REPORTER: John Martinkus

These images are taken from an Osama bin Laden-style DVD recorded in a cave somewhere in East Timor. There's no doubt what fugitive army officer Major Alfredo Reinado thinks of East Timor's democratic process. Over the last year he has given the finger to practically everybody, even those who have since come out in his support.

MAJOR ALFREDO REINADO, (Translation): Now that the election is close, all we hear is lies. Especially from Mr Ramos Horta, who tells Europe that Alfredo is a monster, Alfredo has bad person, Alfredo is a destroyer. Who was governing when this crisis came about? Wasn't it you? Alfredo is a product of this crisis which you created.

The DVD was widely distributed apparently in the hope that Major Reinado could further boost his so-called cult-like status and have an impact on the vote.

DR JOSE RAMOS HORTA, PRESIDENTIAL CANDIDATE: Well, let me say this, it might be surprising to you, it might be surprising to viewers in Australia, I have not seen this video. I believe it exists, I believe the video is there and I believe Mr Reinado must have made accusations against me, as he has done in the past, because of misinformation or whatever. He has information from others that I ordered attack on him or whatever. Well, I sympathise with his feelings, you know. I really don't care what he says.

But at the height of the presidential campaign last week, Jose Ramos Horta publicly ordered a halt to the manhunt for Reinado. It was a clever political move ensuring the support of the Democratic Party, the party closest to Reinado. In the first round of this presidential race the Democratic Party came in third with a significant 18% of the vote. Now it's likely those votes have gone Dr Horta's way, making it virtually impossible for his Fretilin rival, Mr Lu Olo, to win.

DR JOSE RAMOS HORTA: My position is this - does he want to surrender to justice? If so, that's fine. My only obligation as Prime Minister is to speak out, to tell ISF I don't want any security operations, I don't want any hostile military action. He has to be treated with dignity. He has to be provided with full protection so that he can appear in court. That's my position. If he wants to do 1 video, 10 videos supporting someone else, that's fine with me.

But only weeks before Jose Ramos Horta had co-signed a letter asking Australian Prime Minister John Howard to authorise SAS troops to capture the renegade. His backflip hasn't gone unnoticed.

ESTANISLAU DA SILVA, CARETAKER PM: As I said before, he is campaigning as a presidential candidate, of course he is trying to gather as much support he can, including people who, one way or another, maybe taken side with Alfredo. Because to stop any security operation we need to have a proper discussion in the council of minister and then the parliament, and the President need to be properly briefed on this issue.

Fretilin's Estanislau da Silva is caretaker Prime Minister. He says Dr Horta had no authority to call off the hunt for the fugitive Reinado and that operations are continuing.

ESTANISLAU DA SILVA: Last week I had a meeting with the President of the Republic, Xanana Gusmao and he said that the security operation continue. The same think is confirmed by the Brigadier-General Malcolm Rerden which say that so far he hasn't received any request from the state to stop any security operation.

MAJOR ALFREDO REINADO: It is not too late, never too late for any solution. It's not too late for East Timor to have independence after 24 years.

Dateline first met Major Alfredo Reinado last year. My colleague David O'Shea filmed as Reinado's men opened fire on an army patrol, the first shots in what Fretilin claims was an armed coup. The violence that plagued East Timor throughout 2006 appears to have been part of the political realignment which has seen the downfall of the ruling Fretilin Party and the rise of political interests more sympathetic to Australia and America led now openly by President Gusmao and Jose Ramos Horta. On the DVD Major Reinado makes an extraordinary claim that Horta, at the height of the crisis last year, offered him the presidency.

MAJOR ALFREDO REINADO (Translation): I remember what you were like before you became Prime Minister. In Alieu, you turned up on my doorstep at 5am. You asked me to be the next president.

He also says Jose Ramos Horta and President Gusmao had a plan to change the government of the country.

MAJOR ALFREDO REINADO (Translation): Mr Ramos Horta rang me, he said "If you and Xanana want to govern, go ahead. I have a post in Geneva and also in New York with the United Nations." Lies... Now he is standing for election. He is doing all he can to be in power. A leader who changes his mind a hundred times in one day is not someone who can be trusted.

DR JOSE RAMOS HORTA: For many months every time I argue in the cabinet, in the parliament about a peaceful resolution of this conflict, of this problem. I hear even accusations against me that somehow I'm behind Mr Alfredo Reinado. But I have to say also publicly my views. There have been too many loss of lives already in this country through this crisis.

After this attack Alfredo Reinado was charged with murder and weapons offences. He was jailed, then, under the noses of the Australians, walked out of the prison with his men. Months later, and still on the run, he seized 25 automatic weapons from two East Timorese border police posts. The seizure of the weapons made a mockery of Reinado's calls for negotiation and the Government, led by Jose Ramos Horta, called for him to be brought in by force. On March 4 Australian SAS troops attacked his fortified base in the mountain town of Same. Five armed supporters of Reinado were killed but he 'miraculously' escaped and now blames East Timor's leadership for the deaths.

MAJOR ALFREDO REINADO (Translation): The loss of life is not by the Australians, not by foreign military, it is by the heads of our government who are to blame. Why not sit down and discuss this? Let people bear witness of who is right? That is justice. Are you scared? I know that you gave orders not to apprehend me but to kill me, because I threaten your political interests.

DR JOSE RAMOS HORTA: If there is a chance to have Mr Alfredo Reinado surrender to justice to have his day in court, to tell all he knows about weapons distribution, which Fretilin government is the one that has to answer, has to clarify, well, I'm prepared to provide him with safe passage and prepared to ask ISF, the United Nations please hold all operations. Because we are asking the church anyway, we are asking the church to mediate. The church has agreed and we continue to military operations while the church is mediating? It has nothing to do with me wanting votes.

MAJOR ALFREDO REINADO (Translation): My message to Mr Ramos Horta, who sold my name everywhere overseas for his own interests, please do not lie about dialogue that I am in person in Maubisse and Alieu. Until now there is no dialogue.

We will have to wait and see if Dr Jose Ramos Horta maintains the ban on Alfredo Reinado's capture if he is elected. For Fretilin, Horta's order to stop the hunt has already set a bad precedent.

ESTANISLAU DA SILVA: This is a concern because we need to maintain the integrity of the state. By calling off the operation without consent from other elected organs of the state can create a precedent that makes things unmanageable outside, make the business of the state unmanageable in the future.

At least until the election period is over Alfredo Reinado and his rebels appear to be secure.

GEORGE NEGUS: And for the record, we approached Jose Ramos Horta about Reinado's claims. He said, "He will not comment on baseless allegations and would never offer the presidency because that is the choice of the people." And the national newspaper in East Timor today said the hunt for Reinado will be officially called off.

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