Corruption and the Oil & Gas Industry in Timor-Leste: A Test for Anti-Corruption Independence

Introduction

Timor-Leste, a young nation rich in natural resources, has long struggled with corruption in its oil and gas sector. The revenues generated from these industries hold the potential to uplift the country’s economy, yet mismanagement and corruption have significantly hindered progress. The role of independent anti-corruption agencies (ACA) becomes crucial in addressing these issues. However, the effectiveness of Timor-Leste’s Comissão Anti-Corrupção (CAC) in tackling high-level corruption remains questionable. The Jakarta Statement on Principles for Anti-Corruption Agencies highlights the necessity of autonomy, authority, and accountability for ACAs, principles that are still weakly enforced in Timor-Leste.

Background: The Resource Curse and Corruption

Timor-Leste’s economy heavily depends on its petroleum wealth, with the Petroleum Fund being the primary source of government revenue (Transparency International). However, weak governance structures have led to allegations of mismanagement and corruption in state contracts, particularly in the oil and gas industry. In recent years, the government’s investment in projects such as Tasi Mane—an ambitious yet controversial infrastructure project—has raised concerns about a lack of transparency.

Reports indicate that contracts in the energy sector are often awarded without proper oversight, leading to inflated costs and inefficiencies. The lack of public scrutiny and accountability enables political elites to benefit disproportionately from the country’s resources, diverting wealth away from essential services like education and healthcare.

Analysis & Impact: Weak Anti-Corruption Institutions

Despite ratifying the United Nations Convention Against Corruption (UNCAC) (UNODC), Timor-Leste struggles to implement effective anti-corruption measures. The Comissão Anti-Corrupção (CAC) is responsible for investigating corruption cases, but it faces several challenges:

Limited Political Independence: CAC is not entirely free from political influence, making it difficult to pursue high-profile cases involving government officials.

Legal and Institutional Barriers: The lack of prosecutorial power forces CAC to rely on other agencies, such as the Office of the Prosecutor General, which may have conflicting priorities.

Budgetary Constraints: A restricted budget limits CAC’s ability to conduct thorough investigations and enforce anti-corruption laws effectively.

These issues directly contradict the Jakarta Statement, which emphasizes that ACAs must have the autonomy and resources necessary to function effectively (Jakarta Statement).

Solutions & Recommendations

To strengthen the fight against corruption in Timor-Leste’s oil and gas sector, the following steps must be taken:

Enhancing the Independence of CAC:

Legal reforms should be introduced to ensure CAC has prosecutorial powers and is shielded from political interference.

Establish clear procedures to prevent government influence over CAC’s leadership and decision-making processes.

Increasing Transparency in Oil & Gas Contracts:

Mandatory publication of all contracts, revenue flows, and expenditures related to petroleum projects.

Strengthen parliamentary oversight over resource management to reduce opportunities for corruption.

Empowering Civil Society and Media:

Provide protections for whistleblowers and investigative journalists who expose corruption.

Strengthen partnerships between CAC and local NGOs to monitor corruption trends and advocate for policy reforms.

Aligning with International Standards:

Implement stronger mechanisms in line with UNCAC and the Jakarta Statement to ensure Timor-Leste’s anti-corruption agency functions independently and effectively.

Conclusion

Corruption in Timor-Leste’s oil and gas sector threatens the country’s economic development and democratic integrity. Strengthening the independence of CAC, increasing transparency, and empowering civil society are essential steps toward combating corruption effectively. Without these reforms, Timor-Leste risks falling deeper into the resource curse, where wealth serves the elite rather than the people. Ensuring adherence to international anti-corruption standards, particularly the Jakarta Statement, will be crucial in transforming CAC into a truly independent and effective agency. Only through these changes can Timor-Leste safeguard its resources for future generations and build a corruption-free society.

References