ABC Radio Australia 6 July 2009 Some are calling for reform of East Timor's government tender process following revelations that multimillion-dollar rice contracts were awarded to companies that had been linked to relatives of top ministers. The World Food Program and an East Timor food importer talk about the country's tender process - Steve Holland and Stephanie March An East Timorese food importer says he is concerned about the tender processes that led to the allocation of tens of millions of dollars in government contracts.
Radio Australia has revealed that 16 companies last year profited from government tenders - worth a total of $US56 million - to import thousands of tonnes of rice following warnings of a looming food crisis.
One of those companies was part-owned by Prime Minister Xanana Gusmao's daughter. Other contracts were awarded to companies connected to the wife of a senior minister.
Last week, during a press conference, four businessmen defended Mr Gusmao's involvement in the allocation of the contracts.
Now, the World Food Program and a prominent East Timor businessman have joined the opposition Fretilin party in calling for changes to the tender process.
Rui Castro has been the director of the East Timorese agriculture importer Caimaneloqui for seven years.
He says it is shameful that companies with far less business experience were awarded government rice contracts each worth $US3.5 million last year.
"The reason why the Prime Minister developed the project was to strengthen and develop national business people, but the leaders of companies and business groups misused this opportunity," Mr Castro said.
"The wrongdoing is on the shoulders of the leaders of those businesses, so that's why they are now so ashamed to hold meetings.
"They are ashamed, ashamed, and will always be ashamed forever."
Prima Food, of which the Prime Minister's daughter, Zenilda Gusmao, was a listed shareholder, was one of the 16 companies to secure a government contract to supply rice.
Documents obtained by Radio Australia show that Zenilda Gusmao had an 11.1 per cent stake in Prima Food when it became a licensed business in June 2008.
By the end of the year the company had won the contract.
But Prima Food is not listed in East Timor's 2009 business registry.
Mr Castro says it is good that the Prime Minister wants to support local businesses, but more transparency is needed in the tender processes particularly since East Timor is a small country.
"We're happy with the Prime Minister's decision to support local business people, but the goodwill of the Prime Minister was abused by some business groups," Mr Castro said.
"How could it be that the value of the tender was the same for everyone who won? Where's the logic in that? How come everyone won 3,516,000? This was not a tender, this was an appointment."
The World Food Program's director in East Timor, Joannes Flurent, says the government should fix any flaws in its tender process.
"I frankly don't know who they have contracted to, but of course it is better to use experienced companies," he said.
Mr Flurent added he was unsure how many experienced food importing companies exist in East Timor, and whether they were equipped to handle large quantities.
"But this whole tendering process - if there are any flaws - we would like the government [to] establish procurement procedures [and] tendering procedures in order to make the process better next time," he said.
East Timor's Fretilin Opposition is also calling for a review of the tender process.
Deputy Leader Arsenio Bano says after being unable to do so last week, his party on Monday expressed concerns in parliament about the rice scandal - and called for Mr Gusmao to resign.
"We actually asked for the Prime Minister to understand that he made a mistake, and that he should be responsible, and that he should resign from his position as Prime Minister," Mr Bano said.
He says the government party bench responded by defending Mr Gusmao.
"Some of them said it was normal. They said it's no problem that a member of family can participate in the process of tendering," Mr Bano said.
"Our issue is that there was no tendering. There was a distribution of contracts from the PM and awarded by the PM to companies that link to his own family and some families of members of government."
Mr Bano says he hopes Mr Gusmao will officially respond to the Opposition's concerns.
Image added by ETLJB: Artwork by Arte Moris