WB loans graft needs to be curbed<\/p>\n
By Kastorius Sinaga<\/p>\n
JAKARTA (JP): An allegation by an American expert recently
\nthat approximately one third of World Bank loans to Indonesia had
\nbeen siphoned off by bureaucrats reminds us of a 1995 survey that
\nranked the country as the most corrupt in private investment.<\/p>\n
The allegation was made last month by Prof. Jeffrey Winters of
\nNorthwestern University, Illinois, and the survey was done by
\nTransparency International.<\/p>\n
Although the focus of the expert (investments in the public
\nsector) differs from the focus of the survey (investments the
\nprivate sector), if we combine the two diagnoses, the saying
\n\"nothing is well organized in this country except corruption\"
\nseems not far from the truth.<\/p>\n
To both Winters and Transparency International, the
\nbureaucracy is the source and venue of corruption. It would be
\ntherefore quite relevant if we tried to reconstruct corrupt
\npractices and find breakthroughs to reduce the level of
\ncorruption in World Bank-funded projects.<\/p>\n
Corruption is everywhere, with its variables such as graft,
\ncollusion and manipulation, and is a general phenomenon, the
\noldest disease of a public institution called bureaucracy.
\nHowever, this disease becomes more chronic and institutionalized
\nin soft states like Indonesia and other developing countries.<\/p>\n
The institutionalization of corruption can be seen as a
\npolitical symptom in a country where the bureaucracy plays a
\ncentral role that manifests itself as a \"political clique\". In
\nthis condition personnel recruitment tends to be colored by
\nnepotism yielding in effect an unprofessional government and weak
\nsupervisory instruments.<\/p>\n
Although corruption is an economic issue, on a macroscale it
\nis linked with politics, a factor which alienates the masses from
\nthe elite.<\/p>\n
Why? Because those who corrupt public assets are those who
\nhave access and authority in the distribution of the assets. Or,
\nin the case of bribes in project tenders in the public investment
\nsector, such as World Bank-funded projects, those who pay and
\nreceive bribes are those who are close to the decisionmakers.
\nThey are in a position to appropriate project funds so that only
\na little is left for the poor communities which are the very
\ntargets of the projects.<\/p>\n
It is very hard indeed to determine precisely the percentage
\nof corruption in development projects managed by the government.
\nNevertheless, if we study the planning, the tendering and the
\nimplementation of projects, a number of sensitive points can be
\nidentified.<\/p>\n
First, for the sectoral department in charge of the project's
\nmanagement, a project is an additional source of income so that
\nthe markup of a project's scale and cost is kept confidential.
\nThese practices have become common, with the low salaries of
\ncivil servants even encouraging corruption so that it in fact
\nserves as a bonus, an incentive for them to work and get results.<\/p>\n
Second, the process of transferring financial benefits from
\nthe public to the private sector through direct assignment of
\nproject management, privatization programs or concessions often
\ndo not take place in a transparent way.<\/p>\n
On a macroscale this has become increasingly institutionalized
\nin keeping with the practices of monopoly and oligopoly in our
\neconomic system.<\/p>\n
Third, the process of awarding bids for projects in the
\nprovision of goods and services and in construction, both with
\nthe central and the provincial administrations, is predominantly
\ndetermined by either family linkage or \"good\" relationships.<\/p>\n
Failing either one of these conditions, one can still obtain
\nfavor through the provision of money. Therefore, in the tender
\nprocess the phenomenon of entrenched corruption takes place and
\nthe winner of the bid is engineered between the project leader
\nand the bidder based on material compensation.<\/p>\n
Obviously a contract winner would have to manipulate prices,
\nvolumes and technical requirements to make up for the phony
\nexpenditures. In one research I found that in projects tendered
\nat the regional (kabupaten) level, a 10 percent stake of a given
\nproject is put aside for the regent. An additional 2.5 percent is
\nneeded when a project is carried out during special events, like
\nthe general election for example.<\/p>\n
Thus, a development project is no longer a provision of public
\nfacility for the welfare of the community. For the bureaucracy,
\nit seems, a project is a means to reap an economic bonanza for
\nprivate interests.<\/p>\n
If the World Bank has given an impression of passive tolerance
\nfor corruption practices in Indonesia, it is apparently caused by
\nvarious factors including the role of the state as a pillar for
\neconomic growth and a guardian of the sustainability of
\ndevelopment in general.<\/p>\n
However, this has changed in the past five years. Indonesia's
\nprivate sector and foreign investment have increasingly taken
\nover the role of the state in economic growth as well as in the
\nproduction and marketing of goods and services.<\/p>\n
Although the World Bank is testing projects to curb corruption
\nthrough cutting the chain of bureaucracy with programs like the
\none for least developed villages, the village infrastructure
\nproject and the district development fund, this endeavor has yet
\nto be qualified as an active policy of the World Bank in
\nIndonesia.<\/p>\n
It is time for the World Bank to make a breakthrough to reduce
\nthe level of corruption. First, an education program for
\nIndonesian journalists to enable them to investigate corruption
\npractices of project funds by the bureaucracy.<\/p>\n
Second, the World Bank must involve NGOs in monitoring the
\nimpact of projects funded by them and the use of the loans by the
\nbureaucracy.<\/p>\n
The World Bank has successfully introduced these measures in
\npoor countries in Africa and was successful in reducing the
\ninappropriate use of loans. Why is the World Bank not interested
\nin doing the same in Indonesia, which is one of its biggest
\nclients?<\/p>\n
The writer is a lecturer for post-graduate studies of social
\nsciences, University of Indonesia, Jakarta.<\/p>\n
Window: If the World Bank has given an impression of passive
\ntolerance for corruption practices in Indonesia, it is apparently
\ncaused by various factors including the role of the state as a
\npillar for economic growth...<\/p>",
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