Subject: East Timor’s Agriculture Minister Expresses "Profound Disappointment" With Sandalwood Article

Also: AU - Graft halted Timor deal: businessman





Contact: Odete Guterres

Tel: +670 723 4215


Monday 12th December, 2005


Estanislau da Silva, East Timor’s Agriculture Minister has expressed his surprise over today’s article in The Australian “Graft halted Timor deal: businessman” by Mark Dodd.

“I am profoundly disappointed to read that the long and open interview I did with Mark Dodd last Friday by phone was not reflected in today’s article and that many of the issues raised in the article had already in fact been made perfectly clear in my conversations with Mr. Dodd”, stated Estanislau da Silva.

In the article, Mr. Pedro Lay has accused senior government officials of bribery and corruption, claims, which according to Minister da Silva, are without foundation. “In a letter dated 28th October, I wrote to Mr. Lay requesting him to present facts to support his allegations, which as a responsible senior Government Minister, I would then look at, and pursue appropriate action if warranted. I explained to Mr. Dodd that to my disappointment, Mr. Lay has yet to present any facts to back his claims. I had also informed Mr. Dodd that he was welcome to peruse all the documents pertaining to the case, an invitation that still stands”.



December 12, 2005 Monday

Graft halted Timor deal: businessman

Mark Dodd

A SYDNEY businessman claims corruption in East Timor has cost him a multi-million-dollar contract for sandalwood because of his refusal to pay more than $230,000 in bribes to senior government officials.

Pedro Lay, who fled East Timor as a refugee in 1975, claims graft is blocking the tiny country's economic recovery and says his experience should be a warning for others wanting to do business in Dili.

Mr Lay, who runs a Sydney-based electronics company, said a government contract allowing him to buy the prized aromatic timber was revoked after he refused to pay more than $230,000 in bribes to corrupt government officials.

Mr Lay's allegations were denied by East Timor's Agriculture Minister, but have been supported by two senior Fretilin party officials and a former Timorese diplomat, who asked The Australian not to be named.

Mr Lay said the contract was for 400 tonnes of sandalwood confiscated from illegal traffickers and offered for sale by the Government.

Sandalwood has been a protected species in East Timor since 2000, but illegal felling continues, often with the knowledge of government officials.

A purchase agreement for the sandalwood dated November 5 last year was signed by Mr Lay, Agriculture Minister Estanislau Da Silva and the national director of forestry and water resources, Mario Nunes. It did not specify the quantity of wood. Mr Da Silva told The Australian that Mr Lay was not given ''exclusive purchase rights'' and confirmed the agreement had been revoked. The Government ''decided to cancel it because it is our prerogative to cancel it'', he said.

Mr Lay said he offered to continue the commission payments in support of a hospital, school or other approved charity but not to individual officials.

He claimed he successfully procured 2 1/2 containers of sandalwood totalling about 29tonnes of graded wood after paying $US8340 ($11,120) in bribes to two senior officials.

''I am East Timorese. I speak Tetum (the national language), Indonesian, Hakka (Chinese), Portuguese and English. I know these people, and if they do this to me imagine what it's like for foreigners,'' Mr Lay said.

'' I had to pay the bribes before the Government sealed the containers and took them to Dili port.''

Troubles began when he declined to pay any more cash.

He claimed the officials demanded a US50c commission for every kilogram of sandalwood -- more than $US200,000 for the whole consignment.

East Timor gained independence in 2002 after a bloody ballot that ended 25 years of brutal Indonesian occupation. The purchase agreement which Mr. Lay signed on November 5th clearly states that the Government has the right to revoke the contract at any time at its discretion and that no where in the agreement is it written that the Mr. Lay had “exclusive purchase rights”.

When Mr Lay’s allegations surfaced after the signing of the agreement and before the purchase, but with no evidence of corruption, the body with the authority for this matter decided to cancel the agreement as it was not in the national interest.


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