Foiled scam: hand over $1.2 billion from TL's Petroleum Fund

Ong's offer was too good to be true.

In September 2009, Timor-Leste's Minister of Finance received a proposal from "Asian Champ Investment Ltd," (ACI) represented by Datuk Edward Ong, the President of Sutera Harbor, the company behind Pelican Paradise's proposed "five-star hotel" project in Tacitolu. ACI asked the Minister to deposit $1.2 billion in cash from the Petroleum Fund in their "blocked" account at Hong Kong & Shanghai Banking Corporation (HSBC). They said they would pay 7.5% interest in advance and return the money in a year. ACI told the Minister to make a decision within 15 days, and she asked the Petroleum Fund's Investment Advisory Board (IAB - a group of advisers appointed by the Minister of Finance under the Petroleum Fund Law) for advice.

Page one of the 3-page IAB memo

The IAB unanimously sent a memo (released a year later) recommending against ACI's proposal and urging that normal investment processes be followed, which do not include investments in cash. The IAB and Minister asked the BPA to prepare a report on the ACI proposal, which we La'o Hamutuk has not been unable to obtain.

In November 2009, La’o Hamutuk learned about this attempt to scam the Petroleum Fund, and researched ACI, which may or may not exist. Our repeated requests for information from the Banking and Payments Authority (BPA), IAB and Ministry of Finance were declined or ignored. The Ministry asked us to delay publishing, which we did, although their promised information never came. The issue was mentioned several times on the BPA website, and La'o Hamutuk raised it in a BPA press conference, but local and international media never picked up on it, demonstrating that transparency also requires attention.

The IAB discussed the ACI proposal at meetings on 18 September,  23 October,  11 and  20 November (including responding to an email from La'o Hamutuk) and 15 December 2009 (at which time the IAB Chairman incorrectly "noted  that the Minister had responded to La'o Hamutuk's request for further information"). More information became available only this week, with the publication of the 2009 Annual Report on the Petroleum Fund, with its legally-required annex of all advice given by the IAB to the Minister.

Timor-Leste’s successful defense against this attempt to steal one-fourth of our Petroleum Fund shows the importance of strong laws and institutions, clear processes, defined criteria, and professional decision-making. La’o Hamutuk appreciates the diligence and attention of the people and organs involved, and we hope that these strengths are maintained. It also shows that our Petroleum Fund is a tempting target, and that many unscrupulous characters will be attracted by what they perceive as “easy money.”

• Additional information and updates about this attempted scam
• La'o Hamutuk radio program (Tetum) on implications of the ACI scam
• More information on Timor-Leste's Petroleum Fund
• More information on pending revisions to the Petroleum Fund Law