On Fri, 22 May 2009 08:04 UTC US Ambassador to Timor-Leste Hans Klemm sent a cable to Washington DC titled "Timor-leste Seeks World Bank Contrition". This cable has been made available by Wikileaks. This cable covers the story broken by Tempo Semanal (here and here) about the huge salaries for Worldbank consultants working in the Ministry of Finance the conflict between the Worldbank and Government, and politicised hiring of staff by the Minister of Finance.
"World Bank headquarters may have behaved badly and needlessly by in effect publicly scolding the Timorese without prior consultation and in the midst of a highly politicized debate in Dili."
"The program in question is not without its blemishes: its consultants receive eye-popping salaries by Timorese standards and an ongoing review may reveal inappropriate political influence over employment decisions."
The cable continues to outline how the salaries are questionalble in such a poor country.
"Timorese public attention has been drawn to the salaries PFMCBP consultants are receiving. An intrepid Timorese journalist broke the story several weeks ago and posted online the full recruitment and benefit dossiers of more than eighty World Bank consultants assigned to the Finance Ministry's project. The remuneration being received by some World Bank consultants was eye popping - over $500,000 annually in a country where more than half the population survives on less than $0.88 a day. Timorese attention also focused on the cases of three Timorese nationals employed in the program thought to be under-qualified, politically close to the Finance Minister and earning far, far in excess of regular Timorese civil servants. One such Timorese reportedly is drawing an annual stipend of $200,000, while public servant salaries here typically hover around several hundred dollars per month. The opposition party Fretilin accused the government of a variety of sins, including corruption, nepotism and lavishing large sums on low quality advisors. The cases generated sufficient public outcry that members of a party within the ruling coalition joined Fretilin in demanding that the finance minister appear before parliament to explain."
Despite the fact that the Prime Minister Gusmao initially defended the program when the Worldbank announced a review of the program the PM cut off all ties with the Government.
"The Prime Minister held an extraordinary press conference on May 13 to support the government and the World Bank program. He stoutly defended the practice of using foreign advisors as essential to improving the qualitative operations of the government and, in a deliberate bid to insulate the World Bank from criticism, described their salaries as determined by the international market. The PM also asserted that not only did corruption occur more frequently under the old Fretilin government, but so did the practice of hiring expensive foreign advisors (indeed, the PFMCBP was begun by the Fretilin government, although substantially overhauled by the current finance minister). In the middle of this domestic dispute, and after the Prime Minister's public defense of both the program and the World Bank, the latter released a press statement on May. Although carefully worded (it is available on the bank's website), it states the World Bank is reviewing contracts made between the Timorese government and consultants, notes concern about the level and cost of international technical assistance, suggests the PFMCBP has been too costly, and asserts the bank has raised the need to reduce the number of consultants with the Timorese government. It is viewed, by both the Prime and Finance Ministers, as unfriendly, damaging and disloyal. On May 15, the prime minister instructed his government to halt all contact with World Bank staff."
|US Ambassador Hans Klemm and President Ramos-Horta|
The Finance Minister Pires ask for help from USA to save the project and repair relations between the Worldbank, ex former employer, and the Government.
"The Finance Minister reported that she sent the World Bank president a letter asking the Bank to "undo the damage." She asked the ambassador for U.S. support in convincing the Bank's leadership that it must make an effort to fix the current situation, including offering an apology to Prime Minister Gusmao. She summarized her view of the World Bank's May 14 actions as "disrespectful," symbolic of the inherent imbalance in the relationship between an enormous international institution and a small nation such as Timor-Leste. She also urged the U.S. to work to improve communications between the Bank and its office in the Dili (the local World Bank staff reportedly argued against the May 14 press release, but their concerns were overruled by headquarters)."
The US Ambassador also states in the leaked cable the its likley the Minsiter of Finance has made poor decisions - likely regarding the Minister hiring friends on "eyepopping salaries.
"The PFMCBP is not without blemishes. So far, it has added more international capacity than it has built Timorese skills. And the ongoing review may well reveal poor hiring decisions including by the Finance Minister."