AP Enterprise: Critics see potential for massive theft of

AP Enterprise: Critics see potential for massive theft of
international reconstruction aid to Indonesia[ AP Photos XSP126-
128 of Jan. 21[ AP Graphic TSUNAMI LOGO[ By SLOBODAN LEKIC=
Associated Press Writer=
EDITOR'S NOTE: This is one of a series of special reports by AP
correspondents marking one month since the tsunami wrought death
and devastation to Asia and Africa on Dec 26.
JAKARTA, Indonesia (AP) -

Critics see potential for theft of aid on massive scale

Slobodan Lekic
Associated Press/Jakarta

International financial institutions paid about US$35 million in
the late 1980s to build the highway that meanders from Jakarta's
Soekarno-Hatta International Airport to the city, crossing
picturesque rice paddies and fish ponds.

But the 1.2 meter-thick layer of crushed stone that was
supposed to keep the pavement above flood level was never laid
and the project became known as the "highway heist" -- a glaring
reminder of the corruption here that donors must overcome in
aiding areas shattered by the Dec. 26 earthquake and tsunami.

With hundreds of millions of dollars pledged as relief aid,
many fear that corrupt officials in Indonesia will devour a
portion of the humanitarian funds.

Thousands of relief workers -- from the U.S. Navy and Marines
to UN agencies and private organizations -- rushed to deliver
food and water and establish temporary shelters for hundreds of
thousands of survivors along the battered coasts of Sumatra
island. As the mission becomes one of rebuilding rather than
emergency aid, observers say the conditions for corruption are
rife.

"Based on our past experience in other disasters in Indonesia,
corruption is highest in the reconstruction and rehabilitation
phase, rather than during the emergency response," said Luky
Djani, from the independent watchdog Indonesia Corruption Watch.

"We want to focus our monitoring efforts on reconstruction and
rehabilitation because in these two stages corruption will be
rampant."

Indonesia's media has taken the lead in warning of the
potential pitfalls.

"It is well known that the government's credibility is very
low in preventing and eradicating corruption," an editorial in
The Jakarta Post said. "This has raised doubts as to whether the
government will be able to handle public money from all over the
world in a transparent manner."

President Susilo Bambang Yudhoyono has moved quickly to
preempt the potential crisis by appointing international
accounting agency Ernst & Young to track the relief funds. He
also has pledged to work with donor countries to ensure that aid
for tsunami victims is not stolen by corrupt officials.

"There will be no corruption," said Coordinating Minister for
People's Welfare Alwi Shihab, who is in charge of the relief
effort. To bolster the promise, he said the government would
publish a monthly list of all aid "contributions and where it is
going to avoid any suspicion."

The government has estimated that rebuilding efforts in the
most devastated area, Aceh province, will cost at least US$4
billion over the next five years. The earthquake and wave
flattened wide swaths of Indonesia's Sumatra island, killing tens
of thousands and sweeping whole villages into the sea. Some towns
will have to be rebuilt from scratch.

Susilo's administration has said that most foreign governments
that have pledged aid are insisting that they be allowed to
manage the funds.

The Cabinet was drawing up plans for the use of aid in the
reconstruction and rehabilitation phases that would guarantee the
donations are channeled to tsunami victims, said National
Development Planning Board chairwoman Sri Mulyani Indrawati.

This would include the creation of a new management structure,
where donors could track the progress of projects they are
financing and the way their money is being used.

Staffan Synnerstrom, a senior official of the Asian
Development Bank, insisted that outside lenders were determined
"to make arrangements that would minimize this risk."

However, administrators who have seen corruption in the past
warn that the new safeguards don't go far enough. Kwik Gian Gie,
an economics minister in the former administration of President
Megawati Sukarnoputri, predicted that on building or
infrastructure projects, it was "safe to assume a 40 percent
markup."

Aceh has long been regarded as one of Indonesia's most graft-
ridden provinces. Power in the province is largely in the hands
of the military, widely regarded as one of the country's most
corrupt institutions.

The province is extremely rich in natural resources -- the
liquefied gas industry alone, which supplies much of Japan's and
South Korea's needs, brings in about US$5 billion a year.

Critics warn that as efforts to rebuild the shattered
infrastructure get under way, it will be difficult to keep
contractors with ties to the army brass and top bureaucrats from
padding their bids or claiming to have performed nonexistent
tasks.

GetAP 1.00 -- JAN 26, 2005 08:29:42