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However, La'o Hamutuk has long warned of the temptation Timor-Leste's Petroleum Fund -- $10 billion dollars owned by a small, impoverished, new nation with little experience -- offers to unscrupulous, greedy people in the "financial industry" and elsewhere. We believe that Olgario de Castro is not like now-jailed Bernard Madoff, who stole billions from U.S. investors, or the immoral investment managers at Lehman Brothers and other financial institutions who brought down Western economies four years ago. We expect that he is more ethical than the speculators who crashed the Indonesian economy in 1997.
But even if Olgario is blameless, others drool at the opportunity to get their hands on Timor-Leste's money. For many years, La'o Hamutuk has advocated that systems here should be tighter to protect against would-be thieves, with more transparency and stronger checks and balances.
We hope that the revelation of Mr. De Castro's sloppy, boastful conversation will encourage policymakers, citizens and journalists to look at La'o Hamutuk's suggestions more closely, especially since those who revised Timor-Leste's Petroleum Fund law last year rejected them all, just as they ignored the Central Bank's recommendations.
Follow these links for more information about:
- Timor-Leste's Petroleum Fund (including reports)
- The 2011 revision of the Petroleum Fund Law (including diverse analysis and recommendations)
- The billion-dollar attempted scam by Asian Champ Investments in 2009
- How oil companies cheat on their taxes to Timor-Leste
- List of oil companies active here, with their contracts and plans
- The new TimorGAP national oil company
- The controversy over the Greater Sunrise pipeline and LNG plant
- Money Australia is stealing via the Laminaria-Corallina oil field
- How Timor-Leste got $10 billion ... and how quickly we will spend it all.
- Index to La'o Hamutuk articles and documents on petroleum issues
- Seeing money as the solution to every problem
It’s easier to buy a few scholarships than to build a university, or to send VIPs for overseas health care than to create a quality national health system.
- Spending without thinking
State expenditures go up 28% per year above inflation, but no taxpayers are demanding fiscal restraint.
- Lack of realistic long-term planning
The Strategic Development Plan is but a dream.
- Import dependency
Timor-Leste's non-oil trade deficit is more than a billion dollars, importing everything from water to chickens to rice to construction workers.
- Inflation from little local productive capacity (17% in Dili in 2011)
Our productive economy cannot absorb the cash in circulation.
- Ignoring non-oil development and revenues
Three-fourths of Timorese are rural farmers, left out of state plans and budgets.
- Acting as if the oil money will last forever
Bayu-Undan and Kitan will be dry by 2024.
- Borrowing today, to repay tomorrow
TL could borrow more than $460 million in the next few years, and billions after that.
- Wealth goes mainly to the urban elite.
Most people don’t benefit from highways, airports and oil facilities, but will feel the pain of loan repayments.
- The petroleum sector “captures” decision-making.
Few creative ideas to develop agriculture, education, tourism, small industries, etc.
On 13 July, La'o Hamutuk published another blog about the Investment Advisory Board and the Petroleum Fund: Wading deeper into an oily swamp.
Update, November 2012: The Ministry of Finance recently circulated a report on the 2011 General State Accounts, including a list of 223 disbursements totaling almost $30 million from the Contingency Fund managed by the Ministry of Finance. Among the expenditures was $176,322 for Salario ao Assessor Oligario de Castro período Janeiro-Dezembro 2011.
La'o Hamutuk wonders why this was paid from a fund for "urgent or unforeseeable" needs, and if Mr. de Castro also received salary or consulting fees through normal budget lines.