25 September 2009

Xanana Mistakenly Signs Contract with ETO (a company owned by his nephew)

Dili, Tempo Semanal Edition No. 155 Year III - 2009 Monday, 7 September 2009 - Prime Minister (PM) Kay Rala Xanana Gusmao is very serious about establishing and promoting a system of accountability and transparency which will help the management of the state’s finances, especially in areas of procurement and spending of the state budget. However, the Procurement Directorate of the Ministry of Finance has jeopardized the Prime Minister’s credibility because on 30/03/2009 this directorate presented the Prime Minister contract documents for supply of fuel to state vehicles which had the wrong contractor printed on it, with the name of Siverio Pereira Maubere from Aitula Fuels, instead of that of Nilton T. Gusmao from Esperansa Timor Oan (ETO).

This case involves similar allegations as the case where the Prime Minister is alleged to have signed a contract for the supply of rice to his daughter Zenilda Gusmao, because Nilton Gusmao is the Prime Minister’s nephew.

Because of this, some suspicions have emerged of fraud regarding the contract documents signed by the Prime Minister for ETO to supply fuel to government vehicles, in that the company ETO used another company’s name in order to win the approval for the contract from the PMhimself.

In this case, the Pm has also placed himself in a dangerous position because it is clear that he did not look properly at the document before signing it. But it is also possible that the Prime Minister and Nilton Gusmao signed the document at different times. Perhaps the Prime Minister signed first and Nilton Gusmao signed some hours later, as otherwise they would have been present and seen that the signer and signature clause did not correspond, because the documents signed were between the Prime Minister and Silverio Pereira Maubere of Aitula Fuels. However, if the PM knew but proceeded to sign anyway, then he would once again be faced with allegations of fattening his own family though government contracts.

Nonetheless the substance of this case is pointing towards a breach of section 3 of Law 7 of 2007 on Constitutional Officeholders, which imposes prohibitions on certain commercial entities, such as would be the case if Nilton Gusmao has a shareholding exceeding 10% in ETO. This is because the law clearly states, firstly, that those commercial entities in which the office holder has a shareholding exceeding 10% are prohibited from participating in tenders to supply goods and services, or partake in commerce and industry involving contracts with the state or other public entities.

Secondly, line a), of sub-section 2. of section 3, states that commercial entities where the capital shareholding exceeding 10% is held by a spouse or son/daughter or collateral relative to the second degree of kinship, are also prohibited. Line b) of sub-section 2. of the same section 3, states that those commercial entities where the constitutional office holder, alone or together with his or her relatives referred to in line a), directly or indirectly, hold shares exceeding 10%, are also prohibiting from tendering or contracting with the state and its entities in the same way.

In order to find out what Nilton Gusmao’s shareholding is, Tempo Semanal journalists sought confirmation from the directorate of business registration of the Ministry of Tourism, Commerce and Industry, but it was uncooperative in providing the documents requested by the journalists. This type of conduct shows that the government has no commitment to fight against corruption, collusion and nepotism, despite declaring itself the leader of the fight against corruption, collusion and nepotism, which is popping up everywhere like mushrooms after the rains.

For some years now, the company Belak Fuels had been the sole supplier of fuel for thye state’s transport, but in 2007 the Timor-Leste government thorugh the Ministry of Finance, Directorate of National Procurement Services opened a public tender for Timorese companies wanting to compete for this project.

A number of companies competed but Aitula Fuels and ETO were the winners. The tender results were announced and the companies were contracted to supply fuel to state vehicles, demonstrating the confidence of the government in their ability to perform the service. Although at present both Aitula Fuels and ETO supply fuel for state vehicles, there have been public suspicions as to discrepencies in the contract extension documents with ETO, which this newspaper has been able to access, contract No. 01-06-2008-C-40110 where the name of Aitula Fuels Director Silverio Pererira Maubere appears, although the signature that appears on the document is that of Nilton Gusmao.

Amongst those of the public to have concerns over the document, are Timorese business persons who say it shows the lack of professionalism of the staff at procurement services, and weaknesses in the procurement law, evidenced by the lack of control over the work of
procurement services staff.

Despite these accusations, according to the National Director of Procurement, Francisco C Soares, this type of mistake is routine and critics are ill informed of the work of procurement.

Responding to these questions on Tuesday 1/9/09, at the office of Esperansa Timor Oan at China Rate, Taibessi, Dili, the director Nilton T. Gusmao dos Santos said that the public tender for the supply of fuel to government vehicles was held in 2008 and was open to the public, with a number of companies participating. The tender process and determination documentation shows that two companies, Aitula Fuels and Esperansa Timor Oan won because they submitted the best conditions and had the facilities to supply fuel to government vehicles.

When asked about the signature and name discrepancies on the contract document, Nilton said, “I think this contract was signed with two companies, one with Mr. Silverio’s company and one with us, only that the names that were written on the two contracts were the same ones, but I signed the contract myself and it was not somebody else, therefore I do not think there was any fraud involved with the documents. It was merely a technical error that I signed over Mr. Silverio’s name instead of my own,” Nilton explained self-assuredly.

According to Nilton, the contract document signed by the Prime Minister (PM) some months ago was similar to an extension, but that the principal contract was signed by the Minister for Finace Emilia Pires on 26/05/2008.

“The result of the tender shows that the company Esperansa Timor Oan and Aitula Fuels won the tender to supply fuel to government cars, but at the time the government gave them a six months trial period and because they were able to show that they could provide a good service
then the government extended their contract.”

“The contract extension the government granted at the time, was not just to one person but for the two of us, and it was because of this that at the time they wrote the wrong name, but because I did not notice it I signed it and it was only afterwards that I discovered that the name printed on the contract I had signed was incorrect,” Nilton said mockingly.

