workers at the time as they came under heavy criticism for not preparing well enough for the likelihood of mass infections in the dormitories, where workers sleep in rooms with bunks for up to 20 people.

The cavernous Singapore Expo facility in particular was developed to accommodate infected workers with mild or no symptoms as well as others who had been recently discharged from hospital.

The online posts about Teo and her husband questioned how Surbana Jurong was awarded the project. Similar remarks were reportedly circulated widely via the text messaging service WhatsApp.

Surbana Jurong is wholly owned by Temasek Holdings – the country’s state investment firm that counts local corporate giants such as Singapore Airlines and DBS Bank as among its portfolio companies. Temasek is headed by Prime Minister Lee’s wife, Ho Ching.

In a joint statement, the city state’s health and manpower ministries said Teo and the Health Minister Gan Kim Yong were not involved in the selection of Surbana Jurong for the Singapore Expo project or in the process of managing its costs.

“The government accepts that legitimate questions can be raised about the spending, and is fully prepared to explain why and how the money was spent,” the statement said. “However, the government will respond firmly and appropriately to any scurrilous allegation of corruption”.

The statement detailed how it was the government that had approached Temasek to help “at short notice”.

The state investor was approached “because it had the necessary resources to be marshalled at short notice through its subsidiaries”.

It said the firm agreed that the work by itself and subsidiary companies would be done at “cost recovery basis” or below cost in some cases.

“There will be no profit made by Temasek and its linked companies for the work done. The Temasek-linked companies agreed with these arrangements.”

It said Temasek itself had not charged management fees while its affiliate companies such as Surbana Jurong would “only charge for direct expenditure, at cost”.

The urban planning firm worked with other firms and was “able to leverage its sourcing processes to obtain construction and other needed materials on an urgent basis,” the government said.

Teo, in her statement issued to local media through her lawyers, said while she was “legally entitled to substantial damages for these serious and baseless allegations” she had decided not to pursue the matter if the two authors withdrew their allegations and apologised.

The CNA news agency said the legal letters required the authors to make donations of S$1,000 (US$700) each to the government-linked Migrant Workers’ Assistance Fund.

Singapore’s leaders including Prime Minister Lee have in the past successfully won libel suits for accusations of nepotism and corruption.

The ruling People’s Action Party – in power since 1959 – has for years defended ministerial salaries that are the highest in the world as the best means to prevent corruption.