The first part of the quote spells out what will attract legal action, "If you make a personal allegation of fact, if you say I took money, I am corrupt, I will then sue you and ask you to prove it."
The skin is an ever-changing organ that contains many specialized cells and structures, most of it between 2–3 mm thick. It functions as a protective barrier that interfaces with a sometimes-hostile environment. If any of the structures in the skin are not working properly, a rash or abnormal reaction is the result. That's one good reason when a lawyer's letter of demand is in the mail.
When Lee Hsien Yang was once asked about criticism over the excessive goodwill paid to acquire Optus - SingTel paid $13 billion for Optus in October 2001 and most of the acquisition was goodwill worth $11.4 billion - he mentioned something about a thick skin. Recently his brother boasted, as one blogger put it, he is a thick-skinned prime minister who is “flame-proof” to cyberspace vitriol against him. ("When you are in the public eye, you flame me, I'm flameproof."). Before you jump to the conclusion that thickness of the epidermal layer is a genetic trait, remember the father has bankrupted many an opponent who dared suggest something negative about his person or office.
"I have sued 15 or 20 times over the last 30-odd years and they come back with the same story that I have been plundering the place, I've enriched myself, and if I had not stopped it each time on its tracks, I would not have survived or enjoyed the reputation and that I think I do enjoy, that I'm prepared to stand up and be scrutinised." (Interview with the British Broadcasting Corporation, 4 June 1995)
For someone who talks much about digging spurs into the hides of Singaporeans, the thickness of his own epidermis measures quite differently:
"Every morning, my task begins with reading five, four now, newspapers. It can be tiresome. I note the scurrilous, the scandalous. I can live with that. But when any newspaper pours a daily dose of language, cultural or religious poison, I put my knuckle-dusters on. Do not believe you can beat the state." (speech to the Singapore Press Club, Nov 15, 1972)
The moral of the story is to take Shanmugam's words with a large pinch of salt. The proof of the pudding is always in the eating.