Sarah Smiles, Canberra – Nearly $1 million of Australia's foreign aid budget is feared to have been used fraudulently in the past four years.
Much of the money was part of AusAID's tsunami aid program in Indonesia, according to an audit report released yesterday. AusAID's total budget for the period was $7 billion.
AusAID – the Federal Government's overseas aid program – had backed some projects with "limited supporting rationale" after the tsunami in Indonesia, according to yesterday's report, released by the National Audit Office. AusAID also lacked risk management systems to ensure aid was delivered quickly and effectively.
Protracted negotiations with Indonesia over providing the aid has meant that only $70 million of $500 million pledged in grants has been handed out. The provision of an extra $500 million in concessional loans will begin at the end of this year.
The Australia-Indonesia Partnership for Reconstruction and Development (AIPRD) program was set up after the 2004 tsunami, which killed 167,000 people and caused an estimated $7 billion in damage in Indonesia. AIPRD is the biggest aid commitment Australia has ever made.
The report said the scope of the program and its "partnership nature" had presented substantial administrative challenges to AusAID. It said AusAID's rush to provide help after the tsunami had complicated decisions.
"To hasten initiatives on the ground, funds have been committed to some projects with limited supporting rationale, reflecting incomplete knowledge of development needs at the time," it said.
A risk and fraud management plan was completed only in February, a year after AIPRD was launched. "By the time risk management plans had been put in place, some risks had already materialised, particularly the pressures on the timely and effective delivery of aid," the report said.
Of 43 cases of fraud in AusAID's overall aid budget in the past four years, six – worth nearly $24,000 – occurred in Indonesia. The report identified fraud and corruption as key problems in the country, with collusion between bidders plaguing aid projects.
It recommended tighter management of projects and more risk assessment and controls to prevent corruption. AusAID must also improve the transparency of its public reporting.
Kate Wheen, campaign co-ordinator for AID/WATCH – which monitors Australia's foreign aid spending – said she believed AusAID had demonstrated a "lack of transparency" in Indonesia. "AusAID was the least transparent (organisation) in allowing our researchers access to their projects," Ms Wheen said.
AID/WATCH said several projects in Aceh had floundered because of a lack of community consultation. "It was a common response from communities that, simply, they had not been consulted over projects," she said.