Leaking of World Bank aid

Leaking of World Bank aid

Ginandjar Kartasasmita, the minister of national development
planning and chairman of the national development planning board,
has stressed that he finds it difficult to believe the opinion of
Dr. Jeffrey A. Winters. Winters has said the leakage in aid
extended to Indonesia in the last three decades by the World Bank
has amounted to 30 percent of the total.

What Winters has said does not stand to reason because, if it
were true, projects funded by the World Bank would now be
paralyzed.

I know for sure that there is a leakage in loans from the
World Bank or other international financial institutions in
Indonesia. It is difficult, however, to figure out just how big
the leakage is. The figure may be between 10 percent and 30
percent of the value of the projects.

Once I took part in the tender and implementation of a project
for the supply of laboratory equipment. The funding for the
project was a loan from the Asian Development Bank (ADB), which
was extended to one directorate general at one ministry. This
equipment was to be sent to a number of regions in Indonesia.

There is a trick to getting projects:

a. there were nine supplying contractors who decided among
themselves who would be the winner of the tender. The eight other
contractors took part only for formality's sake and each got paid
2 percent of the value of the project.

b. the winning contractor supplied goods which were a very low
quality, for example Taiwan-made microscopes. Their price might
have been only 50 percent of the standard price for the items
which should have been supplied. These goods might be broken
after only a year's use.

c. the winning contractor distributed money to the project
officer, the project supervisor, the heads of the laboratories to
which the goods were sent and the paying treasurer.

The amount of money distributed might reach 30 percent of the
total value of the project. In Indonesia you must have guts to
get involved in collusion.

So, the winning contractor still enjoyed a profit amounting to
about 10 percent of the net value of the project. Unless you know
this trick and are ready to play the game, you will not get a
contract. Competition is really tough among contractors.

Obviously, the losing parties are the Republic of Indonesia
and our children and grandchildren who will have to pay off the
debts this country incurs.

I know a directorate general official who happens to be the
project officer of some projects funded by international loans.
He is very rich and is the owner of four houses in Jakarta. He
also owns one bungalow and two more houses outside Jakarta. He
has three cars and his children are educated in Australia. He is
only a civil servant of IV/A category and officially earns about
Rp 500,000 a month.

It is true that World Bank funded projects will not be
paralyzed because the administrative reports, made in the
knowledge of the bank's representative in Indonesia, are correct
and clean. However, the reports are in fact only a cover-up as
the quality of the projects is actually very low.

This system applies to most government projects funded by
either the state budget or by international loans. Collusion and
corruption grow well in Indonesia and will continue.

According to a 1996 annual survey and study conducted by
Transparency International in Berlin, Indonesia is the second
worst country in the world in terms of corruption. Topping the
list in this regard is Pakistan.

In Pakistan it was this very problem that brought down the
Bhutto regime. In Indonesia there is no cure for a corrupt
situation.

Is Golkar (the Functional Group), the winner of the 1997
general election, daring enough to eradicate corruption? Only
bragging about it is of no use.

SUHARSONO HADIKUSUMO

Jakarta