06 September 2009

Media war over Timor-Leste's 'Ricegate'

Thursday, 3 September 2009 Internet Exclusive Media war over Timor-Leste’s ‘Ricegate’
Media war over Timor-Leste's 'Ricegate'04/09/0 Opinion from Arsenio Bano MP, FRETILIN, +670 741 9505 - Media Watch has been an outstanding source of advocating for the upholding of higher ethical and accountable media standards. I watch it whenever I visit Australia and it is aired.

I have had the benefit of reading the full transcript of the segment on "Ricegate".

I would like to raise some matters here that lead to some further inquiry, and which I venture to say might have lead to inquiry as the program was being researched in the lead up to its airing.

It is clear that MW has relied heavily on matters published in Tempo Semanal in early August 2009. Tempo Semanal is a weekly publication that is highly regarded my parliamentary colleagues and I, who are just some of its wide readership in Timor-Leste. It has been courageous and a leader in airing allegations of official corruption, nepotism and misconduct. It is generally loathed as has been consistently attacked by the government side in the National Parliament.

However, on the issue of the publication of the purported "commercial registration documents" for Prima Foods, it reported very cursorily on the documents in question. There was no real legal and or other critical analysis of the documents even on their own face. This made MW's reliance on the documents and the Tempo report as the basis for its criticism of Holland very untenable and unfair.

From my reading of the full text of the article in question, I only saw one mention of a 'resignation' as a shareholder and or director by Prime Minister Xanana Gusmao's daughter Zenilda. That was not by Tempo Semanal, but by Mr. Epifanio Faculto, from the government registry. Tempo Semanal even in its title asked the question 'Did Zenilda pull out?' Though the term 'resignation' was used by the business group that held a press conference in Dili in support of the Prime Minister on 1 July 2009.

Lets look at what the businessmen supporting Gusmao had to say, and how it was reported:

Julio Alvaro (translation): after she got information from the government which said that according to the procedures the daughter of the Prime Minister should not get any contracts, she submitted a letter of resignation to her colleagues in the same company.

Alison Caldwell: when asked for evidence to support the claims, the businessmen abruptly terminated the press conference.

— ABC, Australia Network News, 1st July, 2009

Note Mr. Alfaro said "submitted her letter of resignation to her colleagues in the company." The company never officially communicated a "resignation" and no "resignation" letter has ever been made public, an easy step to help convince us all of the purported resignation.

However, we note that the reporting by ABC was not just about Zenilda Gusmao, but also Kathleen Goncalves, wife of the Minister for Economy and Development Joao Goncalves and Carminda Carlota, the daughter in law of the Prime Minister. This seems to have all been by-passed by the attention given to the other issue. Those are serious legal questions also affecting the Prime Minister and other members of his government.

The documents published in Tempo Semanal as purported evidence of Zenilda Gusmao having resigned was the letter from the company's shareholders to the Minister on 12 September 2008.

The MW segment quoted shareholder Ms Rangel as having said she received the resignation letter herself. But this was not what she and 6 out of 8 of the shareholders formally stated in a signed letter to the Minister for Commerce, Industry and Tourism as being the reason for Zenilda Gusmao having allegedly severed her links with the company Prima Foods.

The letter adds that Ms Gusmao could no longer participate as a member of the company "because during this time she has not been active in the meetings or active in the activities of the company Prima Foods and we as company members of Prima Foods will buy Ms Zenilda E B Gusmao's shares…."

The published document communicates an "expulsion" from the company, not a "resignation", as claimed by Mr Julio Alvaro and Ms Rangel, or as relied upon by MW.

The authenticity of the documents is also in question.

Mr Fernando Hi has only been the director of Domestic Trade of the Ministry of Tourism, Commerce and Industry since January this year. The Director prior to January 2009 was Mr Epifanio Faculto, whose signature appears on the top right hand corner of the 11 September 2008 registration form.

As MW found, Mr Faculto is hard to contact. Perhaps this elusiveness is related to serious investigations in progress regarding Mr Faculto's alleged mismanagement and fraud involving the theft of large amounts of subsidized rice from the government warehouses.

Mr Hi can attest to the documents being there on the files now, but he cannot say that they are authentic to the extent of their timely lodgment or otherwise.

