By Kenneth Jeyeretnam -
Following my letter to the Ministry of Finance a lot of people have been asking whether we have been here before with the Indonesian loan shenanigans of 1997. Isn’t this just déjà vu? My answer to that is that I don’t believe so. We shouldn’t get ready to throw in the towel yet.
The world has moved on since 1997 and even Singapore is changing, albeit still under the rule of the same political Party who gained a majority and a stranglehold by default in 1960. That same Party has just been given a resounding defeat in Hougang. They attempted to run a campaign that really did seem like a case of déjà vu and it backfired. In 1997 we had only two MPs and one NCMP in Parliament and notably it was the NCMP who spoke up. Fifteen years later we now have six MPs in Parliament. It doesn’t matter that those 6 MPs may have voted with the government on the Budget. They brought down a GRC in 2011 and the Hougang by-election result has kept up the pressure.
It is the 40% of ordinary Singaporeans who voted in that watershed election against the government, despite all the veiled threats and intimidation, who will keep them feeling that pressure. That pressure made our ministers fall on their swords and take a pay cut. The voices of those 40% are still being heard through the new media.
With its push to become a global city Singapore cares much more about its international reputation. I have already pointed out how the Norwegian Finance Minister went to Parliament on the 15th May to ask for approval for his country’s loan to the IMF.. Our Finance Minister is Chairman of the International Monetary and Financial Committee of the IMF so he would hardly wish to be seen as opposing greater transparency and accountability, an explicit objective of the IMF.
In 2012 the economic background is one of major institutional collapse, double dip recession and a crisis in the Eurozone that hurts us all. We are also seeing a new scrutiny put on transparency and regulation and again the IMF itself is well aware that good governance is key to financial stability. They won’t easily forget that Greece falsified its way into the Eurozone by manipulating its figures. As a result of this not only has Temasek Holdings been forced to increase the amount of information it provides but even the very secretive Abu Dhabi SWF has coughed one up.
We are on very safe ground now in demanding accountability from our Ministry of Finance and we will receive support in this. So, while it is always possible that the government will take the same tack as in 1997, try to bamboozle us with Latin and financial terms , I do not think we should worry too much. In any case I know the financial terms and even better I know Latin!
For those who aren’t familiar with the case, back in 1997 a similar question was asked in Parliament by an NCMP about the constitutionality of granting a US$5 billion loan to Indonesia without seeking Parliamentary or Presidential approval. This was brushed aside by the PAP government on the advice of the then AG Chan Sek Kheong. ( he of the miraculous materialisation into a polling booth decision) The PAP argued that Clause 144(1) of the Constitution, which states that
“No guarantee or loan may be given or raised by the Government”, should be interpreted as meaning;
“No guarantee may be given or loan raised by the Government”. This meant that while the giving of a guarantee required Parliamentary approval, the giving of a loan did not.
Some Latin was used to explain it away.
I am not a lawyer but I do believe that the then AG erred in his interpretation of Clause 144(1). The natural and ordinary meaning of the words, it is clear to me, is that both guarantees and loans cannot be given or raised by the government except with parliamentary approval. If the intentions of the drafters of this clause had been to say that only the giving of guarantees but not loans needs to be approved by Parliament then surely the clause would have read
“No guarantee shall be given or loan raised ...”.
“No guarantee or loan may be given or raised by the Government”,
It also makes no sense from an economic or accountability standpoint that guarantees, which are merely contingent liabilities, should require Parliamentary approval while loans, which involve an actual payment, are exempted. It seems to require some very convoluted logic to explain why one would need scrutiny but not the other.
The Parliamentary question from Desmond Lee, from Tharman’s own GRC, has all the hallmarks of a stage managed exercise. I am convinced the question was tabled solely to convince the IMF that the loan commitment has been ‘robustly’ debated in Singapore’s Parliament. I was accused of being convoluted in my letter but I was writing as one economist to another and quoting Tharman’s convoluted speech back to him.
The truth is Tharman and Lee’s language to the house was unnecessarily complicated. Tharman’s job is to be accountable to the people , to provide for effective Parliamentary scrutiny of the Executive. It is not his job to obfuscate. Just as in the Budget, which I pointed out is not set out to IMF standards, which is a masterpiece of opacity and misdirection (here).
Of course couched in Tharman’s language my letter may have been difficult to follow so let me spell it out for you with a bluntness that was of necessity lacking previously. I’ve written as in lines from a short play.
The setting: A Company Shareholder Conference.
Employee: ( posing as concerned shareholder) “Boss, we work so hard all our lives, even after death pay and pay and we never get any safety net or free school or health and you save up all our money ‘cos our Gahmen is so clever it never spends any on us. So now we got big reserves is it?
Boss: That is correct.
Employee: These lazy ang moh get everything free even they never work, they get welfare, they get free child birth, free school, hospital even they got expression free is it?
Boss: Correct again.
Employee. You loan five billion dollars of our savings to these Ang mo who destroy their economy is it?
Employee: Thank You. You are great
In any case whatever the correct interpretation of Clause 144(1), I still stand by the point that the principles of good governance and accountability require that the government seek Parliamentary approval for loans and guarantees. More importantly I cannot believe the IMF would have appointed Tharman to head of a committee without expecting him to demonstrate exceptional levels of commitment to good governance and accountability free of tricks, semantics, Latin and an AG who believes in magic.
It’s your money! You have a right to know how much there is, where it is and to have a say in how it is used.
Also read Kenneth's Open Letter to the President