Timor-Leste, or East Timor, is one of the smallest and poorest countries in Asia. Its only economic hope for the future lies in massive reserves of oil and gas in the Timor Sea. Having fought a bitter battle with Australia over seabed borders and mineral rights it's now taking on some of the world's biggest private energy companies, demanding they pay their fair share of tax on the resources they're extracting.
Four Corners' reporter Andrew Fowler travels to Timor-Leste to detail a no holds barred struggle that involves billions of dollars and the promise of investment and jobs from energy processing. Will Australia's smallest northern neighbour triumph in this battle or will the corporations win out?
"Around the world, multinational companies always fight for their interests and they fight tooth and nail, it's their job, they have shareholders ... we expect the fight to get even harder, because we're talking about a lot of money, but what's changed here is that Timor is fighting back."Advisor to Timor-Leste Government
Timor-Leste's first task is to cut a deal with energy giant Woodside that would see a pipeline and a gas processing plant built on the country's southern shore. If that happens it would mean development, investment, construction and processing jobs, plus more money in taxes. There is a catch though. The company is playing hardball while the government claims the negotiations have involved bullying and double dealing.
As Four Corners discovered, the immediate battle is to audit the energy companies that the government claims are not paying their share of taxes. The centre of this struggle can be found in an office building where a small group of public servants have been meticulously going through contracts and tax returns. This is a contest the country's leaders say they cannot afford to lose, because if they do they will consign an entire country to poverty.
"...all the babies that were born after the Indonesian occupation in 1999 are going to be looking for jobs ... if there's no economy that they can work in, it's going to be a huge drain on society." Charlie Scheiner, NGO Analyst of Government Finance
But it will not just be a drain on Timor-Leste. Australia too cannot afford a failed state on its northern border. Timor-Leste's battle with the corporations is a contest that every country in the region is watching with concern.
"Taxing Times in Timor", reported by Andrew Fowler and presented by Kerry O'Brien, goes to air on Monday 1st October at 8.30 pm on ABC 1. It is replayed on Tuesday 2nd October at 11.35 pm. It can also be seen Saturday at 8.00 pm on ABC News 24, ABC iview and at abc.net.au/4corners.
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