However, no "amended Certificate" for Prima Foods was issued for the remainder of 2008, as is usually the case, omitting Ms Gusmao's name, according to our investigations. It is hard to generate a company registration certificate because there is a wider group of people involved within the civil service and there is an electronic trail that is left behind.

When the Prime Minister returned from urgent medical treatment in Singapore for a back condition that flared up after these allegations surfaced, the Prime Minister held a media conference during which he had the opportunity to put the record straight. However, he not once mentioned a resignation by his daughter. He did challenge his critics, including the Opposition. Tempo Semanal reported part of his media conference as follow:

"They (The Business people) requested my daughter to put US$ 10,000.00 in the bank. In her company each shareholder had to invest US$10,000.00. Each had to submit US$10,000.00. I just want to ask them to understand a little bit more, that if my daughter used her social status, in brackets, then came to lobby me on behalf of other companies to supply (rice), and then she got some percentage in return, this means I have done wrong. This is a different case and for such conduct I will raise my hands (gesturing surrender)"................... said Xanana in a press conference at Dili Airport. He continued explaining the process of the rice contract. "The Government wanted all business people to participate and I told them I don't want to use a single person shareholder Company. If all of you (Business people) agree, that will mean for each company there will have to be a minimum joint venture of five people. All you business people gather yourselves, then we will decide. Now we have the economic stabilization fund for those who can import first (rice) with how many (tons) and take how many months, who will be bringing what rice and (Rice Quantity) in how many months? And who else can import these amount (rice) and until such months? There were 17 companies involved, not only the one belonging to my daughter. From the 17 companies, each company involved many, many people," explained Xanana.

Even the Prime Minister in mid-July did not refer to a resignation. In fact, he confirms that "there were 17 companies involved, not only the one belonging to my daughter," and seeks to justify that her shareholding alone did not amount to any wrongdoing.

The alleged resignation letter from Zenilda Gusmao has never been presented to anyone, not even the relevant ministry when a request to amend records was sent.

Then there is also the applicability of the company law. According to the Timor-Leste Company Law a resignation by a member of a company only becomes effective after the expiration of three months after the date on which it occurs and the companies official registry is notified. This would place the date of effective resignation as about the 11th of December 2008, a date after the contracts were signed and became legally binding.

Article 173 of the Law 4/2004 on Companies stipulates that resignations only become effective after the expiration of a period of 3 months:

3. Resignation only becomes effective at the end of the annual accounting period in which the respective communication is made, but never sooner than 90 days from the end of such accounting period.

This provision was designed to enable creditors of companies and remaining members to have a time period in which to make claims regarding their rights against the resigning member. Simply put, it is a provision to ensure the gate remains closed so the horse does not bolt until all of the resigning members affairs vis-a-vis the company and its creditors are in order.

The letter published in Tempo Semenal purporting to request the Minister to amend the records did not have legal effect. The issue of "removal" of a shareholder, as the letter stated pursuant to article 18 of the company's statutes, is very serious. It involves the extinguishment of legal proprietary rights. In the case of shareholdings it also involves the transfer and payment of money.

Given that not all the members/shareholders of the company signed the letter from Angelica Rangel purporting to "remove" Ms Zenilda Gusmao as a member of the company the only thing that can be said is that it did not legally demonstrate or communicate that it was an act agreed to by all shareholders. That is obvious from merely looking at the document, and seeing that neither Nelcy Funai nor Maria de Fatima signed the letter as is self evident looking at the signature page of the letter dated 12 September 2008.

One has to question why these two members' signatures are omitted to begin with? But the legal implications are clear and the Minister who instructed the registry to amend the records may have breached the law and induced others to breach the law.

There is also the question of whether Ms Rangel knowingly supplied false information to amend the records regarding the company. Her claim of a "resignation" contradicts what she and the other members wrote in the letter to the Minister date 12 September.

