East Timor's president won't intervene in corruption scandal

Steve Holland and Stephanie March

Last Updated: Sat, 27 Jun 2009 10:43:00 +1000

East Timor's president Jose Ramos Horta has distanced himself from a scandal involving the country's prime minister, Xanana Gusmao.

President Ramos-Horta says it is not his business to intervene.

Prime Minister Gusmao signed-off on a multi-million dollar government contract to a company in which his daughter was a major shareholder.

An investigation by Radio Australia has found Prima Food last year won a government contract to supply rice worth $US3.5 million.

Zenilda Gusmao, the prime minister's daughter, is listed as a Prima Food shareholder in East Timor's 2008 business registry.

Radio Australia has also confirmed that the wife of another senior minister has profited from government tenders.

The country's procurement law bans 'agents of the administration', politicians and bureaucrats from awarding government contracts to businesses associated with close family members.

The Deputy Leader of the opposition Fretilin Party, Arsenio Bano alleges it is a blatant example of corruption in the Prime Minister's Office and called for the Prime Minister's resignation.

"It's absolutely a strong indication of corruption, he has violated Timor Law, and before it goes to the courts the prime minister should resign," Mr Bano said.

Prime Minister Xanana Gusmao was unavailable for comment. The prime minister's daughter, Zenilda Gusmao, declined to comment.

However, a spokeswoman for the government confirmed to Radio Australia that Zenilda Gusmao was a shareholder of Prima Food.

In a statement, the spokeswoman said: "The government has always been transparent on these contracts and went to enormous lengths to establish a fair and equitable environment for the private sector."

Arsenio Bano said he has approached the government on a regular basis since December last year, seeking information about companies linked to people related to ministers, but the government refused to supply the information.

"Even when we ask for a simple request, such as a request about how much rice is being transported into Timor...they ignore Parliament," he said.

More government links

Zenilda Gusmao is not the only businesswoman in East Timor with a close relative in government.

Kathleen Goncalves, wife of East Timor's Minister of Economic Development, Joao Goncalves, is connected to at least three companies that have been awarded multi-million dollar government contracts approved by the Prime Minister.

Those three companies connected to Kathleen Goncalves: United Foods Lda, Belun Feto Lda (both listed under Kathleen Goncalves' Chinese name, Fon Ha Tchong) and Tres Amigos were last year awarded more than $US11 million worth of government contracts.

Mrs Goncalves declined an invitation to be interviewed, but in a statement a spokeswoman for the East Timorese government defended her involvement.

"She (Kathleen Goncalves) has been in business in Timor since 1999 importing rice and was an authorised vendor for previous governments [sic], including the Fretilin Government and the Gusmao Government," the statement said.

Kathleen Goncalves' husband, Joao Goncalves, said he did not know the names of his wife's companies or which ones had secured multi-million dollar government contracts.

The companies connected to Kathleen Goncalves, along with Prima Food, are listed on a government list of 16 businesses that last year secured government rice contracts worth $US56 million.

That money came from the country's Economic Stabilisation Fund and was distributed as part of food security measures aimed at ensuring the population had sufficient rice supplies.

Prime Minister Xanana Gusmao played a key role in his country's 25-year struggle for independence from Indonesia.

Mr Gusmao became East Timor's first president in 2002, and was elected prime minister in 2007.

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