WB tells Jakarta to get tough on corruption

WB tells Jakarta to get tough on corruption

Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post,
Jakarta

Apparently incensed by reports of widespread leakage affecting
loans from the Consultative Group on Indonesia (CGI), the World
Bank has urged the government to get tough on the country's
endemic corruption.

World Bank Deputy Director for Asia Pacific Jemal-ud-din
Kassum told President Megawati Soekarnoputri Friday that
eradicating corruption was necessary to create a conducive
investment climate.

"Corruption is always discussed and the World Bank would like
to see serious action (taken against embezzlers)," Coordinating
Minister for the Economy Dorodjatun Kuntjoro-Jakti said after
accompanying President Megawati during her meeting with Kassum.

However, the World Bank, one of the country's biggest donors,
did not say whether or not it would stop giving loans to
Indonesia if it failed to put an end to corruption.

There is no confirmed figure yet as to just how much money is
lost to corruption, but according to Kwik Kian Gie, the outspoken
State Minister for National Development Planning, rampant
corruption was costing the country some $28.4 billion per year.

This means that if the efforts to curb corruption were
successful, Indonesia would not need the help of foreigners for
its development financing.

The World Bank's call came amid reports that at least 20
percent of CGI loans for infrastructure projects were being
siphoned off annually by corrupt officials during implementation.

Non-governmental organization Indonesian Corruption Watch
(ICW) said earlier that corruption was worse now under Megawati
than under the leadership of former dictator Soeharto.

During the Soeharto regime, according to ICW, corruption was
committed by the Soehartos and their cronies only, while under
the administration of Megawati, who took over the national
leadership in July 2001, corruption was the domain of virtually
all members of the political elite.

Corruption is not only engaged in by the political elite here
in Jakarta, but even more so now at the regency and municipality
levels, where mayors and regents have become mini potentates
overnight with seemingly unlimited powers following the
introduction of local autonomy in 2001.

Kassum, who was also present during the press conference,
stressed that financial aid to the country would, to a great
extent, be determined by whether or not there were leakages.

"Making sure that the money goes where it is needed has been
the central driving force for donor programs in Indonesia, and
will continue to be so," Kassum emphasized.

Extensive corruption was widely blamed for plunging the
country into the deep economic crisis that led to the downfall of
strongman Soeharto in 1998 after he had ruled the country for
more than three decades.

On Friday, the Supreme Audit Agency (BPK) admitted that a
significant portion of foreign loans were being misused.

BPK chairman Satrio B. Judono said that embezzlement was
occurring in various overseas-funded projects across the country,
mostly at the hands of corrupt officials, with the rate of
leakage estimated at above 10 percent on average.

"The embezzlement is occurring in various departments," he
said.

Satrio's words came only a day after the National Development
Planning Board (Bappenas) gave a warning that the country might
lose some 20 percent of the funds pledged recently by the CGI, as
had been the case for years, due to corruption.

The Board's executive secretary, Koensatwanto Inpasihardjo,
said that the leakage was caused largely by mark-ups in project
costs.

The CGI, a grouping of the country's major bilateral and
multilateral creditors, granted US$2.7 billion in fresh loans to
Indonesia on Thursday to help cover the 2003 budget deficit.

Kassum refused to comment on the possible misuse of the CGI
loans saying that: "I have not seen the report as substantiated."

He underlined that donor countries were taking serious steps
to ensure the proper use of the money and guarantee transparency
in funds disbursement.

"We are all very committed to eliminating misuse of our funds
and the public's money," Kassum said.