Battling cancer of corruption

By Dennis de Tray and Jean-Michel Severino

JAKARTA (JP): The vigorous debate taking place in Indonesia on the emotionally charged issue of corruption is certain to raise awkward questions for government, for international agencies, for foreign and local businesses, for non-governmental organizations and other sections of society. All have some knowledge of the extent of corruption and all must share in the search for solutions.

It is worth noting that interest in this anticorruption campaign goes well beyond the shores of Indonesia. Other countries, developed and developing, as well as international organizations and companies, are watching the unfolding debate here for lessons and guidance, because corruption is an international problem which has defied an easy solution.

The central issue is not whether 20 percent of development funds were or were not misappropriated because figures such as these are the roughest of rough estimates. What really matters is that corruption is widespread in Indonesia and it poses a major obstacle to economic growth and fairness. Wherever it is found it must be stamped out.

The questions now being raised here may be awkward, but it is important that they be answered if Indonesia is to emerge from the present financial and social crisis and build a strong, sustainable economy for generations to come. Finding those answers will require us all -- including the World Bank -- to honestly evaluate history, including our own successes and failings, so that we can emerge with an acceptable way of tackling what has been accurately called "the cancer of corruption".

And it truly is a cancer. Left to its own devices, corruption spreads throughout a society and an economy, hurting the poor and, by its very nature, misallocating valuable resources.

The World Bank directives are clear; we do not tolerate corruption. We have been working for some time now to reduce the opportunities for corruption in our projects and, more broadly, in government and the civil service. But it is a huge task that will need the best efforts of all stakeholders.

In addition to its long-standing efforts to fight corruption, the bank in the past two years has taken a number of additional steps designed to reduce the chances for corruption in projects with which we are associated, and to strengthen government and civil service capacity to deal with corruption.

Some of the steps we have taken include:

* Increasing the involvement of NGOs, the media and other elements of civil society in monitoring the implementation and effectiveness of projects. We have also tightened the supervision of our projects.

* Addressing "collusion, corruption, and nepotism" (KKN) through the conditions attached to Indonesia's economic recovery program. In particular, the World Bank has led the charge within the donor community in confronting the big monopolies, internal trade barriers and other significant sources of corruption and nepotism. Success in this will be critical for Indonesia to obtain maximum benefit from continuing international assistance.

* Raising "KKN" as a major issue at the Consultative Group meetings on Indonesia last year and earlier this year. There is now a consensus between the government and its international donors on the need for good governance, openness and transparency. We are engaged in a dialog with the government on a broad anticorruption initiative, to be backed by a structural adjustment package later this year.

These are important steps, with significant implications for all Indonesians. But they are the beginning, not the end, of the real fight against corruption. Progress will do much to attract foreign investment, and maximize the impact of foreign assistance. For this reason, there is a need for a comprehensive and cooperative anticorruption program in which the government, civil society and the international community work together to deal with the culture of corruption.

The bank is considering a number of initiatives such as a project watchdog committee comprising NGOs and other members of civil society, and increased use of independent audits and international public sector reform specialists. We have begun discussing these steps with the government and civil society, and will continue to do so.

In the past few weeks, we have witnessed the emergence of several initiatives in Indonesian civil society to address the issue of corruption. The World Bank has already started working with these new groups, and is eager to do more.

The campaign against corruption continues to be a major priority in our dialog with the government and will have a significant influence on future lending. Current and future lending to Indonesia, including adjustment loans, permits the bank to push the dialog on corruption in a way that was not possible in the past. This program allows us to offer more support and protection to the tens of millions of poor Indonesians who are suffering the effect of an economic collapse.

In the final accounting, only the people of Indonesia can solve the problems of Indonesia, including corruption. But the World Bank stands ready to help in any and every way we can. This is a time of unprecedented opportunity to engage in open and spirited debate. This is a debate that may cause short-term pain and embarrassment to many people and organizations, inside and outside the country. But it will also bring great long-term benefits to Indonesia and, for that reason, it is a debate that the World Bank welcomes and actively supports.

Dennis de Tray is the World Bank's country director in Indonesia, Jean-Michel Severino is its vice president for East- Asia and the Pacific region.