After the tsunami, waves of
corruption By Bill Guerin
JAKARTA - The outpouring of foreign aid
and donations to Indonesia in the wake of the
December 2004 tsunami is being pilfered by corrupt
government officials and their affiliated business
interests.
That's the disturbing
conclusion of a number of independent studies
conducted by anti-graft watchdogs focused on the
reconstruction efforts in the tsunami-hit province
of Aceh, where an estimated 167,700 people were
killed, 37,000 went missing
and
500,000 were internally displaced by the killer
waves.
Total damages were estimated by the
government at more than US$4.5 billion. Amid all
that loss and suffering, the list of documented
corruption allegations is growing, and even
officials attached to the government's Aceh and
Nias Rehabilitation and Reconstruction Agency,
known locally as the BRR, openly admit to
corruption among their ranks.
Indonesian
Corruption Watch (ICW), an independent
non-governmental organization (NGO), recently
released a report alleging irregularities,
corruption and collusion in at least five major
BRR-managed projects valued at a total of Rp23.8
billion ($2.6 million), including the publication
of reports, the appointment of staff and the
procurement of office equipment.
Aceh-based public prosecutors recently
accused Achyarmansyah and Hendrawan Diandi, senior
government officials overseeing tsunami-related
reconstruction, of corruption for allegedly
inflating the price of the agency's annual report,
"Developing the Promised Land". And that's just
what's transpiring in the office; the suspected
scale of the on-the-ground corruption in Aceh's
swampy, devastated coastal areas is estimated to
be much worse.
Based on such concerns,
some international organizations have scaled back
their relief work in Aceh. UK-based NGOs Oxfam and
Save the Children both suspended key projects in
Aceh after being fleeced by building contractors
who improperly used the money to build substandard
structures. Oxfam had earlier committed to spend
$97 million in the region but pulled back on those
plans after discovering financial irregularities
in its operations. An outside auditor recently
recovered $20,000 of $22,000 paid for construction
materials that had been booked but not delivered.
Akhiruddin Wahyuddin, coordinator of the
Aceh-based Anti-Corruption Movement (Gerak), has
publicly contended, though without citing full
documentary evidence, that "30-40% of all the aid
funds, Indonesian and international, have been
tainted by graft". He even goes as far as to
describe the salaries paid to BRR executives as
"another form of legalized theft of public funds".
According to Gerak, BRR chairman Kuntoro
Mangkusubroto is budgeted substantially more in
salary, Rp75 million per month, than even
President Susilo Bambang Yudhoyono, who makes a
mere Rp62.7 million per year.
The 2004
tsunami destroyed an estimated 1.3 million homes
and buildings, eight seaports, four gas depots,
85% of clean-water facilities, 92% of sanitation
facilities, 120 kilometers of roads, 18 bridges
and 20% of electrical distribution points in Aceh
and adjoining areas. The total damage bill was
estimated by the government at $4.5 billion,
representing 2.2% of Indonesia's gross domestic
product and 97% of Aceh province's annual economic
production. Beyond the enormous loss of life, the
waves also destroyed about 40,000 hectares of rice
fields and 70% of the fishing industry, according
to the United Nations.
In the wake of the
disaster, more than $4.4 billion was speedily
pledged by foreign governments and donors with few
strings attached. To be sure, there were
preliminary concerns that much of the money would
end up in the wrong pockets. Even before the
tsunami, civil-war-ravaged Aceh was rated as one
of the most corrupt provinces in Indonesia.
Abdullah Puteh, the former governor, was sentenced
to 10 years in jail for so-called
"self-enrichment" after he misused state funds in
2002 in the purchase of a Russian helicopter.
Post-tsunami hopes were that a strong
media presence and Yudhoyono's widely perceived
no-nonsense approach to governance would mitigate
those risks. More than a year and a half later,
however, the huge scope and scale of the
reconstruction effort and the massive amounts of
cash involved are reinforcing the province's old
corrupt practices, corruption-watchdog and some
multilateral-organization staffers say.
Indonesia has long been ranked by
independent global corruption watchdogs such as
Transparency International as one of the world's
most corrupt countries. And the types of public
works projects now under way in Aceh are
historically the most prone to corruption and
graft, in both the developed and developing world,
the anti-corruption watchdog group contends. Faced
with the challenge of coordinating and checking
the largest ever disaster-relief effort, massive
amounts of foreign aid have swamped the
bureaucracy's absorptive capacity.
Good
intentions It wasn't supposed to be this
way. Yudhoyono called on global consulting hot
shots McKinsey & Co for advice on how to
design and monitor the BRR in the spirit of
maximum transparency and accountability. Moreover,
Yudhoyono chose Stanford University-educated
engineer and former energy minister Kuntoro
Mangkusubroto, known for his incorruptibility in
government and diplomatic circles, to lead the new
agency.
Formally established in April
2005, the agency is now tasked with coordinating
and managing both the state budget and overseas
donations for reconstruction and oversees a total
budget of Rp13 trillion. This includes some Rp2.4
trillion from the state budget for reconstruction
projects, which, in turn, is funded by an interest
moratorium on Indonesia's global debts agreed to
by the Paris Club of developed creditor nations
The BRR has so far approved 181 different
projects amounting to $410 million, including the
construction and reconstruction of basic
infrastructure, schools, hospitals and housing.
The completion of about 120,000 makeshift houses
to shelter some 500,000 internally displaced
persons is expected by the end of 2007.
BRR spokesman Tuwanku Mirza Keumala told
Asia Times Online that after initial logistical
and bureaucratic hurdles, new houses are being
built at a faster pace than at any time since the
initial disaster. Some outside observers even
suggest Aceh's health care and education are
better now than before the tsunami.
