13 October 2012

Government will make "final payment of $1.1 million to Lifese" for dysfunctional naval port at Hera

Hera Port, East Timor
ETLJB 13 October 2012 - On 14 September 2012, the V Constitutional Government met in the Council of Ministers meeting room at the Government Palace in Dili and approved the First amendment to Law No 16/2011 approving the State Budget for 2012 .

The draft law included an amendment to the General State Budget for the last payment to Lifese by the Secretariat of State for Defence of $ 1.1 million.

Lifese, an Australian-based engineering firm whose chairman is the former NSW Liberal Member of Parliament and Supreme Court of NSW judge, John Dowd, was involved in a dispute with the Government of East Timor over the construction of the new patrol boat base at Hera to the east of the capital, Dili.

In the dispute that arose between Lifese, the Government and the East Timor Defence Force during the construction of the port, Lifese had, according to a report in The Australian newspaper in February, 2011, claimed more than $695,000 for damages, saying it had been unable to finish contracted work.

Lifese had claimed that the East Timor Defence Forces had prevented the company's workers from entering the port site and, after spending $3.8 million, said it had run out of funds and accused the Gusmao government of failing to honour the contract and release further funds for building works to continue. In addition, materials imported from Australia had been stuck at Dili port, accumulating storage charges of $US7000 per day.

It was observed by some at the time that the dispute arose as a result of a confict between civilian bureaucrats and the East Timor Defence Force over control of $7.7 million in funds to build the base, with Lifese caught in the middle.

On 16 March 2011,  the government cancelled the contract. According to a report by Tempo Semanal at the time, "The council Minister's concluded that the Sydney based company has failed in honoring it's contract and the government has cut the contract today," its source said.

The company had, at that time, already received some payment of US$ 4,447,000 from the total contract value of US$ 7.1 million.

The original contract which signed between the government Timor Leste and Lifese engineering  company provided that  the project had to be finished by October 2010.

The government official informed Tempo Semanal that, "Lifese Engineering which has a close relationship to a well known and respected lawyer in Australia has violated the contract and should pay a fine of 10% to the East Timorese Government out of the total project value of US$7,017,705.20. But instead of paying the fine, Lifese wrote to Xanana's government on 20/10/2010 accusing the Timorese government was causing the delay and  and demanded the Government pay US$695,330.28 for the delay in the project. That meant that the cost of the port goes would have increased to US$7,713,035.38.

The contract was signed July 27th 2010 but some of the works had already commenced in April 2010 which, according to Tempo Semanal, was in violation of the country's procurement law. Lifese Pty Ltd started their work on the project based on a Letter of intend to award from Timorese Government dated 31/03/2010.

In July last 2010, a member of parliament from the opposition Fretilin party raised the issued of good governance and conflict of interest by the involvement of a world bank former adviser to East Timor Finance Minister.

On 9 October 2012 Lifese issued a press statement by the Chairmen of Directors of Lifese, Mr John Dowd which was made, "in view of the publicity concerning the construction by Lifese of the mooring facilities at Port Hera."

According to Mr Dowd, his company "was prevented by the Commander of the Navy from constructing the mooring facilities at the location for which they were designed some short distance from the ultimate construction site not-withstanding that the original site has sufficient depth not only to protect the pontoons from grounding on the floor harbour but to allow a sufficient depth of water to permit full use of the pontoons on both sides of the wharf”.

Mr Dowd said that “[w]hen we were directed to locate the mooring facilities to the present site it was pointed out to the Naval Commander, that without proper dredging the pontoon nearer the land would in fact be damaged at low tide each day. It was further stipulated to us by the Naval Commander that there was a plan to redirected the river flow elsewhere to avoid the built up of sediment. It is hardly rocket science to work out that a 40 tonne pontoon grounding at one end exerts enormous pressure at that time and therefore it was obvious that without dredging the pontoon would be broken”.

“We pointed this out at the beginning of the construction at several times during the construction and subsequent to the construction. We were told that dredging would occur before the site was completed. Although this was not our responsibility we did in fact do some limited dredging at the time of construction” said Mr Dowd.

The press release from Lifese continues:

“Because of conflicting information we were receiving form the Naval Commanders and the Secretary of State, Julio Pinto, the Prime Minister was asked to resolve the matter. The Prime Minister came to Port Hera to view the facilities and was told by the Deputy Commander, as the Commander was overseas, where the Commander wanted the facilities located. The Prime Minister agreed to this and instructed that they should work out the details. Unfortunately the Prime Minister’s instructions were not fully carried out”.

“We now understand that a budget provision for such dredging did not occur during the last financial year. The dredging work still has not been carried out” said Mr Dowd.

Lifese Pty Ltd wishes to repair the damage done and also wishes to be paid the very considerable amount of money still outstanding for the work.

It is disappointing that the full facts have not been put before the public and that our reputation is being harmed by the damage to the pontoon which would inevitably occur by the relocation of the mooring facilities and the failure to dredge” said Mr Dowd.

Tempo Semanal reported yesterday that 40 of members of the East Timor National Parliament had voted for the proposed law amending the General State Budget that included a payment of $1.1million to Lifese.

The speech by Prime Minister Gusmao to the National Parliament on the presentation of the law amending the state budget made only one brief reference to the payment describing it as "the  final payment for the construction of a wharf for the naval component in Hera." There is no mention of the engineering problems with the port which are yet to be rectified.

But the opposition party, Fretilin, opposed the budget rectifying law claiming that it violated the law by using money from the Petroleum Fund to pay for some of the Government's debt. According to the report by Tempo Semanal, the opposition called on the Anti-Corruption Commission to investigate the Hera Port contract and accused Prime Minister Xanana Gusmao as the party responsible for the problems with the new port at Hera which was intended to be used for the two patrol boats procured from China.

The port is not being used.

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