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In 2004 a little known but highly significant change in the law governing our reserves took place. Mr Lee Hsien Loong, then deputy prime minister, introduced a constitutional amendment to allow the Government to transfer funds from our reserves to Government-linked companies (GLCs) and statutory boards.
With one important addition: That such a transfer would not be deemed a draw on the reserves.
Apparently the Constitution had not allowed such transfers of our reserves to be made without the transaction being considered a draw on the reserves and, hence, requiring the approval of the elected president.
With the amendment is it the case that the Government can now make such transfers without the knowledge of the president and, more important, the public?
Then (as now) the SDP was the only opposition party to raise questions about the move. We released two statements on the matter, one on 26 Apr 04 and the other on 12 May 04. We pointed out the dangers of such an amendment and raised the following questions:
- How much is allowed to be transferred to any one company?
- Who will determine/approve the transactions?
- Under what criteria will the transfers be deemed necessary?
- Will it be guaranteed that the money will not be lost through the ventures conducted by the statutory boards and GLCs?
- Is there any provision to ensure that failed businesses are not bailed out?
- Is there a limit as to how much funds can be transferred to any one entity?
A lesser known fact was that there was another deputy prime minister in 2004. His name is Dr Tony Tan. Dr Tan is, of course, seeking the office of the presidency.
If Dr Tan becomes president he may have no knowledge of (or even if he did he would likely have no power to stop) the transfer of funds to GLCs under the present Constitution – a move that he helped enact when he was DPM. Can, and should, he be taken seriously as a candidate?
What if the Government decided to transfer all of our reserves to some of these companies? How would the president know?
For instance, were our reserves used to buffer the losses that Temasek Holdings incurred in the 2008 financial meltdown? Temasek had admitted that it had lost $70 billion in its investments that year. How are Singaporeans to know whether our reserves were tranferred to the GLCs under the stable of companies owned by Temasek? Does the current President, Mr S R Nathan, have any information on this and, if he does, is he willing to share it with the public?
In theory the president holds the so-called ‘second key’ to the reserves. In other words, he would have to assent to the drawing of our reserves by the Government.
But if the reserves are drawn and given to GLCs and statutory boards are now deemed not to be a draw of the reserves and if, such being the case, the president’s consent is not needed, then how is he going to know how much is in the vault? Would he know how much he is supposed to have oversight of when the cabinet can transfer funds without it being considered a reserve draw-down?
In other words, what exactly is the president guarding?
This is the question that the candidates must ask themselves if they are serious about getting elected and discharging their duties of the presidency.
More important, Singaporeans must not lose sight of the big picture which is that the elected president’s powers are dependent on what the PAP is or is not willing to confer upon him.
This means that the only real way to keep an eye on our reserves and check the PAP is to have a real opposition in parliament, one that will pay attention to such matters and one that is willing to ask the tough questions.
Without such an opposition, the PAP will continue to change legislation including amending the Constitution willy-nilly to suit its own needs.