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

Strategic Development Plan subdistrict socialization finishes

In April, the Government of Timor-Leste published a summary of their draft Strategic Development Plan for the next 20 years, and the Prime Minister began visiting each of Timor-Leste's 65 districts to socialize the plan. He finished this process on the night of September 11 (actually at 2:00 am on September 12) in Laulara, Aileu district. La'o Hamutuk attended this final meeting, and have posted some pictures of the meeting and the PM's presentation (2.5 MB).

The full version of the plan has not been released, although we have published a leaked copy, as well as our analysis of its feasibility and implications.   Last week, a letter to the PM from acting UNMIT head Finn Reske-Neilsen was also leaked.

La'o Hamutuk continues to follow this process, and we encourage everyone in Timor-Leste to inform themselves and share their perspectives on the decisions involved in this plan, which will have serious implications for decades of Timor-Leste's future.

Reliance EIA poses test for Timor-Leste Government

Reliance's block is the orange area at top right.

Last June, the Indian oil company Reliance presented Timor-Leste with a draft Environmental Impact Statement and Environment Management Plan for a deep-water test gas/oil well they hope to drill in Block K of Timor-Leste's exclusive maritime area next month. La'o Hamutuk made a submission, urging the National Enviromental Directorate (DNMA) to reject Reliance's draft until the company makes significant revisions.

Following a meeting last month with Government, civil society and other stakeholders, Reliance responded to comments by La'o Hamutuk and others,  and submitted a somewhat revised version of their EIS and EMP, which DNMA is currently deciding whether to accept. Reliance has also announced that the well will be drilled by Transocean's Deepwater Frontier drilling ship.

This is the first time Timor-Leste's Government has had to decide on approval of an oil well in Timor-Leste's exclusive area, and it is a critical test which will set the precedent for future oil and gas projects. We hope that environmental professionals in regulatory agencies will make their decisions based on technical realities to protect Timor-Leste's interests, and not on political or personal loyalties.

La'o Hamutuk has posted a new web page in English and Tetum, with historical and technical information and links to documents about this project. The following is an abridged version of the text on that page:

LH Submission on Cova-1 deep water test well

La'o Hamutuk has just made a submission to the RDTL National Environmental Directorate about the Cova-1 deep-water exploration oil well which Eni wants to drill in September in Timor-Leste's exclusive offshore territory. Our main points are:

• Public consultation should be better.
• Safe and clean operation is more important than Eni’s financial gain.
• The oil spills modeled are too small.
• No flaring should be allowed.
• Regulators have the right to inspect operations.
• Local content requires more effort.
• Pay attention to accuracy and detail.
• Eni should plan for 2010’s unusual weather patterns.
• Plan for additional ship traffic.

La'o Hamutuk web page on the Cova-1 project.

The Impact of Oil and Gas Exploitation on Social and Environmental Destruction

Invitation to a Public Meeting on 29 July
Oilwatch is an international network against the destructive consequences from the activities of petroleum companies in tropical countries. The Oilwatch network promotes solidarity and reinforces common struggles among developing countries. Oilwatch understands that today’s model of exploiting non-renewable resources in developing countries disempowers people and violates their rights to make decisions about their own natural resources. The Oilwatch network resists the negative impacts of the oil and gas industry on people and their environment.

    This year, as a member of Oilwatch, La’o Hamutuk will host a regional meeting of Oilwatch Southeast Asia, with participants from Indonesia, the Philippines, Burma, Thailand  and Nigeria. La’o Hamutuk would like to use this opportunity to help Timor-Leste’s people learn from Oilwatch’s experience, and about the impacts of the oil and gas industry in other countries. Therefore, we are inviting you to participate in a public meeting: The Impact of Oil and Gas Exploitation on Social and Environmental Destruction, with speakers from Oilwatch Southeast Asia and Oilwatch International. It will be held at the Liceu, UNTL.

   Presentations and reports from the public meeting are now available at http://www.laohamutuk.org/Oil/Oilwatch/10OilwatchSEAJul2010.htm.

Impaktu Eksploitsaun Mina no Gas ba Destruisaun Sosial no Meiu-Ambiente

Konvite ba  Enkontru Publiku iha loron 29 Jullu                           
    Oilwatch rede internasional ida ne’ebé kontra konsekuensia aat husi atividade kompañia petroleum nian liu-liu iha nasaun tropikal sira. Oilwatch ne'e rede ida ne’ebé promove solidariedade no haforsa identidade ne’ebé hanesan entre nasaun sira ne'ebé foin dezenvolve-an. Oilwatch komprende modelu eksploitasaun ba rekursu iha nasaun foin dezenvolve-an sira ohin loron nian ne'ebé la fo kbiit ba povu  no la respeita povu nia direitu atu halo desizaun ba sira nia rekursu rai nian. Oilwatch rede rezistensia nian kontra impaktu negativu husi atividade industria mina no gas ba ema no ba sira nia meiu-ambiente.
    Tinan ne'e nudar membru ida husi Oilwatch, La’o Hamutuk sei sai uma nain ba enkontru regional Oilwatch Asia Sudeste nian, ho partisipante sira husi Indonesia, Filipina, Burma, Tailandia no Nigeria. La’o Hamutuk mos hakarak aproveita oportunidade ne'e atu povu Timor-Leste mos bele aprende buat foun ruma husi Oilwatch nia esperiensia, no kona-ba impaktu industria mina no gas iha rai seluk. Tan ne'e liu husi karta ne'e ami hakarak konvida ita boot sira mai partisipa iha Enkontru Publiku IMPAKTU EKSPLOITSAUN MINA NO GAS BA DESTRUISAUN SOSIAL NO MEIU-AMBIENTE, ho narador husi Oilwatch Asia Sudeste no Oilwatch Internasional,  ne'ebé sei hala’o iha:

• Fatin    : Auditorium Liceu - UNTL
• Data    : Kinta 29 Jullu 2010
• Horas    : 08:30 – 13:00 OTL

LH 2009 Annual Report on line

La'o Hamutuk has published our Annual Report for 2009, including a description and evaluation of our work and its results, a list of articles we wrote or were cited in, and our financial situation. In the spirit of transparency, we encourage other organizations and institutions to do the same.