29/06/09 ABC News By Steve Holland and Stephanie March (Reuters: Gary Ramage/Pool) - 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 is taking action to eliminate corruption and on Monday approved plans to establish an anti-corruption commission.
But the leader of the National Unity Party, 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 Mr Gusmao signed off on a deal with Prima Food last year for it 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.
On Saturday, the East Timor government released a statement.
"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," it said.
"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, the Secretary of State for the Council of Ministers and official spokesman for the Fourth Constitutional Government.
It also declares that Mr Gusmao has not broken any laws under the constitution that address guidelines for business interests.
But Ms Borges says the government has chosen a convenient interpretation of the constitution.
"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 anything it does is done with transparency, and is not in the interest of any family member," she said.
"And the Prime Minister should be very, very aware himself that he was awarding very healthy contracts to his own daughter who is a shareholder of this company," she said.
"That is highly unacceptable, highly irregular in any democracy."
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.