The
Multi Donor Fund, which includes the European
Union and the World Bank, has in the past year
completed the construction of 2,800 houses,
1,000km of roads and a number of new bridges while
creating 24,500 desperately needed new jobs.
That record has made some foreign donors
more forgiving than others. In July, top officials
from the EU and the World Bank praised the Aceh
reconstruction progress, deeming it better than
recovery efforts in the United States after
Hurricane Katrina devastated New Orleans and other
coastal areas.
Scott Guggenheim, the World
Bank's Indonesia-based sector coordinator for
social development, says it would be difficult to
expect the BRR to top its present achievements
given the logistical problems of the areas.
"So far, only 1% of the reconstruction
fund is unaccounted far, but we learned that in
Louisiana the amount of funds that was misused was
$2 billion," he told a press conference in Aceh in
July. "Everyone would be happier if they could
have 120,000 houses in six months. In Nias, where
cement has to be carried on the backs of
motorcycles, it is ridiculous to hope for the
building of 10,000 houses within a year."
Of a total $7.1 billion pledged by donor
countries and agencies, only about $4.6 billion
has so far been formally committed. But as
allegations of systemic corruption gather pace,
it's unclear whether future disbursements from
foreign donors will or should be as forthcoming.
Blame game Indonesian officials
are surprisingly open about the corruption and
graft allegations.
When asked about the
ICW corruption claims, BRR spokesman Keumala told
Asia Times Online that his agency openly
acknowledges the group's findings and will use
them to revisit the BRR's internal controls. He
added that the BRR was open to a thorough
independent investigation and said the agency had
nothing to fear as it has worked faithfully to
deliver on its mandate. He said BRR head
Mangkusubroto has been a stickler for bidding
protocols on reconstruction projects, where his
insistence that every contract be processed
through transparent bidding and tendering systems
has been criticized in some quarters for slowing
down the pace of reconstruction. Asked about such
criticisms, Keumala said the delays are due to the
BRR's "commitment to achieving a high degree of
effectiveness, transparency and quality".
At the same time, Teuku Kamaruzzaman, a
former rebel leader and second in command at the
BRR, has publicly said the reconstruction and
rehabilitation agency directly appointed several
"partner" companies for projects to speed up
reconstruction and avoid technical and
bureaucratic hurdles in an emergency.
There are growing indications that local
Acehnese and ethnic-Javanese authorities from
Jakarta in many cases don't see eye to eye on how
the reconstruction efforts should best proceed.
According to a top UN official, local
non-governmental activists are treating
reconstruction projects as battlegrounds where
they compete for donor funding and, once it is
secured, misuse it for their own personal benefit,
leaving the dislocated locals to fend for
themselves.
"It is common for me to see
them benefit from disaster-recovery projects:
another project, another new flashy car for each
of them," said Puji Pujiono, head of the UN Office
for the Coordination of Humanitarian Affairs.
A United Nations Children's Fund (UNICEF)
official in Nias says his agency plans on building
more than 150 new schools across the
disaster-ravaged island. However, that process is
being encumbered by local officials in the
island's southern area of Teluk Dalam who
consistently ask for more money than was
originally agreed, often for undisclosed reasons.
For example, the UN agency set up a
water-treatment plant in one area agreed to with
local officials, but was later charged by the same
officials for the land. There is an inherent
threat in such requests for more funds, the
official suggests: in mid-2005, a non-food-item
distribution center run by the International
Committee of the Red Cross was burned down and its
staff members evacuated by helicopter amid a
conflict between local groups competing for aid
resources.
Last December, local media
reported that BRR head Mangkusubroto was preparing
to expel a number of NGOs that had failed to
fulfill their obligations and were hindering
reconstruction efforts. Nearly 10 months later,
many of the accused NGOs are still operating in
disaster areas. Keumala says that's because, on
reflection, the BRR chief felt that "it was better
to give all involved in the recovery effort, in
whatever capacity, more time to show their
merits".
For Yudhoyono, retaining the
goodwill of the international community is vital
for the development of Aceh and to encourage badly
needed new foreign investments for the rest of the
country. Directly elected in a landslide victory
in 2004, Yudhoyono has since made
corruption-busting a cornerstone of his reform
program, and Aceh is putting that policy to its
biggest test.
Approaching the end of his
second year in office, the former general turned
political reformer has been nominated for - and
tipped to win - this year's Nobel Peace Prize for
his efforts to bring peace to war-torn,
disaster-stricken Aceh. But a successful
reconstruction effort is pivotal to maintaining
the peace that has held with the rebels whom
Jakarta fought for more than 30 years.
The
Acehnese have long complained that the central
government does not equitably share the wealth
generated from the province's bounty of natural
resources. Despite a sixfold increase in
Aceh-specific revenues since 1999 - mainly from
tsunami aid, as well as extensive oil and gas
sales - Aceh remains Indonesia's fourth-poorest
province, according to official statistics.
Speeding up reconstruction and rebuilding
the local economy are essential economic
incentives to bring former fighters out of the
jungles and back into mainstream society. However,
the emerging allegations of official corruption
will only reinforce local perceptions of central
government abuses and threaten to sour the terms
of the peace deal that has allowed a substantial
amount of reconstruction to proceed.
Bill Guerin, a Jakarta
correspondent for Asia Times Online since 2000,
has worked in Indonesia for 20 years, mostly in
journalism and editorial positions. He has been
published by the BBC on East Timor and specializes
in business/economic and political analysis
related to Indonesia. He can be reached at
softsell@prima.net.id.
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