Singapore's government has countered concerns about the appointment of Lee family members to state-linked companies, with arguments about a shortage of talent and Singapore's need to be steered by an elite who know the ropes.

The Economist said it agreed to pay an unspecified amount in compensation. State-controlled Channel News Asia said the magazine paid S$390,000 (US$229,000) in damages plus legal costs, and that the Lees would donate the money to charity.

The Economist, half-owned by UK publisher Pearson Plc, published an apology on its Web site for its Aug 14 article entitled Temasek, First Singapore, Next the World, which focuses on Temasek's recent aggressive expansion.

In the apology, the Economist said its "allegations are false and completely without foundation" and agreed to compensate both Prime Minister Lee and his father, Minister Mentor Lee Kuan Yew for the "distress and embarrassment."

The magazine declined further comment.

Ho Ching was appointed in May 2002 as executive director of Temasek, which owns stakes in about 40 of the nation's biggest companies, including Singapore Airlines Ltd., Singapore Telecommunications Ltd. and banking giant DBS Group Holdings Ltd.

Former prime minister Goh Chok Tong, replaced by Lee on Aug. 12, said a year ago that his successor may find it "awkward" as prime minister to defend his wife's top position at Temasek.

Foreign news organizations which have succumbed to Singapore's libel laws include the Asian Wall Street Journal, the International Herald Tribune and Bloomberg LP, which paid damages in a case involving the Lee family and Temasek in 2002.

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