Mr Kenneth Jeyaretnam, Secretary-General of the Reform Party, has filed an application in the High Court to quash the Singapore Government’s pledge of a US$4 billion loan to the International Monetary Fund (IMF). The IMF announced pledges from various countries, including Singapore’s, on 20 April 2012.
Mr Jeyaretnam is seeking the Court's leave to make an application for a Prohibiting Order "prohibiting the Government and/or the Monetary Authority of Singapore (MAS) from giving any loan and/or guarantee to the International Monetary Fund unless such loan was made in accordance with the provisions of Article 144 of the Constitution."
He is also seeking the Court to grant leave to apply for a Quashing Order “quashing the Government and/or the MAS’ decision to make a US$4 billion loan commitment and/or guarantee to the IMF for contravening the provisions of Article 144 of the Constitution.”
Article 144 of the Constitution states that
(1) No guarantee or loan shall be given or raised by the Government —
- except under the authority of any resolution of Parliament with which the President concurs;
- under the authority of any law to which this paragraph applies unless the President concurs with the giving or raising of such guarantee or loan;
- or except under the authority of any other written law.
In the affidavit in support of his application released to TOC, Mr Jeyaretnam contends that “The Parliamentary record shows that Parliamentary approval was not sought”. It also notes that the Minister of Finance, Mr Tharman Shanmugaratnam failed to respond to several open letters written by Mr Jeyaretnam raising the questions.
Mr Jeyaretnam highlights that while a letter he wrote to President Tony Tan was answered, it referred his letter to the Monetary Authority of Singapore (“MAS”). Mr Jeyaretnam, in his application, contends that this proves that Presidential approval has also not been sought as “the MAS is merely the manager of the official foreign reserves on behalf of the government and not the owner of the reserves”.
The implication of Mr Jeyaretnam’s argument is that “the IMF cannot rightly accept these funds. At least not until the citizens in the Republic from whence it originated have received an assurance that the proper democratic and constitutional steps have been followed.
Mr Jeyaretnam proceeds to make the point that “In a robust democracy, a government does not hide behind technicalities and dispense with the need to make itself accountable to the people for the use of their money”.
Apart from the Constitutional argument advanced in the application, Mr Jeyaretnam raises a more fundamental question of transparency. He notes that Singapore has no Freedom of Information Act and notes that only a solitary question on the loan was advanced in Parliament, a “carefully scripted and stage-managed exercised dispensed within minutes”.
The affidavit further highlights the disparity between the manner in which Singapore’s support for the loan was announced without caveat whereas countries like Russia, India, China and Brazil made private pledges but held discussions on the loan in their home countries.
The affidavit concludes by highlighting the connection between domestic checks and balances on the use of public finances:
“Without accountability there is real danger that these forced savings, which cause real hardship for many poorer Singaporeans, could be dissipated through poor investment returns before we can do anything about it. This is not merely an idle academic exercise. It was not so long ago that Greece’s accounts were shown to have been manipulated.
This brings us in a neat circle back to one of the reasons the IMF needs that firewall in the first place”.
The jury is still out on whether Mr Jeyaretnam’s application will succeed: the track record of public interest litigation in Singapore is dispiriting.
However, win or lose, Mr Jeyaretnam has made a point that will probably have politicians, economists, and lawyers in Singapore and beyond sitting up in the months to come.
The author of this piece prefers to remain anonymous due to potential professional conflict issues.