Andrew Quinn, Jakarta – As cash donations pour in from around the world for the victims of Asia's tsunami, fears are rife that corruption will divert big chunks of the aid money before it reaches the disaster zone.

Foreign governments and donor institutions such as the World Bank – along with private citizens from London to Beijing – have opened their pocketbooks for the tsunami crisis, with pledged aid and donations reaching more than $7 billion by Tuesday.

For Indonesia, ranked among the most corrupt countries in the world last year by Berlin-based watchdog Transparency International, the influx is both a lifeline for desperate victims and a temptation for unscrupulous officials.

"The government faces a second tsunami of aid," said Luky Djani of Indonesia Corruption Watch, a non-governmental group. "They are deluged by the huge amount of donations and they don't know how to manage and how to deliver it in the right way."

For the United Nations, it's chance to prove it can manage the finances of major humanitarian missions after accusations it mishandled its oil-for-food programme in Iraq. Billions of dollars are believed to have been lost during that seven-year programme from kickbacks and skimming off contracts.

Corruption fears aside, the need for help remains acute. In Indonesia, the country worst hit by the December 26 earthquake and tsunami it spawned, more than 100,000 people died and another 600,000 are homeless.

President Susilo Bambang Yudhoyono, who took office in October pledging to eradicate graft, has said he will keep a sharp eye on aid distribution. The Minister for Social Welfare, Alwi Shihab, has told reporters relief payments will be audited so as to avoid "damage by greedy hands".

But analysts say the scale of the foreign assistance headed for Indonesia will put even the best intentions to the test. "Problems with corruption are so high it is almost inevitable," said Sidney Jones, an Indonesia expert with the International Crisis Group. "There is simply no history in Indonesia of the monitoring mechanism necessary to stop it."

Scattered reports, bigger fears

Indonesia's record of official graft gives cause for concern. Transparency International says the country's former President Suharto was among the most corrupt leaders ever seen, stealing anything up to $35 billion during his decades in power. His lawyers have denied the accusation.

Corruption watchdogs are already receiving scattered reports of problems with aid in Aceh, where officials have been accused of small-scale pilfering or reselling of aid supplies.

Aceh has seen a long-running conflict between government troops and separatists and is heavily patrolled by the Indonesian military – itself a frequent target of corruption charges.

Analysts say the situation is likely to worsen once emergency relief shifts to reconstruction work, with big projects promising bigger profits for corrupt officials. "If you look at the past, 30 to 40 percent [of aid] can be lost," Djani said.

Most aid agencies have thus far kept quiet about their fears, anxious not to discourage contributions. "We are aware corruption is kind of rife, but we're hoping it's not going to happen," an aid worker in Aceh said. "We have to hope that ultimately people are going to get what they need."

But some countries are speaking up. Australia, unveiling its biggest-ever single donation of A$1 billion ($750 million) for tsunami relief, insisted on control over how it is dispersed. "The last thing [the public] want is to see some of that money being siphoned off for corrupt purposes. That would turn the Australian public violently against aid of any kind," Foreign Minister Alexander Downer told reporters.

Jones of the International Crisis Group said aid groups and UN agencies would have to keep checking aid spending, while Indonesia Corruption Watch said it would send monitoring teams of its own to watch how much help was making it to local people.

The United Nations is applying lessons learned from the now-defunct Iraq oil-for-food programme by adopting measures to ensure greater accountability and transparency for the global tsunami aid effort, spokesman Stephane Dujarric said on Monday.

The world body has accepted a no-fee offer from accounting and consulting firm PricewaterhouseCoopers to help track tsunami aid, said Kevin Kennedy, a senior official in the UN Office for the Coordination of Humanitarian Affairs.

Among the measures being prepared are a way to let the public track every aid dollar via a Web site and the drafting of new rules to protect UN staff whistle-blowers.

Local analysts said the disaster marks an opportunity for Indonesia to show it could keep its own house in order. "Our reputation and credibility as a nation is at stake," Jakarta Post editor-in-chief Endy Bayuni said in an editorial this week. "If we can't handle this, and if the money so generously donated for victims of the disasters is embezzled, siphoned off, marked up – in other words, corrupted – it will bring a terrible shame to this nation."