17 July 2015

Bobby Boye's damage to Timor-Leste

Last April, Nigerian-American Bobby Boye admitted to a U.S. court that he defrauded Timor-Leste of $3.5 million dollars, and he will be sentenced in October.  As part of his plea bargain, Boye agreed to to “make full restitution [to Timor-Leste] for all losses resulting from the offense of conviction or from the scheme, conspiracy, or pattern of criminal activity underlying the offense.”  La'o Hamutuk has published a detailed history of Boye's crime and record at http://www.laohamutuk.org/econ/corruption/Boye/14BoyeCase.htm. We just wrote to the prosecutors, estimating what Boye's scheme cost Timor-Leste, and the following is an abridged version of our letter.

15 July 2015

To: Shirley Uchenna Emehelu and Barbara Ward
Office of the U.S. Attorney, New Jersey, USA

As we wrote to the U.S. Attorney nearly one year ago, La’o Hamutuk is a Timor-Leste civil society organization which has followed the activities of Bobby Boye since 2010. After his arrest, La’o Hamutuk published Boye’s long history of  deceit, scams, crimes and occasional sanctions -- forgery, false medical leave claims, disqualification from stock exchange trading, lying on employment applications, fraudulent bankruptcy and  criminal conviction for embezzlement. We believe that the Court should understand the full scope of his conspiracy, which extends far beyond the wire transfers to his non-existent company.

Congratulations on getting Bobby Boye to admit that he defrauded Timor-Leste and to agree to “make full restitution [to Timor-Leste] for all losses resulting from the offense of conviction or from the scheme, conspiracy, or pattern of criminal activity underlying the offense.” We encourage you to share evidence so that Timor-Leste and Norwegian authorities can appropriately enforce their laws, exposing Boye’s conspiracy and making it more difficult for a future fraudster to emulate his misdeeds.

Although the amount of money that Boye admitted that he wired totals $3,510,000, the cost of his scheme to Timor-Leste is many times larger -- our estimate is $176,080,000. We hope that you will impose a sentence which provides restitution to the people of Timor-Leste, more than half of whom live below the poverty line. Timor-Leste is one of the poorest and most oil-export-dependent countries on earth, and our petroleum reserves will soon be exhausted. The losses from Boye’s crimes further cripple inadequate education, health care and other basic services.

Boye laid the foundation for his fraud over several years, obtaining his position through lies and carefully plotting to gain officials' confidence, Even today, Timor-Leste continues to pay for his crimes.

Boye prompted Timor-Leste to make dubious tax assessments against international oil companies, knowing that the companies would pay under protest before they appealed. He then boasted that he had brought in hundreds of millions of dollars in new revenues and promised billions more, thereby “proving” his skills and the incompetence of his predecessors, and earning the unquestioning trust of Timor-Leste officials. The scheme also reinforced his recommendation for Timor-Leste to tighten its tax regulations, opening the way for the fraudulent contracts and wire transfers resulting from his conspiracy.

The companies' appeals of these tax assessments are pending arbitration rulings in Singapore, and Timor-Leste may lose most or all of them. In addition to having to return the payments, Timor-Leste could be ordered to pay interest, legal costs and perhaps penalties. Timor-Leste has also spent millions of dollars to hire attorneys in an effort to limit the damage from Boye’s actions.

Boye’s scheme has inflicted or will inflict financial losses in excess of one hundred and seventy million dollars, as estimated in this table.

Note 4: Although we do not know the exact amount assessed, ConocoPhillips' recent SEC Report says:
“ConocoPhillips served a Notice of Arbitration on the Timor-Leste Minister of Finance in October 2012 for outstanding disputes related to a series of tax assessments. As of March 31, 2015, ConocoPhillips has paid, under protest, tax assessments totaling approximately $237 million, which are primarily recorded in the “Investments and long-term receivables” line on our consolidated balance sheet. The arbitration hearing was conducted in Singapore in June 2014 under the United Nations Commission on International Trade Laws (UNCITRAL) arbitration rules, pursuant to the terms of the Tax Stability Agreement with the Timor-Leste government. Post-hearing briefs from both parties were filed in August 2014. We are now awaiting the Tribunal’s decision. Future impacts on our business are not known at this time.”
ConocoPhillips owns 57% of the Bayu-Undan joint venture, so other partners’ assessments are about $179 million more. Boye also assessed 
back taxes from other companies, including $25 million paid under protest by Woodside Australian Energy in relation to a different project.
Bobby Boye probably does not have sufficient assets to make restitution for all of these losses. However, he should not be allowed to replicate his 2004 scam, when he concealed $250,000 in stolen money while convincing a Bankruptcy Court to release him from $100,000 in personal debts. Timor-Leste’s losses are 700 times greater than Boye’s previous embezzlement, and its people will suffer far more from non-restitution than the shareholders of the company he stole from a decade ago.

