Timor-Leste Exposed to Tax Evasion Schemes Amidst Oil Revenues

Corruption and Administrative Malpractices Plague Timor-Leste

Dili, Timor-Leste - In a country where 41% of the population lives below the basic needs poverty line, corruption and administrative malpractices continue to afflict Timor-Leste. The country’s fragile statehood and weak regulatory framework make it vulnerable to money-laundering schemes and embezzlement, particularly in the oil extraction sector.

Estimated Annual Losses Due to Corruption

According to estimates by the World Bank, corruption costs Timor-Leste around $60 million annually, equivalent to 1.5% to 2% of its GDP. This staggering figure highlights the need for effective measures to combat corruption and promote transparency in government dealings.

Efforts to Combat Corruption

The Anti-Corruption Commission (CAC), established in 2009, is working tirelessly to combat corruption through capacity-building programs and training workshops. In November 2018, CAC investigators and prosecutors participated in a three-day training on advanced criminal and financial investigations, focusing on complex cross-border corruption cases.

Training Highlights

• Participants learned about investigative planning and management matrices
• International principles in financial investigations were discussed
• The use of financial documents to trace money and identify beneficial owners was emphasized

This training aims to equip national authorities with specialized skills for handling financial transactions and identifying suspicious activities, enabling them to combat corruption more effectively.

UNODC Support

The United Nations Office on Drugs and Crime (UNODC) is providing technical assistance to strengthen Timor-Leste’s legal framework against corruption. A national roundtable was held in November 2018 to support the development of a draft Anti-Corruption Law, which will be debated soon in Parliament.

Key Recommendations

• UNODC has recommended an effective legal framework to protect reporting persons
• The need for transparency and accountability in government dealings is crucial

As Timor-Leste navigates its complex economic landscape, it remains essential that authorities prioritize transparency and accountability to prevent corruption and tax evasion schemes from undermining the country’s fragile statehood.

Conclusion

Corruption and administrative malpractices continue to plague Timor-Leste, with tax evasion schemes emerging as a major concern. To combat these issues, authorities must prioritize transparency and accountability, while strengthening their legal framework against corruption. The international community, including organizations like UNODC, can play a vital role in supporting these efforts.