As blackouts crippled Timor-Leste, its leaders scrambled for a solution.
It was 2010 and the newly independent country, still reeling from decades of occupation and destruction, was desperate to keep the lights on in its capital, Dili.
Among the potential fixes was a proposed deal with Australian energy company Lighthouse Corporation to supply much-needed diesel fuel to the nation's capital.
But what began as urgent negotiations to keep the lights on has now unravelled into a decade-long legal battle, with Lighthouse suing the Timor-Leste government for $523 million plus interest and legal costs in the Supreme Court of Victoria.
The $523 million accounts for loss of potential profits that Lighthouse alleges it could have made from the deal.
That amount represents at least 11.5 per cent of Timor-Leste's total GDP of $4.55 billion — a sum that experts warn is a significant financial burden for the small South-East Asian nation.
Now, Timor-Leste has filed for a dismissal application which will be heard at the end of this month.
Timor-Leste argues deal based on 'fraud'
Lighthouse Corporation Limited and its Australian subsidiary, Lighthouse Corporation Pty Ltd, said in its lawsuit that it entered into a seven-year fuel supply agreement with the Timor-Leste government in late October 2010.
Under the deal, Lighthouse was to supply 7 million litres of diesel fuel per month and provide eight emergency power generators free of charge, on the condition that only its fuel would be used.
Payments were to be made through letters of credit issued at least 20 days before each shipment.
However, Lighthouse alleges in its lawsuit that the Timor-Leste government failed to provide the required letters of credit, making it impossible for the company to deliver the fuel.
Despite multiple letters and formal demands, including appeals to then and current Prime Minister Kay Rala Xanana Gusmão, Lighthouse says the government never paid up.
But Timor-Leste denies it ever entered into a formal agreement with the company.
In a scathing 190-page defence and counterclaim filed in court, Timor-Leste argued that the entire deal was based on lies.
The Timor-Leste government told the ABC that Lighthouse attempted a "major fraud" against its government, an allegation it has made in its court filings.
According to court documents, the Timorese government reportedly saw red flags after Lighthouse Corporation allegedly struggled to provide concrete evidence of its financial capacity.
In its defence filings, the country said Lighthouse also made grandiose claims about its industry connections, forcing it to cease negotiations for any deal.
Allegations of doctored bank statements
In the court documents, Timor-Leste alleges it was misled by Lighthouse, through its Australian director and owner Albert Jacobs and others, including executives Sean Magee and James (Dimitrios) Podaridis, who are named as plaintiffs in the lawsuit and defendants in the countersuit.
Timor-Leste said Lighthouse "made a number of false representations about itself, its credentials, and its relationships designed to mislead the Timor-Leste government", according to court documents.
Among the alleged false representations in the court documents was that Lighthouse Corporation lied about having 30 years of experience in crude oil and diesel supply, positioned itself as one of Europe's largest private energy firms, and boasted ties to ExxonMobil, BP, and Caltex.
The defence argued that Lighthouse Corporation Pty Ltd was only incorporated in 2009, a year before negotiations began, making it impossible for the company to have the expertise and industry ties it claimed.
They say the Lighthouse based in Australia had no real assets or operations, noting that one of its registered offices was a cafe at the Alfred Hospital in Melbourne at the time, according to court documents.
Timor-Leste argued in court documents that Lighthouse also misled the government about having financial backing to invest in Timor-Leste's energy infrastructure and "falsely" claimed to own substantial oil reserves.
In August 2011, the Timor-Leste government said it ceased negotiations on the proposal, citing alleged misrepresentations by Lighthouse regarding its exclusive agency agreement with another energy provider, Cummins South Pacific, and its financial capacity to deliver on the contract, according to court documents.
Lighthouse denied these allegations in court filings, arguing it had both the financial resources and contractual authority to meet its obligations, making the termination unlawful.
In response to questions from the ABC, Lighthouse Corporation director Albert Jacobs rejected allegations of fraud, insisting that the fuel supply agreement was legally executed with signatures from Prime Minister Xanana Gusmao and other senior officials.
He maintained that Lighthouse had the financial capacity to fulfil the contract, citing US$550 million (about $877 million) in banks and agreements with major fuel suppliers, including a European refinery, Petronas, and BP Singapore.
But the most damning allegation came in 2022, when court documents filed by the Timor-Leste government claimed Lighthouse doctored a Commonwealth Bank statement, inflating its account balance from about $25,000 to $55 million to appear financially capable of delivering on the deal.
The Commonwealth Bank of Australia was subpoenaed in 2022 as part of Timor-Leste's legal defence against Lighthouse Corporation.
According to an affidavit by Timor-Leste's defence, the subpoenaed records confirmed that the original account balance was only $25,072.74, while the version Lighthouse provided in its proceedings to secure the fuel supply deal was false.
This alleged forgery has become a key piece of evidence in Timor-Leste's argument that Lighthouse engaged in fraudulent misrepresentation.
Last year, Timor-Leste moved to dismiss the case, citing the alleged fraudulent conduct by Lighthouse as a key reason.
Agio Pereira, the minister of the presidency of the council of ministers and government spokesman, told the ABC that "Timor-Leste will continue to vigorously defend its position", adding that Lighthouse "attempted to perpetrate a major fraud against the [Timor-Leste] government but ultimately failed", a claim the country's lawyers are arguing in court.
"As the matter is before the courts, the [Timor-Leste] government is unable to comment further," he said.
Timor-Leste is hoping to have the case dismissed on February 27.
A nation looking to rebuild
While developed countries may have settled a case that has dragged on for more than a decade, director of the Asia-Pacific Development, Diplomacy & Defence Dialogue (AP4D), Melissa Conley Tyler, said the $523 million lawsuit posed a significant financial burden for the developing nation.
"What does $523 million mean to Timor-Leste? It means a lot. I imagine they will fight this case for as long as they can to make sure that money goes to their own people's needs — to health, to education, to the youth in particular," said Ms Conley Tyler, who recently published research on the country's development challenges.
Beyond the financial toll, Ms Conley Tyler emphasised the human cost, as Timor-Leste was forced to divert critical government resources and legal expertise away from nation-building, social services, and economic development to fight a drawn-out legal battle in Australia.
Timor-Leste remains one of the poorest countries in South-East Asia and the world, with two-thirds of its population surviving on about $3 a day, she said.
"You have large family sizes, high child mortality, and a lot of stunting and malnutrition," Ms Conley Tyler said.
