Mismanagement highlighted in East Timor

Contracts with a Chinese company lead critics to blast government for alleged poor procurement policies.

Despite its hydrocarbon wealth, East Timor is one of the poorest countries in southeast Asia [EPA]

Dili, East Timor – East Timor’s government has come under renewed public criticism after granting a contract to a Chinese state-owned company to supply furniture to Timorese schools.

The contract of just over $1m is relatively small for a country with oil and gas wealth, but its significance is larger. In 2008 the prime minister, Xanana Gusmao, granted the same company a $300m contract – the largest in the nation’s history at the time – to build East Timor’s power plants and national electricity grid.

The company, Chinese Nuclear Industry Construction Company No. 22 (CNI22), was widely criticised for its failure to fulfill the terms of the contract, and a big portion of the work had to be reassigned to a different company, increasing the cost by hundreds of millions of dollars and delaying the project for several years.

“We hope that they will never receive another contract from East Timor,” a government watchdog group, La’o Hamutuk (Walking Together), wrote in an October 8 letter to the chairman of the National Procurement Commission.

“The project was seriously flawed in concept, design, implementation, community relations, and quality of work,” the group wrote. “The company repeatedly failed to meet its commitments regarding keeping on schedule, quality of materials, employing Timorese workers, worker safety, and environmental management. They refused to comply with directives from the supervising consultant and others.”

A December 2008 cable later released by Wikileaks from then-US Ambassador Hans Klemm informed Washington: “The decision to award the contract to the Chinese firm again was made by the prime minister with very little consultation with line ministers.”

The prime minister’s choice follows Beijing’s long history of generous aid to East Timor, including the donation of three Chinese-constructed government buildings in the capital city of Dili – a presidential palace, a defence headquarters, and a ministry of foreign affairs building.

The awarding of another contract to CNI22 this month revives questions about the government’s relationship with the company. Critics ask: Why would it buy school tables and chairs from an international construction company? Why would it import the furniture, instead of patronising local suppliers – thus generating employment and keeping money in the country? A spokesman from Gusmao’s office did not to respond to requests for comment.

Lack of transparency

Longtime Timor observers say a limited tendering process for government contracts often results in inefficiency, mismanagement, and corruption.

“This lack of transparency is becoming much more problematic,” said Damien Kingsbury, a professor at Deakin University in Melbourne who blogs frequently on East Timor issues. “If the government is serious about combating corruption, it needs to increase transparency and subsequent accountability.”

East Timor coffee brews little profits

Critics say a culture of corruption pervades East Timor’s fragile democracy, from a lack of transparency at the highest levels of government to an expectation among some journalists of payment in exchange for news coverage. With oil and gas revenues allowing increased spending – the annual budget rose from $600m five years ago to $1.6bn today – government leaders have the resources to splurge on the trappings of power.

Mari Alkatiri, a prime minister from 2002 to 2006 and later an opposition leader, said of corruption among top leaders: “We know each other. We know who was poor two years ago and suddenly became rich. There’s no miracle here.”

Frequently cited examples of spending abuses include generous housing, travel, and other allowances for government ministers, and lifetime salaries for newly elected members of parliament before they even finish their first term.

Accusations of corruption, collusion, and nepotism are commonplace. Finance Minister Emilia Pires is currently under investigation by the country’s Anti-Corruption Commission for allegedly steering a government contract to her husband’s firm, while former Justice Minister Lucia Lobato is in prison after her conviction for tendering a government contract to her husband.

The US embassy and NGOs list anti-corruption initiatives as a top priority in the country. East Timor currently ranks 113th out of 174 countries in Transparency International’s annual Corruption Perceptions Index.

The challenge of self-governing is in many ways proving more difficult than the quarter-century-long fight for independence, particularly for a new country building its democratic traditions and institutions from scratch. Many Timorese like to consider Gusmao, a resistance-era hero who spent time in an Indonesian prison, somewhere between their Nelson Mandela and Che Guevara. But others consider his leadership style to be aloof.

The country’s other famous resistance-era hero – former president and Nobel laureate Jose Ramos-Horta – lives and works in Guinea-Bissau as a special United Nations envoy, and declined to comment for this story, citing his physical distance from the country.

Resource curse?

East Timor became Asia’s newest country in 2002 and remains among its poorest. A petroleum fund set up as a kind of trust fund is now worth close to $14bn, but many worry that what economics call the “resource curse” will see the country lose its newfound wealth to waste, inexperience, and corruption, as have other countries such as Angola and Zimbabwe.

Petroleum from the Timor Sea provides 95 percent of the country’s state revenues and 80 percent of GDP. The International Monetary Fund calls East Timor one of the most oil-dependent economies in the world.

The country’s oil wealth is not reaching the bottom half of the population that lives below the poverty line of $1.33 a day, but more importantly, it is not going to productive social investment, watchdogs say. By failing now to fund education, healthcare and infrastructure, the country is not positioning the economy well for the day when the oil runs out. For example, spending on education is lower than on generous veterans’ benefits for the resistance fighters (and their families) who expelled Indonesian occupiers in 1999.

Groups like La’o Hamutuk say that ultimately, it’s up to East Timor’s government to thwart corruption.

Source: Al Jazeera