In addition to these financial losses, Boye’s crimes caused incalculable damage to the rule of law in Timor-Leste. Last October, Timorese leaders blamed the impending loss of Boye-initiated tax cases on Portuguese prosecutors and judges in Dili District court. A Parliamentary resolution used “the set of legal proceedings, under which the contractors on oil exploration Bayu-Undan sued the State in more than 50 complex processes related with international taxation matters and those procedures has been brought before the national court as well” to validate then-Prime Minister Xanana Gusmão’s breach of separation of powers by illegally firing all non-Timorese judges and prosecutors, undermining the Constitution of this young democracy.

Another inestimable loss resulting from Boye’s scheme is the time and attention it took from many high-level Timorese officials, including the Prime Minister, Minister of Finance, Minister of Petroleum and Mineral Resources, and Minister of State for the Council of Ministers. This reduced their credibility and their effectiveness to carry out other responsibilities. It also damaged public confidence in and efficacy of revenue collection, especially from the oil and gas activities which provide more than 90% of the nation’s income.

In addition, this conspiracy has damaged Timor-Leste’s reputation in the international investment community, making it more difficult to attract the businesses and capital needed to develop the country. At the same time, Timor-Leste has been marked as a possible easy target for scammers and thieves who want to steal part of the country’s $17 billion Sovereign Wealth Fund.

We do not know who else was complicit in Boye’s crimes. The only person who has been named so far is Tiago Guerra, a Portuguese consultant and businessman who lived next to Boye in Dili. Last October, Guerra was arrested for money-laundering, imprisoned for six months without charges, and is still barred from leaving the country. However, Guerra has not yet been tried, while other co-conspirators enjoy impunity and may continue to steal from the country’s citizens.

Note 7, added 23 July: After this letter was delivered, we realized that the preceding paragraph is misleading. La'o Hamutuk did not intend to write that Tiago Guerra conspired with Bobby Boye, or that Guerra is guilty of criminal activity. Although Guerra was arrested and imprisoned for nearly nine months and is still barred from leaving Timor-Leste, no formal legal charges have been filed against him. Guerra maintains his innocence and has not had a chance to defend himself in court. Like everyone else, he should be presumed innocent until proven guilty. In a democratic nation under rule of law, “suspicion” that someone is involved in money-laundering does not justify violating their rights. La'o Hamutuk is not aware of any evidence which links Tiago Guerra with Bobby Boye’s crimes, and we did not mean to imply that the two were co-conspirators.
     However, we wonder if the state's pursuit of Guerra without proper legal process diverts attention from others who were complicit in Boye’s crimes and may still be in positions to steal from the country's citizens. On 20 July, Dili District Court sentenced the former Minister of Education to seven years in prison in a separate corruption case, reminding everyone that some Timorese public officials abuse public property for private gain. We continue to encourage a thorough investigation to find out who was involved with Boye's conspiracy.

Judge Wolfson’s recent acceptance of your request to delay sentencing until October allows time to develop a more complete and accurate accounting of “all losses resulting from the offense of conviction or from the scheme, conspiracy, or pattern of criminal activity underlying [Boye’s] offense,” for which he has agreed to “make full restitution.” We hope that you will make a determined, effective effort to convince the judge to implement that part of the plea agreement.

Thank you very much for your attention to this letter and to this case.


Juvinal Dias             Adilson da Costa Junior          Charles Scheiner
Researchers at La’o Hamutuk

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