In Timor-Leste, one of the newest nations in the world, a case of corruption is explored in this chapter, which is associated with the resource curse of official corruption. The case involves an expatriate tax lawyer who worked for the Ministry of Finance and orchestrated a 'taxation miracle' for 'his' adopted country. He was charged for a $3.51 million wire-fraud by the United States Department of Justice and subsequently sentenced to six years of imprisonment. However, the case was found to be more complex than simple fraud and official corruption. The findings indicate that the key elements that led to the fraud were a series of misadventures arising from issues of hiring, management, cybercrime, and weak internal controls. It has also been suggested that the fraud was allowed to perpetuate due to the collusion of several multinational resource companies, costing the Timor-Leste taxpayers as much as $176 million.
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The United States (US) Attorney General’s wire fraud related charges against Bobby Boye read like to plot of a fantastic international crime thriller:
Per the wiring instructions of Opus & Best, Country A wired a total of approximately $3,510,0001 on Contract payments from a Country A account at the Federal Reserve … to the Opus & Best 0399 Account secretly controlled by the defendant BOYE … [who] did knowingly and intentionally conspire and agree with others, known and unknown, to devise a scheme and artifice to defraud Country A, and to obtain money and property from Country A. (United States, June 2014, p.2)
The funds were utilized to acquire four properties in New Jersey, totalling over $1.5 million in cash. Additionally, luxury items like a Bentley, a Range Rover, a Rolls Royce, and designer watches were purchased (US, 2014). The country referred to as “Country A” by US prosecutors in the aforementioned quotation is Timor-Leste, formerly known as East Timor. Timor-Leste has gained notoriety for endemic corruption in its political structures and society at large, as evidenced by various studies (Doig & Tisne, 2009; Drysdale, 2008; Lundahl & Sjöholm, 2008; White, 2017). This reputation is supported by reputable indicators, such as Transparency International's Corruption Perceptions Index, where it has consistently ranked as highly prone to corruption.
However, it is worth noting that there has been some improvement in the corruption ranking of Timor-Leste, which ranked 82 out of 180 countries in 2021, compared to its lowest ranking of 143 in 2011 (TI, 2021). Despite these improvements, Timor-Leste continues to be one of the poorest nations globally, as reported by the World Bank. Although poverty has declined significantly from 2007 to 2014, there is a lack of more recent statistical data due to the government's failure to collect information since 2014 (World Bank, 2022).
The legacy of the 25-year Indonesian occupation and the influences of Portuguese and Indonesian rule have deeply impacted Timor-Leste's bureaucratic practices and societal customs, contributing to the prevalence of corruption (Blunt, 2009). The country's natural resource exploration and exploitation, as well as contract negotiations, present ample opportunities for corruption. Apart from its oil and gas resources, Timor-Leste possesses substantial and relatively untapped marine and land resources suitable for various development purposes (Blunt, 2009).
Regrettably, the study of corruption in Timor-Leste has been neglected by criminologists, and research on this topic is limited, not only in criminology but also in other disciplines such as commerce and accounting.
Corruption cases prevalent in resource-dependent countries like Timor-Leste are not uncommon. In fact, the term 'Dutch disease' is associated, in part, with corruption and lax governmental practices in tax revenues that emerge in resource-rich developing economies. These cases often make headlines when politicians or public officials engage in corrupt activities, such as accepting facilitation payments for services within the scope of their employment.
The criminological and financial crime literature contains well-documented evidence highlighting the vulnerabilities of developing nations to internal fraud and corruption (Doig & Riley, 1998; Kenny, 2007; Otusanya, 2011; Wraith & Simpkins, 2010). Indonesia, for instance, is a country significantly impacted by corruption among government officials, which has permeated all aspects of official life (Nurhidayat & Kusumasari, 2018). Given that Indonesia occupied Timor-Leste for twenty-five years, with Indonesian officials holding all key positions in government and the public sector during that period, the endemic official corruption in Indonesia has had lasting effects on Timor-Leste as well.