One-third of WB loans unaccounted for: U.S. expert

One-third of WB loans unaccounted for: U.S. expert

JAKARTA (JP): About a third of the World Bank's loans to
Indonesia have leaked and disappeared into the bureaucracy, an
American expert on Indonesia's economy said yesterday.

Jeffrey A. Winters, an associate professor at the Northwestern
University in Illinois, blasted the World Bank at a press
conference hosted by the International NGO Forum on Indonesian
Development (Infid).

Winters blamed the World Bank's global "don't ask, don't tell"
policy for the continuous theft of aid money.

The World Bank, one of the major contributors of international
aid to Indonesia, announced July 17 in Tokyo, Japan, that it
would increase its aid to Indonesia by US$300 million for 1997-98
to $1.5 billion.

The World Bank office here refused to comment because its
director, Dennis De Tray, was overseas.

Several government officials at the National Development
Planning Board refused to comment on Winters' statement.

Winters estimates the World Bank has agreed to lend about
US$20 billion to Indonesia since the bank was established in 1965
but the exact figure was not available from the bank.

Winters, whose doctoral studies focused on Indonesia and the
World Bank, said the figure of a third of World Bank money
disappearing into the bureaucracy came from one of the bank's
former directors in Jakarta.

"Since then, half a dozen bank officials, both in Jakarta and
Washington, D.C., have given the same estimate. Indeed most have
pointed out that 30 to 33 percent is a conservative estimate, and
that such levels of theft and leakage are not uncommon in
developing countries like Indonesia," Winters said.

He said it would be disastrous for the bank to admit publicly
that loan funds were routinely stolen in Indonesia but that "they
quite readily admit privately that such leakage is substantial".

"One of the most disturbing aspects of the World Bank's close
relationship with the Indonesian Government is that for three
decades the bank has allowed a large proportion of its loan funds
to leak into the government bureaucracy and disappear.

"The bank knows the money is being stolen, its staffers have a
general sense of how large the problem is, but there is no
concrete data on such theft because the bank does not collect
such data," Winters said.

"In short, the World bank has a global policy of don't ask,
don't tell," he said.

Winters said the World Bank should immediately start assessing
how much of the World Bank's total loans to Indonesia had been
stolen.

"Upon determining the level that has leaked into the
bureaucracy, that amount should be forgiven," he said.

He said since the World Bank supplied funds in a continuous
way it had to know that money was not being used as intended and
that it was unfair that ordinary Indonesians, especially the
poor, had to pay back these funds with interest.

"If the average Indonesian received only two-thirds of the
loan funds from the World Bank, why should they be required to
pay back 100 percent with interest?" Winters asked.

"The average Indonesian does not have the power to impose
limits on the actions of government officials. But the World Bank
does have the leverage, and it should begin to use it
immediately," he said. (aan)