Mr Kenneth Jeyaretnam, secretary-general of the Reform Party, has filed an application in the courts to annul the Singapore Government’s pledge of a US$4 billion loan to the International Monetary Fund. (IMF) The IMF announced the pledges from various countries, including Singapore’s, on 20 April.
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.”
Mr Jeyaretnam is arguing that in making the pledge to the IMF, the Government has contravened the provisions in Singapore’s Constitution, namely that Parliament’s and the Elected President’s approval were not sought before the commitment was pledged by Singapore.
"The Parliamentary record shows that parliamentary approval was not sought," Mr Jeyaretnam said in his affidavit filed in the Court today.
We will have a more detailed report later today.
Five Letters and a Quashing Order
By Ng Jing Song
Kenneth Jeyaretnam, the Reform Party Secretary-General, has applied for a “Quashing Order” against the Monetary Authority of Singapore’s US$4 billion loan commitment to the International Monetary Fund (IMF).
This challenge filed to the High Court is not a lightning bolt out of the clear sky.
In April 2012, Jeyaretnam picked up on the IMF’s vote of thanks to Singapore for the latter’s US$4 billion contribution. This contribution was meant to bolster the IMF’s lending capacity as the Eurozone crisis roiled the global economic waters.
This contribution in turn roiled Jeyeratnam because the Monetary Authority of Singapore (MAS) allegedly failed to seek the approval of both Parliament and the President. The failure contravenes Article 144(1)(a) of the Constitution, which dictates that “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...”
Prior to this legal challenge, Jeyaretnam had mailed out five notable letters.
Two letters reached the desk of Tharman Shanmuguratnam, the Minister of Finance, Chairman of the MAS, and the head of the IMF’s policy advisory committee. The first letter clarified that the Reform Party’s opposition to Singapore’s commitment was not due to the loan’s riskiness. Rather, the issue at hand was the lack of accountability. It was a procedural objection. The second letter opened with the same query before delving into the alleged discrepancies spotting the National Budget. Both letters ran into a wall of silence.
Jeyaretnam managed to draw out a response with his next two letters to President Tony Tan. The first note to the President probed if approval had been sought before the US$4-billion pledge was made. More than two weeks later and thirsty for a reply, Jeyeratnam sent his second query to President Tan. He included the quip: “I received no response to [the earlier] letter which puzzles me considering the speed with which your gracious decline of [the Reform Party’s] invitation to the JBJ Memorial Event was received.” Jeyeratnam then learnt that the MAS had not sought presidential approval.
After four open letters to the Singaporean authorities, the fifth letter was bound for Washington D.C. Jeyaretnam laid out his education and financial credentials at the start of his letter to Ms Christine Largarde, the Managing Director of the IMF. In the letter, Jeyaretnam lamented that Singapore’s commitment was not undergirded by accountability, “the speed humps of democracy”. He also raised that this might be symptomatic of a larger problem: Tharman Shanmuguratnam’s multiple appointments, Jeyaretnam wrote, permitted the minister to “approve a loan to [the IMF] without any scrutiny back home and will not even provide transparency to its citizens”.
Should Largarde buy Jeyaretnam’s case, Singapore’s loan commitments could be annulled. However, there is a significant reason to believe that the IMF’s position will not jibe with Jeyaretnam’s stance. In the letter to Largarde, Jeyaretnam lamented the “unnecessary austerity” foisted on Singaporeans in order to amass the country’s sizable reserves. The IMF has traditionally lauded such austerity as fiscal rectitude: liberalising the labour market, trimming government spending on welfare, and running budget surpluses.
It appears that the odds are stacked against this particular recourse. Perhaps this explains the other recourse sought by Jeyaretnam: now in the High Court, an ex-hedge funds manager who graduated from Cambridge University with double First Class Honours and a Masters in Economics from Cambridge University wants a “Quashing Order” against a government lauded for its fiscal rectitude.
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