Jakarta – A consultant with the World Bank in Central Sulawesi rejected on Tuesday a statement that a bank-funded project in Donggala regency in 2002 was marred by corruption.

"The statement is not true. Every project in the World Bank is supervised tightly," said Yuliana, a consultant employed by the World Bank in Donggala regency, a few dozen kilometers northwest of Palu, the capital of Central Sulawesi. Yuliana was commenting on the statement by Iskandar Sukirman, the chief of the Donggala prosecutor's office, who was quoted by Antara news agency on Sunday as saying that a project manager in the World Bank program named ZC had been declared a suspect in a Rp 700 million (US$82,350) graft investigation.

Yuliana said that she and other World Bank consultants had checked out the statement and discovered that ZC was not the manager of a World Bank program but rather a government official in the Donggala administration's Community Empowerment Board.

Yuliana said that ZC was also a project manager in the Subdistrict Development Funds scheme, a program run by the Donggala administration to help alleviate poverty in the regency.

"The suspect was in charge of the various projects. He [allegedly] embezzled money from a project funded out of the Donggala regency budget. The project has nothing to do with World Bank projects," she said.

Similar comments were voiced by Lily, an officer employed by the World Bank's National Management Consultant for District Development Programs (PPK) in Jakarta.

She said that the World Bank had nothing to do with the programs headed by ZC. "Probably, the money involved was provided by other institutions – certainly not the World Bank," she told Antara.

Separately, an investigation by Antara in Donggala administration indicates that ZC has embezzled some Rp 700 million out of a total of Rp 3 billion in Subdistrict Development Funds provided by the Donggala administration – not by the World Bank.

"He should have channeled funds to all subdistricts in Donggala that were targeted by the program, but he failed to do so. He reported to the Donggala regent and other Donggala government officials that he had paid out all the money, but when we checked with local people, many of them said that they had yet to receive the funds," said a source in the Donggala administration.

The investigation by the Donggala prosecutor's office has produced indications that ZC embezzled Rp 700 million out of a total of Rp 3 billion. The source said that there could well be other suspects in the case, but added that this would ultimately be up to the Donggala prosecutor's office.

Separately, Iskandar Sukirman acknowledged that he had made a mistake. He confirmed that the money allegedly embezzled by suspect ZC was not provided by the World Bank, but by the Donggala administration.

"He embezzled the money from a poverty alleviation project run by the Donggala administration – not by the World Bank," he told Antara.

He added that his office was preparing charges in the case, and once these were finalized, ZC would be brought to trial.

The World Bank disbursed a grant in 2002 worth Rp 6.75 billion to finance district development programs (PPK) in seven districts in Donggala regency.

The money was used to provide soft loans to small and medium enterprises, funding for infrastructural development and scholarships for school dropouts. The program benefited 46, mostly poor, subdistricts in the regency. The program has been underway since 1999.