There is a final peculiar point about the letter and the documents produced in an attempt to convince us all of a purported "resignation". The Minister is said to have received a letter requesting the amendment on 12 September 2008 and dispatched instructions to his Director of Domestic Trade the same day to: "Adjust this business documents pursuant to the change in new members, as requested in this declaration!" This handwritten note is dated 12/09/2008. Yet the signature notation by the Director of Domestic Trade, Epifanio Faculto endorsing receipt (and according to our information from staff at the registry - endorsing approval for action on registration of the particulars noted on the form) was the preceding day, 11 September 2008.

Finally, there is the case of how the alleged violation of the procurement law and the law on constitutional officeholders prohibiting certain companies in which the relatives of those officeholders hold shares in the prescribed manner. The relevant period is the time when it was decided to award the contract to the company and not the time the relevant contract was signed by both parties and became legally binding. The adjudication of the contracts on the statements of all concerned occurred sometime after June but before even 11 September 2008.

Neither the Tempo Semanal article, nor MW who relied on it, made any such critical analysis.

Since early 2008 when the rice scandal began FRETILIN as well as other opposition parties in the parliament have formally requested documents regarding the procurement and the contracting for the supply of rice from the government. These are documents that the parliament and its members are usually entitled to have access to as it is the parliament's constitutional role to oversee the execution of the government budget. It is also the law.

However, the government has simply ignored repeated attempts, just as they have done with regard to the secret oil and gas deals over the Greater Sunrise field development, the Patrol Boats acquired without tenders from the Chinese, the second hand heavy fuel oil power stations, and other such things.

It is high time that this scandal that the government itself has called "Ricegate" be fully investigated. The President of the Republic himself requested in a letter dated 2 June 2009 that the Provedor (Ombudsman) for Human Rights and Justice investigate the manner in which rice contracts were awarded.

The President's letter said that the President had received many expressions of concern of "maladministration and peddling of influence" regarding the rice contracts, and that "the contracts for the supply of rice were given by a closed process that did not involve bidding, and that involved collusion and cases of corruption." He requested the Provedor to investigate it urgently.

Currently, FRETILIN and MPs from KOTA, PPT, PUN, ASDT have submitted a resolution to establish a parliamentary inquiry into the whole rice supply issue. The commission of inquiry is to be composed of MPs from all parties based on their proportional representation in the parliament, which will have the legal power to summons witnesses and documents.

It is best that this whole Ricegate fiasco be dealt with within that context.

ABC News has been accused of trying to 'get' Mr Gusmao by ignoring some points of inquiry, but MW missed a few, which is understandable because they were doing it without someone on the ground.

MW reported:

And one of the two women who are listed as having bought Zenilda Gusmao's shares in Prima Food, Angelica Rangel, told Media Watch today:

"At the time we signed the contract with the government, Zenilda had already resigned so she did not see any of the money from the contract. The documents... are authentic. I was the one who received the letter of resignation on September 11th."

— Statement from Maria Angelica Rangel da Cruz (Prima Food Ltd shareholder) to Media Watch, 15th August, 2009

Now let's see. She received the resignation on 11 September. The following day most of the other members of the company signed the document, and notified the Minister. The Minister dispatched the instructions all on the same day, except that Mr Faculto appears to have preempted his Minister and the formal request letter by doing everything on the 11th of September. Ms Rangel is a full time employee of the Portuguese bank BNU-CGD. That must have taken some effort. Those who do business in Timor-Leste know very well island time would make that swift execution quite incredible, especially having a Minister, this Minister as a matter of fact, turn documents around so quickly.

Since the AMP government took office, Ms Rangel has obtained a number of government contracts. Her company is currently contracted to construct the wall and other installations in Dili's new cemetery at Becussi. She would definitely not want to put any future tender prospects at risk.

It appears that Media Watch did not ask where the resignation letter she received was. Given that this letter has never been made public and that "resignation" was not the reason officially communicated to the Ministry, it appears that MW was relying on information provided by others who misled them. That is a fair conclusion to draw from this.

Unlike "Utegate", this "Ricegate" has a long way to go yet. Indeed, FRETILIN as an Opposition simply wants to hold the de facto Gusmao government accountable for the millions spent on rice imports. Our concern is the same as the President's and others'. We praise all efforts by media outlets to move us in this direction and condemn any media blackouts or shut downs. That could only perpetuate the lack of probity and transparency that is felt by many in our country, not just by FRETILIN.


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