16 Jul 2009

PM defends award of contract to daughter's company

6:30 pm on 16 July 2009

East Timor's prime minister has defended his role in authorising a $US3.5m rice contract for a company part-owned by his daughter.

Several contracts were also awarded to companies linked to the wife of another minister.

Prima Food last year won a contract worth $US3.5 million ($A4.35 million) to import rice into East Timor.

Radio Australia previously revealed Zenilda Gusmao, daughter of prime minister Xanana Gusmao, has a stake in Prima Food.

The Opposition Fretilin Party has called the situation a case of nepotism and corruption, and is calling for the prime minister to resign.

After weeks of silence on the matter, Mr Gusmao told the ABC he will face an investigation by a recently established anti-corruption commission in East Timor.

The ABC reports Prima Food was one of 17 companies awarded government contracts to import rice to East Timor. Together, the contracts were worth $A69 million.

Several contracts were awarded to companies linked to the wife of another minister.

Radio Australia has obtained documents that indicate Zenilda Gusmao secured an 11.1% stake in Prima Food.

Government ministers have stood by the Prime Minister and recently restated their support in an official press release.