Govt, WB deny alleged wastage of loan funds

JAKARTA (JP): The government and the World Bank separately denied yesterday allegations that one-third of the Washington- based bank's loans to Indonesia since 1965 have been wasted through collusion and corruption.

State Minister of National Development Planning Ginandjar Kartasasmita rejected the allegations as "groundless" -- while the World Bank's Vice-President for East Asia and the Pacific, Jean-Michel Severino, rejected the accusations as "demonstrably untrue".

Both officials were commenting on a statement made here Monday by Jeffrey A. Winters, an American associate professor of political economy at Northwestern University, Illinois, who said that a "large proportion of loans" the World Bank had lent to Indonesia since 1965 had been wasted and were "unaccounted for".

Winters said his conclusions were based on information he gathered from former head of the Jakarta World Bank office, Atilla Sonmez, on Jan. 3, 1990 and other executives of the bank in Washington and Jakarta.

Winters, at a news conference here, elaborated on an article he wrote for the Feb. 13, 1997 issue of the Hong Kong-based Far Eastern Economic Review weekly magazine.

"About 30 percent of the money lent to Indonesia by the World Bank routinely disappears somewhere inside the (Indonesian) government," the article says.

Ginandjar said Winters' method of arriving at such sweeping allegations was doubtful as they were based largely on conversations with the bank's officials.

"As a scholar, it's deplorable that Winters has taken such a reckless way of jumping to conclusions. He should have supported the figure he cited with more rational explanations," Ginandjar told The Jakarta Post.

"I therefore completely doubt Winters' professional competence in so far as his assessment on the use of the World Bank loan funds in Indonesia is concerned," Ginandjar said.

Ginandjar said the World Bank has always tightly supervised its loan disbursements and its projects are subject to internationally competitive bids.

"I think, given its tight and elaborate procedures, it would be impossible to have such a high level wastage of loan funds," Ginandjar said.

"Even if there were a leakage (of the World Bank loans to Indonesia), I completely doubt the figure (cited by Winters). I also doubt the seriousness and nature of his conversations with Sonmez," he said.

Separately, in a statement faxed from Washington D.C., Severino also mentioned the bank's tight loan supervision.

He said: "We know exactly where our money is going. Worldwide we have very stringent standards for disbursement of our loans. If supervision of our projects produced any evidence of misappropriation or misallocation of our funds, we would take swift action to stop it. We do not tolerate corruption in our programs. On this principle there is no compromise."

Severino said the bank was puzzled by Winters' allegation. "We have checked his claim, which he has made in the past, and found nothing to support such an estimate."

"We have had a small number of projects rated unsatisfactory by the Bank's own assessment standards, but Indonesia retains one of the best records of successful project implementation of any of our client countries across the developing world," Severino said.

Dennis de Tray, the country manager of the World Bank here, also regretted Winter's allegations.

"It is deeply regrettable that our work for the people of Indonesia should be misrepresented in this way. The procurement of goods and services financed under Bank loans is conducted through open, transparent and competitive international procedures. Funds are disbursed only to suppliers of these goods and services under contracts approved by the Bank," De Tray said.

The World Bank, one of the largest donors of international aid to Indonesia, announced recently US$1.5 billion in new loan commitments to Indonesia, up $300 million from last year.

"There is full accountability on the use of Bank funds through a comprehensive system of independent ex-post financial audits of project accounts. The bank itself carries out separate reviews on the use and development impact of its loans," De Tray said. (aan)

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