Indonesian loan 'does not go against constitution'

THE Government has dismissed claims by Mr J. B. Jeyaretnam that it breached the constitution in not consulting parliament or the elected president when it granted a US$5 billion (S$7.9 billion) loan to Indonesia recently.

A statement from the Finance Ministry yesterday said it was Mr Jeyaretnam, a Non-Constituency MP, who had misinterpreted the constitution.

"The Workers' Party secretary-general has misinterpreted the constitution. He should re-read Article 144. If he finds difficulty understanding the words, he should consult another lawyer, preferably a senior counsel," the statement said.

Finance Minister Richard Hu had explained in parliament on Wednesday that Prime Minister Goh Chok Tong had made the decision to grant the loan "in consultation" with his senior advisers, including Senior Minister Lee Kuan Yew, the Deputy Prime Minister and Dr Hu himself, and that the decision was approved by the cabinet.

Mr Jeyaretnam described this in a press statement on Thursday as a "startling revelation" and criticised the "casual way" the decision was taken. He said the Government had contravened the constitution as it had not sought approval from parliament or the president before granting the loan, and demanded a full explanation from the cabinet.

He based his claim on Article 144 (1) of the constitution, which states: "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."

Responding to the charges yesterday, the MOF said Mr Jeyaretnam's interpretation was "completely wrong".

"Article 144 applies only to the giving of guarantees or the raising of loans by the government, and not the giving of loans to others," it said. It noted that the sentence "no guarantee or loan shall be given or raised by the government..." was a sentence with more than one subject and more than one verb.

"In such cases, the provision must be read reddendo singula singulis, that is, to render each to each, applying each verb to its appropriate subject," it said, adding that this was confirmed by attorney general Chan Sek Keong.

This interpretation is borne out by the wording in Article 144 (2), which elaborates on the scope of Article 144 (1), it said.

Article 144 (2) confers on the president the power to veto any Bill providing "for the borrowing of money, the giving of any guarantee or the raising of any loan by the government" if, in his opinion, past accumulated reserves are likely to be drawn upon.

In the AG's written opinion to the Acting Minister for Law, which was also released to the media, the proper construction of Article 144 (1) was that "no guarantee shall be given and no loan shall be raised by the government" without approval from parliament and the president. These words did not apply to the loan to Indonesia, the AG said.

The MOF concluded: "There is no reason for the government to act ultra vires in granting the loan to Indonesia. It is a perfectly proper decision within the executive's prerogative."

Ultra vires means acting beyond authority.

In his written opinion, the AG also said Mr Jeyaretnam was wrong to argue that since Article 144 was introduced only in 1991, previous parliamentary or presidential approvals for the purchase of Indonesian equities and assets were no longer valid.

The AG said that these approvals, mentioned by Dr Hu in parliament, had nothing to do with Article 144. They referred to approvals given under the Financial Procedure Act in 1986 and the Monetary Authority of Singapore Act in 1980, and continued to be in effect until revoked.

The AG's conclusion: "Mr Jeyaretnam's arguments contained in the press release have no merit."

Published in the Straits Times. November 22, 1997