How graft rears its ugly head in aid projects<\/p>\n
By Donna K. Woodward<\/p>\n
This is the first of two articles on corruption in
\ninternational aid organizations.<\/p>\n
MEDAN (JP): Shortly after Indonesia's liberation from the
\nSoeharto reign, allegation after allegation of corruption,
\ncollusion and nepotism (KKN) appeared in the press.<\/p>\n
Headlines scream: \"Residents complain of KKN in Bupati X's
\noffice\" or \"Workers demand an end to KKN in PEMDA Y\". But there
\nwere others: \"There's no KKN in this office\", \"No Sir, we don't
\ndo KKN here\" and \"Not here either!\"<\/p>\n
KKN was everywhere, and it was nowhere.<\/p>\n
Now a World Bank internal report whispers that there is
\ncorruption in its projects too. While the bank's country
\ndirector, Dennis de Tray, quickly disavowed the report (though
\npresumably it was one to which his staff contributed), economist
\nKwik Kian Gie considered the 20 percent figure realistic, and The
\nJakarta Post editor thinks 30 percent may be a more accurate
\nfigure. How is this possible?<\/p>\n
Foreign-funded development projects tend to come with lots of
\nstrings attached, and foreign consultants whose presence lend the
\nproject not only technical but also managerial and fiscal
\ncredibility. Programs and accounts are audited, and every rupiah
\nthat goes out from the project is accounted for.<\/p>\n
Considering all the internal controls and the foreign experts,
\nsurely there is only minimal token leakage in these projects. How
\ncould there be wholesale graft in projects funded by the World
\nBank, or other international groups such as the Asian Development
\nBank, the EU, USAID, AUSAID, etc?<\/p>\n
Outright embezzlement, which is rather hard to succeed at, may
\nnot even be necessary, if projects sponsored by international
\norganizations allow for personal enrichment via petty graft.<\/p>\n
Let us visualize a hypothetical development project. First,
\nour project must rent office space and staff housing. But our
\nproject, it seems, has paid more than the market value for its
\nspace. Why?<\/p>\n
Part of the excess rent may have been charged to pay for extra
\nrenovations. But there are more questionable possibilities. Is
\nthe building owned by a friend or relative of a project insider?<\/p>\n
Is any of this excess rent being \"kicked back\" to the
\nindividual who made the deal between the owner of the office
\nbuilding and the project, or indirectly to an official who
\napproved the development project?<\/p>\n
But leases and receipts are all in order. Forget the receipts!
\nThey are not sacred script and need to be reviewed in the light
\nof common sense.<\/p>\n
If a project is paying much more than the market price for an
\noffice, a plot of land, a contractor's service, equipment and
\nsupplies and others, then a conscientious administrator or
\nauditor should question this, receipts notwithstanding.<\/p>\n
A higher fee may be justified and legitimate. But
\ndisproportionately high fees should, at the very least, be
\nquestioned by the person responsible for authorizing payments.<\/p>\n
This presupposes that the person knows relevant market prices,
\nand this is often the first deficiency. The expatriate consultant
\ndoes not know the local market and does not do the legwork
\nrequired to learn it.<\/p>\n
Next, the project needs to recruit local staff. How
\ntransparent is the recruitment process? Are positions advertised?
\nHow much of an edge are friends of the project leaders and
\nfriends of friends of the project leaders given when positions
\nare filled?<\/p>\n
If someone is given job preference based not on qualifications
\nbut on a relationship to a staff member of the project, will the
\nmost qualified person be hired? Maybe not. And where will that
\nemployee's loyalties lie, if, later, there is any conflict of
\ninterest?<\/p>\n
Once there is a building and staff, equipment is needed. When
\ngoods and services are purchased, are tenders solicited
\ntransparently? Or are contracts and purchases instead used as a
\nway to reward local officials who are friends.<\/p>\n
\"Let's give this construction\/catering\/you-name-it contract to
\nthe nephew of General A; after all, we need the government's
\nsupport in Location A, and the general is helpful. What's so
\nwrong with giving his nephew the job?\"<\/p>\n
What's wrong is that the nephew may be only a mediocre
\ncontractor or caterer, unable to deliver adequate results.<\/p>\n
Or he may inflate his prices because a foreign aid project is
\npaying and \"everyone knows they have lots of money. Let's make a
\nlittle extra while we can.\"<\/p>\n
Or the nephew-contractor may inflate his prices so he has
\nmoney to give a commission to his favorite uncle, the general.<\/p>\n
Indeed, he may inflate his contract price to factor in a
\ncommission or gift for the project leader who awarded him the
\nproject. When equipment is needed, it's, \"Let's let Employee B
\norder the office equipment from his wife's cousin's company. That
\nway we'll get good service and a good price too.\"<\/p>\n
Cousin, on the other hand, may not have the same sense of
\ncommitment to the project's welfare, instead feeling a greater
\ncommitment to his children's school fees.<\/p>\n
Is it really a good deal for the project? Without proper
\ntenders, who can say?<\/p>\n
The writer, an attorney and former American diplomat at the
\nU.S. Consulate General in Medan, is president director of PT Far
\nHorizons.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/how-graft-rears-its-ugly-head-in-aid-projects-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}