East Timor's government rejects corruption claims
Steve Holland and Stephanie March
East Timor's government has defended Prime Minister Xanana Gusmao's authorisation of a multi-million dollar contract to a company in which his daughter was a major shareholder.
The government says it's taking action to eliminate corruption in government and parliament on Monday approved plans to establish an anti-corruption commission in East Timor.
Calls for investigation into PM's office
But the leader of the National Unity Party, MP Fernanda Borges has told Radio Australia's Asia Pacific program the new commission's first task should be an investigation into the Prime Minister's Office.
An investigation by Radio Australia found Prime Minister Xanana Gusmao signed-off on a multi-million dollar government contract to a company in which his daughter was a major shareholder.
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.
Government responds to corruption allegations
On Saturday, the East Timor Government released a statement:
"On June 26, 2009, a story by the Australian Broadcasting Corporation (ABC) titled 'Gusmao faces corruption claims' was circulated in print, television and radio, aired in Australia and throughout approximately 46 countries throughout their Asian Pacific network," it said.
"While we welcome the interest of the ABC in reporting on Timor-Leste, we would ask for better due diligence in ensuring the facts are correct before misinformation is widely disseminated.
"There are several inaccuracies in the reporting, especially when referencing the laws of the Constitution which seem to be the basis of the corruption allegations."
The statement was issued by Agio Pereira, Secretary of State for the Council of Ministers and Official Spokesman for the 4th Constitutional Government.
It continues, to declare that the Prime Minister has not broken the law:
"Shortly before leaving office Fretilin enacted the statute of holders of sovereignty bodies (Law 07/2007)"
"The law addresses guidelines for business interests amongst a range of other inclusions."
"The Constitution of the Republic of Timor-Leste states that the Sovereign Bodies are the President of the Republic, the National Parliament, the Government and the Court.
"These entities, and the members thereof are not considered "agents of the administration" or "public bodies" under the Timorese Constitution.
"Since the Fretilin Government was responsible for writing and enacting all the aforementioned laws, they would be well aware that no corruption has taken place and should have been transparent with the Australian Broadcasting Corporation."
But the leader of the National Unity Party and former Finance Minister, MP Fernanda Borges says that statement is a weak excuse.
"Well that is a very convenient interpretation of our constitution," she says.
"I'm very unhappy the government interpreted in that fashion because that shows denial of responsibility for acts which members of the government have the responsibility to ensure that contracts anything the government does is done with transparency and is not in the interest of any family member."
Fernanda Borges who is also the Chairperson of East Timor's Constitutional Committee says legislation to enact East Timor's Anti-Corruption Commission passed through Parliament Monday afternoon.
She says the Commission's first directive should be an investigation into the Prime Minister's authorisation of the multi-million dollar government contract to Prima Food.
"And the Prime Minister in signing them should be very, very aware himself that he was awarding very healthy big contracts to his own daughter who is a shareholder of this company," she said.
"That is highly unacceptable, highly irregular in any democracy."
Fernanda Borges has added to calls for an investigation into the rice contract scandal.
Concern about new watchdog
But one watchdog organisation has voiced concerns about the new corruption commission's ability to function effectively.
The non-government organisation La'o Hamutuk, which has been working in East Timor since before the country gained independence has reiterated concerns that the commission would make East Timor more vulnerable to corruption.
East Timor's Deputy Prime Minister Mario Carrascalao has told Radio Australia there will be inquiries into the rice contract scandal, while the Fretilin Opposition says it will be calling for answers when Parliament sits on Tuesday.