Bappenas official warns of embezzlement of CGI loans

Bappenas official warns of embezzlement of CGI loans

The Jakarta Post, Jakarta

A day after the Consultative Group on Indonesia (CGI) pledged
higher than requested fresh loans for the country, the National
Development Planning Board (Bappenas) gave a stern warning that
the loans could well end up being embezzled by corrupt officials.

Bappenas executive secretary Koensatwanto Inpasihardjo said
that for many years, the loans from the country's traditional
donors had been pilfered, thus reducing their beneficial impact.

Speaking during a discussion on the CGI loans, he said that at
least 20 percent of the CGI loans for various infrastructure
projects each year had "leaked" during the implementation stage
of the projects. This occurred through corruption, especially the
marking up of project costs.

Koensatwanto said that Bappenas was currently investigating
the massive corruption, but quickly added that the board could
only play a monitoring role and had no power to impose sanctions.

He said that Bappenas would ask the President to issue a
special decree to tightly monitor the CGI-funded projects.

The CGI, which groups 30 bilateral and multilateral donors,
pledged on Wednesday at the end of its two-day meeting in the
resort island of Bali some US$2.7 billion in fresh loans to help
finance the 2003 state budget deficit.

The new loan commitment was announced amid rising calls for
the government to stop taking out foreign loans as these would
only create too much of a burden for the next generation due to
the already high level of foreign debt. There have also been
concerns that the new foreign loans would only be embezzled by
corrupt officials as happened in the past.

Unconfirmed reports previously said that around 30 percent of
World Bank loans fell victim to corruption during the 30-year
rule of former President Soeharto. This figure amounts to some
$10 billion.

The World Bank has admitted that the abuse took place, but
thus far has not stated a figure.

State Minister for National Development Planning Kwik Kian
Gie, who is also the chairman of Bappenas, has told the CGI forum
in Bali that the country would not have to beg for new loans from
the donors if it could curb the rampant corruption that cost the
cash-strapped country some $28.4 billion a year.

He said that among the losses to the state from graft,
Indonesia was losing around $9 billion from stolen or smuggled
logs, fish and sand, and $8 billion from tax leakages.

Elsewhere, Koensatwanto said that there were suspicions that
foreign donors might be playing a part in the embezzlement of the
CGI loans.

He pointed out that the donors had been aware that their loans
were embezzled by the previous corrupt regime, but they continued
to disburse the money.

University of Gajah Mada (UGM) economist Revrisond Baswir
shared Koensatwanto's view, saying that the embezzlement of the
CGI loans was part of a conspiracy between the government and
foreign donors.

He said that the government had deliberately set the state
budget each year in a deficit position to provide a reason to
continue borrowing from the CGI.