Govt, WB deny alleged wastage of loan funds

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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