Nilton added, that because there were two contracts, with each having their own responsibilities, Aitula Fuels performing their own work by themselves and Esperansa Timor Oan did the same, only sometimes clashing when their areas of responsibilities clashed.

“I do not think there was any fraudulent manipulation in this case, because its clear.” Nilton added that when one speaks of fraudulent manipulation, there must be some intent to conceal and deceive through that manipulation, saying that nothing was neing hidden in this case

as everything went through the normal processes and the company Esperansa Timor Oan never interfered with the tender process.

“I never interfered with the tender process because I have confidence in my own capacity and conditions based on the proposal we submitted,” Nilton reinforced defending himself against the accusations.

The proposal and bid security for the tender for this contract was for 5 years, but the government only granted a contract for six months because they wanted to see how they performed in the contract. “This agreement stipulates that when we performed satisfactorily then of course each year the government would extend our contract until the fifth year, but if in the middle of that contract term the government felt our contract performance was unsatisfactory, then the government could automatically terminate the contract because the government does not want anyone to play with the contract,” Nilton recounted.

Grave doubts have emerged from the information obtained by the newspaper from the director of the company Esperansa Timor Oan, that the total budget they submitted for the five years was nearly US$8,000,000, but when we look at the second contract for the period between 1 January 2009 (12 months) that has a budget of US$2,000,000.

When Tempo Semanal journalists went to Aitula Fuels to clarify the questions referred to, the Director of Aitula Fuels Silverio Pereira Maubere said, “When the dispatch came down from the Prime Minister there was only his name, but at that time the two companies had won the tender, with the company Aitula Fuels coming first and the company Esperansa Timor Oan came second but the dispatch paper which came down was only in my name, but instead ETO’s name before they signed and because of this we don’t think it is a problem,” Silverio followed up.

According to Silverio, there is no indication of manipulation with this issue but it was merely a technical error because at that moment it was he himself who signed first on 26/03/2009 then afterwards Esperansa Timor Oan went to sign on 30/03/09, “but before Nilton was about to sign he himself rang to seek clarification on this issue but I told them not to worry and that was a technical error,” Silverio explained.

Responding to the question that possibly someone had deliberately manipulated the contract using his name, Silverio, confessed that he had no knowledge of any such manipulation, but it was merely a technical error by the staff who had prepared the contract for signing.

Aitula Fuels submitted a budget in the amount of US$2,981,105 for the 13 districts per annum and for the 5 years a total of almost US$8 million and a half.

Though the two companies won the tender each works in their pre-determined zones, with Esperansa Timor Oan taking care of Lautem, Baucau, Viqueque, Manatuto, Oecussi and Dili districts, whilst Aitula Fuels looks after Aileu, Ainaro, Same, Suai, Liquica, Ermera, Maliana
and also Dili District.

On the 02/09/09 the director of procurement Francisco Burlaco told Tempo Semanal that it was correct that there had been a technical error made to the Esperansa Timor Oan contract where it was written Aitula’s Fuel name instead, because of this, according to him there was no indication of any tampering with the contract because these contracts should correctly have had printed on it each company’s name, but because the kids incorrectly wrote in Aitula’s name on all the documents, which was later amended.

“This is merely an issue of the technical error so there is no impact to the budget process because we have corrected the incorrectly written name and there is no indication of tampering,” Francisco defended. Responding to accusations that procurement’s work was below standard, Francisco said, that we all have to understand that the kids have a lot of work to do, so mistakes are normal.

“Yes there was the problem with the name, but the amount was not the same because Aitula could not have taken responsibility for its work areas referred to because in the contract it was shown that this area was Esperansa’s so Esperansa was suppose to sign but because a technical mistake in administration is normal and the accusers do not know what they are talking about because they do not know the technical processes involved. As I said today I know there was a technical error in incorrectly inserting the name but also in the amount of money, but these mistakes are normal,” Francisco ended.

But Timorese businessman Rui Castro said, if someone legally challenged this contract, then it would not be simply dismissed as a technical error but involves legal issues, because there are constitutional issues, and it gets worse when you start talking about who it was who signed the contract, and for that very reason it is not just a technical error because when you sign a contract either you do it according to the law or you do not, because if you do not, then its illegal.

This document is the total responsibility of procurement, so for that very reason, when a contract has to be delivered for the contractor to sign they have to exchange opinions as to its state so they can rectify anything that is incorrect, not to just let it go until it is
made public.

“If the contract has been able to fall into public hands it means that the people working in procurement have the intention of spoiling the PM’s government because when in front of the PM they kneel but behind his back they think something else and do something else,” Castro explained defending the PM. “I don’t think this is the first time this has happened but there are cases involving many members of government.”

Castro said that if it had been up to him “administrative action would have been taken

against the staff responsible for drafting the contracts, the Minister for Finance must hold the Director General Francisco responsible as well as the director of procurement, so the PM must hold them responsible.

“For me this issue is an attempt to smear the PM’s name because people to whom the PM has given his trust to manage the contracts are not working in good faith and because of this they have manipulated things so that the incorrect documents were presented to the PM for his signature,” Castro said aggressively.

Castro added that, this error was not by the company because Nilton did not prepare this contract so if there is anything to be investigated it should be the people who should be investigated especially the head of the department where the PM signed the contract. “When we speak of shareholding exceeding 10% as prohibiting access to contracts from the government all of FRETILIN’s contracts were illegal because at that time Amat Alkatiri (Belak Fuels) had the contract to supply fuel to government cars but no one questioned the government for the three years, so why should we question Nilton,” Castro sais.

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