Eyebrows raised by East Timor budget management

Updated July 8, 2008 11:08:13

East Timor's opposition has asked for an explanation from Prime Minister Xanana Gusmao about the awarding of a government rice contract. [Reuters]

East Timor's government is under fire again for its financial management.

Radio Australia's Karon Snowdon reports that last week there was parliamentary anger at a plan to double the size of the budget mid way through the financial year.

Some of that anger is spilling out onto Dili's streets as students take up the protest, vowing to do so for the rest of the week.

Police fired tear gas at protesting students on Monday, arresting 21 people.

The students were demonstrating against a government decision to spend more than $US2 million to buy new four wheel drive vehicles for 65 members of parliament.

The government says the plan involves just 26 cars for about $1m.

President of the PSD, or Social Democartic Party, Mario Carascalao, says this is a justified expenditure and government work outside the capital is not getting done because of the lack of four wheel drive cars.

He says there are more important issues to be concerned about.

"The cars is a matter that has been politicised by some people, for me this is not the main problem here in East Timor,' Mr Carascalao said.

The main opposition Fretilin Party has accused Prime Minister Xanana Gusmao of awarding a lucrative contract to one of his friends.

Fretilin has released a copy of a contract signed by the Prime Minister which doubles the government order for rice.

The new contract for the import of 16,000 tons at a cost of more than $14m is triple the bill signed for 8,000 tons in February.

The big cost increase can be explained in part by the high international price for rice.

The Goverment says the extra tonnage is needed for food security.

The contract has gone to Germanu da Silva - a friend of the Prime Minister, a member of his CNRT party, and a director of the company Tres Amigos.

Fretilin member of Parliament, Jose Texeria, says there was no tender process to award such a lucrative contract.

"That raised more than a few eyebrows in Timor," he said.

"When we're spending our money, and we have still very little of it, we need to make sure we get the best deal and the best way to do that is a competitive bidding process," Mr Texeria said.

He says the government should explain.

"We want the prime minister, firstly, to be held accountable - we want a full explanation," Mr Texeria said.

"It's a lot of money - $14.4 million is about a quarter of the budget that Fretilin used to have in any one year to run the country."

Requests by Radio Australia for further information from Prime Minister Xanana Gusmao's office have gone unanswered.