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.]