Timor-Leste/FRETILIN welcomes government MP's call for inquiry into Ministry of Finance malpractice

MEDIA RELEASE

Dili, Thursday 2 April 2009

FRETILIN welcomes government MP’s call for inquiry into Ministry of Finance malpractice

FRETILIN today welcomed a call by the two biggest parties in Timor Leste’s ‘Parliamentary Majority Alliance’ (AMP) government for an inquiry into apparent corruption and nepotism in the Ministry of Finance.

Two AMP chiefs – the Democratic Party’s (PD) deputy leader, Rui Menezes and the Social Democratic Party’s (PSD) leader, Fernando Gusmão – on Tuesday (30 March) called for a parliamentary committee to inquire into the controversial recruitment of national directors for the ministry, including the involvement of politically-appointed Australian advisors.

“Mismanagement of the Finance Ministry is so serious that even the AMP’s own parliamentarians will tolerate it no longer,” said FRETILIN MP and Party Vice President, Arsenio Bano, today.

“FRETILIN as the largest party in parliament has been calling on the de facto Minister of Finance, Ms Emilia Pires, to answer allegations of corruption and nepotism for almost a year now, including allegations of jobs for ‘mates’ from Australia employed on hugely inflated salaries,” Bano said.

He said that on Tuesday PD deputy leader Rui Menezes expressed particular concern that a selection panel composed almost entirely of foreign advisors and non-public service political appointees decided the futures of senior civil servants who had served the ministry since 2002.

Mr Menezes added that following the panel’s interviews with the applicants, a list of successful candidates was published on 26 March. However a conflicting list was published the following day, which omitted previously successful candidates and added new ones.

Some of the people named on the second published list of successful candidates had not even applied for the positions, Mr Menezes said.

He said Minister Pires should be called before parliament to explain, and called on her to cancel the recruitment process and start afresh.

Mr. Menezes has previously raised complaints in parliament of the minister’s political appointment of an Australian taxation official, Mr. Graham Daniels as Director General of the ministry’s Customs Division. He has questioned the Minister’s motives for the
appointment, as well as Mr. Daniels’ alleged mistreatment and verbal abuse of Timorese national directors and staff.

Also on Tuesday PSD leader Mr. Fernando Gusmão called on Ms Pires to explain to parliament what he criticised as “a practice of growing collusion, corruption and nepotism in the Ministry of Finance.” Mr. Gusmão used the Indonesian acronym “KKN” to describe evidence of increasing corruption in the ministry.

Both Mr. Menezes and Mr. Gusmão also criticised the large number of politically-appointed advisors and other bilateral and multilateral–funded consultants, mostly Australian citizens, including an Australian pathology nurse who is an advisor in the ministry.

Mr Bano said Minister Pires had repeatedly failed to respond FRETILIN’s requests to provide parliament with details and copies of contracts with these consultants and advisors.

“We don’t have anything against Australians, but we do object to ministry appointments on the basis of who you know and not what you know,” Bano said.

He said FRETILIN would ask parliament to formally investigate the ministry’s recruitment processes and would expect support from members of the AMP.

The Australian newspaper on January 16 2009 in a report headed “Timor officials 'took' $13.3 million” said: “An urgent search is underway in East Timor for $13.3million that was allocated to various government ministries but is unaccounted for, amid growing corruption concerns.”

Mr Bano said minister Pires had failed to explain what happened to these missing millions, despite having promised to do so by the end of March 2009.

Note: FRETILIN Media Release of 16 December 2008 is reprinted below. For further information contact José Teixeira on +670 728 7080 or Arsenio Bano on +670 741 9505

Timor-Leste/Gusmao's $15m rice deal alarms UN

Mark Dodd

The Australian - July 07, 2008

East Timor Prime Minister Xanana Gusmao has signed a $US14.4 million ($14.9 million) food security contract giving sole import rights to the vice-president of his political party - a deal that is ringing alarm bells at the UN and among the impoverished country's main donors, including Australia.

Dili-based diplomatic sources said they had strong concerns about the deal, seen as a blow against efforts to improve governance and transparency in one of Southeast Asia's most troubled and poorest countries.

Speaking on national television on Saturday night, Mr Gusmao defended the contract, saying it would ensure food security for the country at a time of need.

A copy of the contract signed on May 7 - entitled "The Supply and Warehousing of White Rice" - which has been obtained by The Australian, shows Mr Gusmao's signature authorising the procurement of 16,000 tonnes of white rice for $US14.4 million.

The beneficiary is given as Germano AJda Silva, director of Dili-based Tres Amigos Company and vice-president of Mr Gusmao's CNRT party.

The contract is an amendment to an earlier procurement for 8000 tonnes of rice for a price originally set at $US4.08million.

"The Ministry of Finance Procurement Service hereby declare the following amendments to the above mentioned contract," it says. "The contract price is hereby changed from $US4.08 million to $US14.4million.

"The price increase has resulted from changes to the contract quality and unit price."

The opposition Fretilin said yesterday the rice contract was evidence of growing corruption involving the Prime Minister and close associates.

Fretilin's Arsenio Bano - who sits on the parliamentary committee for financial oversight, defence, national security and foreign affairs - said in addition to conflict of interest concerns, the deal had major national budget implications for this year.

Mr Bano alleged that Mr da Silva had been involved in an earlier case of misappropriation of public monies in 2000 in which Mr Gusmao was forced to replace a $US20,000 accounting shortfall in his then presidential office with his own money.

The latest allegations are a blow to the image of Mr Gusmao, a celebrated former leader of the pro-independence FALINTIL guerilla force that spearheaded the territory's bloody 24-year struggle to separate from Indonesia. Like many guerilla leaders turned politicians, Mr Gusmao, while personally popular, has shown himself to be less adept at public administration.

"The Prime Minister said on the weekend on national television that he prefers not to let the people of East Timor starve of rice." Mr Bano said. "But this statement is very concerning for us because it could be seen to be promoting even wider conflict of interest and collusion.

"What does this statement promote as an example for the other ministers?"

It is understood that the UN's World Food Program, US and Australian embassies in Dili have raised concerns about the deal following several other contentious multi-million-dollar contracts, including the procurement of Chinese patrol boats and two heavy fuel-oil powered electricity plants.

To cover these and other contracts, the Government has sought a supplementary budget increase for 2008 of more than 122 per cent, up from a parliamentary approved $US425.5 million to $US773 million.

According to Mr Bano, the Government has shown an inability so far to spend even a fraction of its original budget allocation and moves to raise more money from the public coffers are matters of extreme concern.

"What we are very concerned about is the Government's capacity to spend this money properly. Between January and March this year, the Government spent only $US32million - that is just over $US10 million a month," he said. "Why on earth would they now be wanting an extra $US425 million?"