Govt doubts WB report on graft
JAKARTA (JP): The government questioned yesterday the accuracy of a World Bank internal memorandum that disclosed Indonesian officials were believed to have siphoned off more than 20 percent of the bank's loan funds.
"To me, the 20 percent figure is a big question mark. How could they have reached at that figure," asserted Budhy Tjahjati, a deputy for foreign economic cooperation at the National Development Planning Board (Bappenas).
Tjahjati was commenting on a front-page story in the Asian Wall Street Journal yesterday which quoted the bank's memorandum that attributed much of the corruption to the ruling Golkar party, particularly in the two years leading up to the general election in May, 1997.
The report, prepared for senior bank officials, largely ascribes the problem to a colonial bureaucratic system that presumes civil servants will supplement their low wages by moonlighting, receiving kickbacks or siphoning off state funds, according to the Journal.
Tjahjati suspected that World Bank officials might have misunderstood the matter, wrongly concluding that funds had been embezzled which in fact might well have been used for either data gathering, land acquisition or the advance payment of rupiah (local) costs due to delays in state budget disbursement.
"I think Dennis de Tray (the World Bank's country manager for Indonesia) should be more specific as to which projects had been affected by corruption and to what extent, so that we can take the appropriate steps.
"If the World Bank lets the issue linger based on such a general, open-ended report, our image in the international community will be damaged," Tjahjati added.
She said that if the report was not true " we could sue the writer".
Tjahjati admitted some "leakage" in the World Bank loan funds but their amount could not have been as large as the internal memorandum stated.
Latest reports put World Bank loan disbursements in Indonesia as of July, 1997, at around US$11 billion.
De Tray was not available for comment yesterday as he is overseas but Ben Fisher, a senior economist at the World Bank office here, acknowledged that the report did not refer to any specific projects.
"The internal memorandum was intended to be a general framework for discussions with the Indonesian government in an ongoing effort to improve project implementation," Fisher said.
He said he could not know exactly how the report could have reached that figure because it was difficult to find specific evidence.
"True, we closely monitor and supervise project implementation and whenever we find any misappropriation we act firmly and immediately to stop fund disbursement," Fisher said.
He confirmed there were cases where the World Bank had acted to stop or annul disbursement until the problem was settled but he acknowledged it was extremely difficult to put a specific figure on the amounts embezzled.
The Journal quoted the report as saying that much of the corruption involved state contracts with firms owned or controlled by government officials and their relatives.
The memorandum, according to the newspaper, cited "numerous reports of diversion of 50 percent to 80 percent of funds budgeted for project land acquisition and resettlement assistance," areas in which the World Bank has participated heavily.
It found the worst siphoning of funds -- defined as 25 percent or more -- in the ministries of home affairs, transmigration, and forestry, the Journal said.
The analysis, based on reports prepared by World Bank staff in Jakarta, appears to reflect the bank's awakening to global allegations of Indonesia's endemic corruption.
On July 29, 1997, World Bank Vice President for East Asia and the Pacific Jean-Michel Severino flatly denied a statement made by Jeffrey A. Winters, an American associate professor at Northwestern University, Illinois, in Jakarta that about 30 percent of the money lent to Indonesia by the World Bank routinely disappeared somewhere inside the Indonesian bureaucracy.
"We have checked his claim which he has made in the past and found nothing to support such an estimate," Severino asserted in a statement in Washington.
Severino said at the time: "Indonesia retains one of the best records of successful project implementation of any of our client countries."
The World Bank's new, tougher stance on the issue of corruption seemed to have been instigated by its own president, James D. Wolfensohn, who together with International Monetary Fund Managing Director Michel Camdessus expressed determination to escalate the war against corruption at their annual meeting in Hong Kong last September.
"We have been pushing this line on corruption since last year and we will again reaffirm to our board of governors that it is an area we will not withdraw from," Wolfenshon stated in Hong Kong. (rei/vin)