Contact: In Jakarta: Prabha Chandran (62 21) 5299-3084 pchandran@worldbank.org
In Washington:
Mohamad Al-Arief (202) 458-5964
malarief@worldbank.org JAKARTA. August 14, 2006 - The World Bank has uncovered corruption in connection with the ongoing Eastern Indonesia Regional Transport Project (EIRTP) and preparation of the Strategic Roads Infrastructure Project (SRIP). The World Bank’s recently completed investigation found evidence showing that a consulting company involved in the implementation of the EIRTP and the preparation of the SRIP made facilitation and gratis payments exceeding US$300,000 to officials in the Ministry of Public Works in the implementation of contracts valued at about US$6 million in the EIRTP and the preparation of the SRIP project. The Minister of Finance Sri Mulyani has requested the Heads of the Corruption Eradication Commission (KPK) and the Financial and Development Supervisory Board (BPKP), and Minister of Public Works, to take administrative and/or legal action to investigate these allegations and to prosecute offenders in accordance with Indonesian law. The cases are now being investigated by the Corruption Eradication Commission. What mitigation measures are the Government and the World Bank planning to implement in light of the findings in this case? The Government of Indonesia (GOI) and the World Bank have agreed upon a number of strong measures for mitigation of corruption risks in the roads sector, which are to be implemented via the proposed SRIP project. There are four key building blocks related to the agenda on anti-corruption, being pursued in this case: the GOI will enhance project specific safeguards through a fortified anti-corruption framework; the GOI will strengthen the monitoring and fiduciary safeguards capability within the Ministry of Public Works; the World Bank will coordinate closely with, and support the work of, relevant Government agencies, viz., the supreme audit agency (BPK) and the anti-corruption agency (KPK); and the World Bank will work with the GOI over the longer term to build a robust, sustainable governance framework.
More specifically, with respect to the SRIP, the Government has committed to the following: strengthening procurement arrangements; using a recognized Procurement Agent in the selection of key large consulting contracts; using a Procurement Advisor to assist in the civil works procurement process; the use of e-procurement; using timely technical and financial audits; and creating enhanced disclosure, website, and complaint handling system, combined with the engagement of civil society observers.
The Bank’s anticorruption team in the Jakarta office has developed enhanced anticorruption measures in the project beyond what is normally required in the Indonesia projects, and for its part will enhance Bank supervision and monitoring including via “early warning indicators” and strengthened ex-post audits and reviews of complaints. The Bank will work closely with BPK and KPK to enhance the supervision of the SRIP project. There will be rigorous follow-through on complaints and sanctions in conjunction with the Bank’s Department of Institutional Integrity (INT) unit. The World Bank, on the basis of its finding of corruption, has declared misprocurement in connection with the SRIP contract, as well as cancelled the portion of the EIRTP loan associated with the affected contracts. The Bank has requested the Government of Indonesia to repay a total of approximately US$4.7 million, US$1.1 million of which will be applied to the PHRD Grant – representing the disbursed amounts under the affected contracts in both SRIP and EIRTP.
The INT will determine whether there is a basis under the standards set out in the rules and procedures of the Bank’s Sanctions Committee, to seek to initiate debarment proceedings against the consulting company. The Government of Indonesia has asked the KPK and BPK to assess what action, judicial or other, can be taken under its laws. More information:
 About the World Bank's Department of Institutional Integrity
Eastern Indonesia Region Transport Project (project documents)
Indonesia Strategic Roads Infrastructure Project (project documents)
For more information about the World Bank in Indonesia, please visit: http://www.worldbank.org/id |
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