FRETILIN
TIMOR-LESTE NATIONAL PARLIAMENT
MEDIA RELEASE
Dili, 27 October 2009
Audit reveals Gusmao government’s woeful financial
management: Action looms on “Referendum Package”
The Gusmao de facto government’s Minister for Finance, Ms Emilia Pires, stated to a parliamentary
committee that she would not take any responsibility for budget implementation, blaming other
ministries, which failed to spend budget monies for vital social and other infrastructure. “This is
another appalling piece of evidence of this Minister’s incompetence and lack of responsibility for
her legal duty”, said a FRETILIN MP and Party Vice President Mr Arsenio Bano today.
Finance Minister Pires was named by the country’s anti-corruption watchdog for abuse of power in
relation to a government tender contract last year. She is also at the centre of a jobs-for-mates on
huge salaries scandal, involving World Bank administered money.
Mr Bano was speaking to journalists after a hearing by the Parliamentary Economy, Finance and
Anti-corruption Committee on the 2008 financial year audit. He said that the Minister confirmed
that the claimed “reform policies” in public finance management of the Gusmao de facto
government have failed abysmally.
“A key ministry, Social Solidarity, has according to the Minister’s own report spent only 7.2% of
their capital and development budget, and less than half of their minor capital budget, with an
overall spending of 51% of their total budget.
“The Infrastructure Ministry only spent 12% of their capital and development budget and 20% of
their minor capital budget, and a total of 16% of their overall budget for 2009. The Ministry of
Tourism, Commerce and Industry spent only 7.1% of their capital and development budget. The
Ministry of Agriculture, Forestry and Fisheries, has only spent 36.9% of its capital and development
budget, only 3.6% of its minor capital budget and overall only 35.7% of their 2009 budget.
“Health spent a mere 27.5% of its capital and development budget, and only 18.7% of minor
capital,” said Mr Bano.
“These are the engine house ministries that move development along and that deliver most of the
country’s basic services. Yet the Minister did not accept any responsibility for this parlous public
finance management. All this after such large amounts of donor assistance, such as the US$26
million Public Finance Management Capacity Building Project, to which countries like Australia
have contributed, and which employed ‘advisors’ on salaries of hundreds of thousands of dollars
each per year,” said Mr Bano.
The government’s auditors, Deloitte Touche Tohmatsu Chartered Accountants from Darwin, stated
that they were unable to “obtain appropriate audit evidence to support the validity of salary and
wages payments to certain employees as their contracts of employment were not available for us to
inspect.” The auditors could not obtain evidence “to support the validity of pension payments,” as
well as being “unable to attend cash counts and hence obtain sufficient appropriate audit evidence
to support the validity of cash advances at year end.”
The auditors’ report also said they were “unable to review the prior year audit working papers and
were not able to perform alternative audit procedures to enable us to form an opinion on the
opening cash balance 31 December 2007, or on the adjustment of US$73,270,000 referred to in
Note 7, regarding the accounts to prior years.”
Mr Bano commented: “These Audit qualifications are clear evidence of public finances being a
shambles. There were never any such qualifications for all the audits undertaken prior to and
including the 2006-2007 financial years.
“Why were the previous auditors’ working audit documents not available to the current auditors?
We know that the government had issues with the previous auditor being intransigent on their audit
report for the transition six months 1 July to 31 December 2007. The Minister failed to explain why
the current auditors can’t say where these monies are. Just as she has failed to explain whether
advances reported as missing last January have all been recovered. It seems from the auditor’s
report that they were not recovered,” Mr Bano said.
The auditors’ report qualified “receipts amounting to US$817,000 and payments amounting to
US$116,746,000 being post 31 December 2008 transactions.” They say: “We were unable to satisfy
ourselves as to the completeness of these receipts and payments as we have not audited all receipts
and payments for the period 1 January 2009 to 30 June 2009 and we were unable to satisfy
ourselves as to completeness through alternative audit procedures”.
Mr Bano commented: “Nearly US$200 million worth of transactions cannot be verified by the
auditors. That is unacceptable in anyone’s books. All this after the purported ‘reform’ too. It is a
joke for this government to continue to paint the rosy picture it has been of public finances, or to try
to blame others, such previous governments for their incompetence and corrupt elements. It’s their
doing and their incompetence,” Bano said.
During questioning on the highly controversial sole sourcing of government public works projects,
the so called “Referendum Package” of August 30 this year, the Minister expressly shifted
responsibility for answering the myriad of questions and accusations raised by both the Opposition
as well as government MPs to the Prime Minister himself. She evaded it totally.
"The US$34 million “Referendum Package” was announced by the de facto Prime Minister after he
dragged together unspent budget monies from varied ministries to spend on purportedly urgent
infrastructure projects. There has been no tender, but contracts were coordinated by, and contractors
from, handpicked businesspeople with close political and family ties to the de facto Prime Minister.
It included an advance payment of 20% of the contract price before any works commenced. There
have been allegations by civil society, business, and MPs from all parties, of over-pricing and
phantom projects.
“We know that the Finance Minister herself was against the ‘Referendum Package’ from the outset.
We hear she told the Prime Minister that it is was illegal and he responded as usual that he knew
where the Dili prison was located. But it is a joke for the Finance Minister to say that it is the Prime
Minister’s responsibility to answer questions on it because she did not know. The law says she has
to know, that she is the Minister responsible for implementing the state budget. It is her legal
responsibility. She cannot just say, ‘it’s not me, it’s the others’. If she is not happy with having to
do so, then she should resign. We intend to hold her accountable whether she wants it or not,” said
Mr Bano.
“Now the Minister comes before the parliament and when questioned about the shambles that has
become the ‘Referendum Package’, involving procurement of goods and services worth in excess of
US$34 million, she simply diverts all questions and responsibility to the Prime Minister and other
Ministers. She says that the atrociously low budget spending is because of other minister’s
management. Will she ever be held responsible for anything?” asked Bano.
“This ‘Referendum Package’ is a big disaster. It has been an irresponsible and illegal attempt by
the de facto Prime Minister to spend, spend, spend, so that he does not have to face the
embarrassment of having asked parliament for more than the government could handle, just as we
had told them when they brought the budget to parliament for approval. It has totally disregarded
procurement and public finance laws and regulations.
“This is totally unacceptable and we will be taking legal action,” Mr Bano warned.
For further information, please contact Arsenio Bano MP on +670 741 9505 or Jose Teixeira MP on
+670 728 7080
NEWS 
