Phelim Kyne, Jakarta – Rampant corruption will take a massive bite out of millions of dollars in aid to Indonesia's earthquake-stricken province of Aceh unless the government tightens control mechanisms, government officials and analysts warned Wednesday.
The northwestern province has a reputation for being the most graft-ridden in a country that ranks high on the watch lists of anti-corruption organizations.
The government has estimated that rebuilding efforts in Aceh will cost IDR10 trillion ($1.07 billion) over the next five years, and has allocated $150 million for emergency relief over the next year, in response to Sunday's earthquake and resulting tsunami. Millions of dollars in funds and material goods are expected to be donated to aid survivors and rebuild shattered infrastructure in the province, where official projections say up to 40,000 may be dead and half a million homeless.
The proportion of such funds vulnerable to corruption could exceed estimates of 30% of Indonesia's total budgetary funds lost to graft annually, said Danang Widoyoko, vice coordinator of independent watchdog Indonesia Corruption Watch.
"Aceh is where the most government money has been lost to corruption in all of Indonesia ... so there's a high risk of corruption in this situation," Danang told Dow Jones Newswires. "In our experience corruption worsens in humanitarian emergencies, like in the refugee situation in East Timor."
Existing official emergency-response bodies are ad hoc and lack audit mechanisms to minimize theft of aid by corrupt officials, said Emmy Hafild, secretary general of the Indonesia chapter of international anti-corruption organization Transparency International.
"Most problematic ... is the [emergency] food, medicine and clothes that may be taken either by private hospitals, military users or by traders who will resell it," Hafild said.
Even Indonesia's Minister of Social Affairs, Bachtiar Chamsyah, Wednesday cautioned against "black-headed rats" in the country's bureaucracy whose corrupt tendencies imperil effective distribution of Aceh aid.
Indonesia ranked as one of the world's 14 most graft-plagued nations by Transparency International's 2004 global Corruption Perceptions Index, and President Susilo Bambang Yudhoyono has bemoaned that corruption is "systemic" to the country. Aceh has long been recognized as its most corrupt region.
Government vigilance unreliable
The government's imposition of martial law on Aceh in May 2003, in response to an escalating pro-independence insurgency, has effectively gutted civil supervisory and monitoring mechanisms there, Danang said.
While rescue workers scrambled Monday to assist survivors in Aceh, the provincial governor went on trial for offenses including theft of state budget funds and padding the purchase price of a Russian-built Mi-2 helicopter, for personal gain which cost the government more than IDR10 billion.
The province accounted for almost half of the estimated IDR2.7 trillion in national revenue lost to corruption by the end of August, Indonesia Corruption Watch's Danang said.
Indonesia's central government recognizes the vulnerability of humanitarian assistance heading to Aceh and is taking measures to protect that aid, Coordinating Minister for the Economy Aburizal Bakrie told reporters Wednesday.
Bakrie said government efforts to reduce graft will include subjecting all reconstruction contracts to the supervision of the state auditing agency.
But emergency and reconstruction funds and materials which end up under control of Aceh's provincial government are likely to go astray, Standard Chartered economist Fauzi Ichsan suggested.
"If aid goes through reputable nongovernment organizations ... the room for corruption would be pretty tight, but if aid distribution is done through local government and bureaucrats, the threat of funds not being accounted for is pretty big," he said.
International nongovernment humanitarian assistance organizations say they're aware of the challenges that corruption poses to getting aid to the people who need it most, and are gearing distribution systems accordingly.
A successful relief operation in Aceh hinges on delivering actual relief goods rather than cash to affected populations and overseeing every step of the distribution chain, said John Budd, Jakarta-based spokesman for the United Nations Children's Fund, or UNICEF. "It's not like we're just taking this money and handing it out and saying 'Here, spend it,'"," he said.
Reconstruction funds particularly vulnerable
Transparency International's Emmy Hafild said the risk of corruption will persist long after the initial humanitarian emergency crisis in Aceh has passed.
Donor funds pegged to rebuild infrastructure including roads, schools and hospitals will come under threat from bureaucrats with long experience in plundering government coffers.
Indonesia's government is counting on the World Bank and the Asian Development Bank to provide up to $3 billion in currently "unproductive or undisbursed" country loans to support infrastructure reconstruction, Minister of Finance Jusuf Anwar said Tuesday.
Neither lender has made specific monetary pledges for such projects, but Jakarta-based representatives of the two institutions say they will strive to mitigate the impact of corruption on any loans they may issue to support Aceh reconstruction.
One such strategy might be to directly funnel such lending to community-driven development projects that eliminate the role of bureaucratic middlemen in disbursing funding, said Mohamad Al-Arief, a communications officer in the World Bank's Jakarta office.
"We're aware of the risk of corruption and siphoning-off of funds and we're determined to make arrangements that would minimize this risk," the ADB Resident Mission in Indonesia's governance adviser, Staffan Synnerstrom, said.
"But this is also a new situation with a lot of solidarity for the people there, which may actually decrease corruption."
Indeed, cooperation with the government to date in Aceh suggests that expectations for huge losses to corrupt officials is both unkind and exaggerated, Oxfam Great Britain's Country Programme Manager David Macdonald indicated.
The government has set up an organizational structure designed to quickly and efficiently deliver emergency aid to Aceh's residents, Macdonald said.
"We understand that Indonesia has been flagged as having higher-than-average levels of corruption...but I think the traditional impression of Indonesia really won't apply in this case," he said.