Indonesia: World Bank Sanctions Indonesian Publishers in Book and Reading Development Project

Washington, September 28, 2004 ¾ The World Bank announced the debarment of 10 individuals and 26 firms for fraudulent and corrupt practices in relation to the World Bank-financed “Book and Reading Development Project” (BRDP) in Indonesia. These firms and individuals will be ineligible to receive any new World Bank-financed contracts for the periods of their debarments. The World Bank also announced the issuance of four letters of reprimand in connection with the same project.

These actions are part of the World Bank’s broad anticorruption efforts initiated by President James Wolfensohn in 1996. More information on the World Bank’s overall anticorruption policies and activities can be found at http://www.worldbank.org/anticorruption.  Information about the active anticorruption program of the World Bank in Indonesia is found at http://www.worldbank.or.id.

World Bank Country Director Andrew Steer welcomed the ruling, saying that, “the funds we lend must go to help the people of Indonesia reduce poverty.  In this case, getting textbooks into the hands of Indonesian school children was an urgent need and donors responded to meet that need.  The World Bank has worked closely with the Government of Indonesia to uncover and correct the diversion of funds from this project through corrupt practices.”

Following an investigation by the World Bank’s Department of Institutional Integrity (INT), the World Bank declared misprocurement and requested the Government of Indonesia to repay $10,000,000 from the disbursed proceeds of the loan and to prepare and implement an acceptable action plan to improve the procurement process in the education sector.

The Book and Reading Development Project-related debarments mark the culmination of an investigation launched by the World Bank in late 2000 following an article in the Indonesian news magazine “Tempo,” in which allegations of fraud and corruption in the implementation of the BRDP were made.  The World Bank investigation was handled by INT and involved the collection and analysis of documents as well as the interviewing of many witnesses.  The World Bank’s Sanctions Committee issued notices of debarment to firms and individuals allegedly involved in fraudulent and corrupt practices under the project.  All of the firms and individuals were granted the opportunity to dispute the charges.  The Sanctions Committee’s debarment decisions were based on a preponderance of the evidence that in every one of the three completed procurement rounds of the project, the debarred publishers engaged in fraudulent and corrupt practices in the procurement process.

The period of debarment varied between two years, for those individuals and firms which participated in the scheme but not as principal organizers, to 15 years for those individuals and firms which played a central role in the scheme and were its primary beneficiaries through the size and/or number of contracts they won under the project.  One firm and three individuals received public letters of reprimand from the World Bank, but remain eligible for World Bank-financed contracts.

The BRDP, which commenced in October 1995, was implemented by the Ministry of Education and Culture (MOEC) and sought to improve the quality of basic education in Indonesia through the supply of and demand for textbooks.  The BRDP was funded in part from an International Bank for Reconstruction and Development (IBRD) loan valued at $132.5 million, which funded the purchase of textbooks for Indonesia’s junior secondary schools.  The project envisioned four rounds of textbook procurement over the years 1996-2000.  For a number of reasons, the fourth procurement round was cancelled and the project closed on December 31, 2001, having disbursed only $53, 232,000 of the loan amount.

List of Debarred Firms and Individuals and Letters of Reprimand:

The firms and individuals listed below are debarred under the grounds of Procurement Guidelines 1.15(a)(i) and (ii).  Their addresses vary, as shown below, and their ineligibility period is from September 8, 2004 to September 8, 2006:

PT Penerbit Erlangga, of Jakarta, Indonesia

Mr. Gunawan Hutauruk, of Jakarta, Indonesia

PT Grasindo, of Jakarta, Indonesia

Mr. P.M. Winarno, of Jakarta, Indonesia

Mr. Frans Parera, of Jakarta, Indonesia

Ms. Ibu Ace/Acue Amir, of  Jakarta, Indonesia

PT Ganeca Exact, of Bandung, Indonesia

Mr. Muslim Faisal, of Bandung, Indonesia

Mr. Ketut Suardhana, of Bandung, Indonesia

PT Mitra Gama Widya, of Jakarta, Indonesia

Mr. Mayhuddin Al Mudra, of Jakarta, Indonesia

PT Mizan, of Jakarta, Indonesia

CV Cempaka Putih, of Jakarta, Indonesia

PT Trigenda Karya, of Bandung, Indonesia

PT Pabelan, of Jakarta, Indonesia

PT Surya Angkasa, of Semarang, Indonesia

PT Edumedia, of Jawa Timur, Indonesia

PT Tiga Serangkai, of Jawa Tengah, Indonesia

CV Aneka Ilmu, of Jakarta, Indonesia

CV Djatnika, of Jawa Barat, Indonesia

CV Bumi Aksara, of Jakarta Timur, Indonesia

CV Titian Ilmu, of Bandung, Indonesia

CV Selangkah Maju, of Indonesia

CV Kendang Sari, of Surabaya, Indonesia

The firms and individuals listed below are from Bandung, Indonesia, and the grounds for their debarment is Procurement Guidelines 1.15(a)(i) and (ii).  Their ineligibility period is from September 8, 2004 to September 8, 2019.

Mr. H. Syaefullah Sirin

CV Grafindo

CV Multi Trust

PT Pribumi Mekar

Mr. Wimpy Ibrahim

Ikip Malang/Yayasan Penerbit Ikip Malang

PT Indah Jaya Adipratama

PT Mapan

PT Multi Adiwiyata

Mr. Rozali Usman

PT Remaja Rosda Karya

PT Balai Pustaka

The firm and individuals listed below received Letters of Reprimand:

PT Kanisius

Mr. E. Surono

Mr. F.X. Supri Harsono

Mr. I. Puja Raharja

Background Information
World Bank funds are provided to help developing countries reduce poverty. The World Bank has the responsibility to ensure that the loans and credits it extends, and the trust funds that it administers, are used for their intended purposes. This policy is enforced through a comprehensive array of rules and procedures aimed at ensuring high standards of integrity, transparency, and accountability in World Bank-supported projects. The procurement procedures for World Bank-financed projects are monitored by World Bank staff to ensure that the process is free from fraudulent practices and corruption.

The World Bank Department of Institutional Integrity (INT) is charged with investigating allegations of fraud and corruption in World Bank-financed projects.  The department reports directly to the President of the World Bank and is staffed by a multinational team of more than forty professionals, including investigators, legal specialists, forensic accountants, procurement specialists and experienced World Bank project managers.  Additional information can be found at http://www.worldbank.org/integrity.

Allegations of fraud and corruption related to World Bank-financed projects can be reported to 1-800-831-0463 24 hours a day and an international AT&T operator with international translation is available.  To reverse charges (collect calls) dial 704-556-7046.  Reports may be anonymous, and can also be made in person or online at: investigations_hotline@worldbank.org

The sanctions process is an internal administrative process within the World Bank.  It provides for due process to all parties involved in the sanctions process.  For more information on procurement and sanctions, see: http://www.worldbank.org/procure

For more information on the World Bank’s anticorruption policies and activities, see: http://www.worldbank.org/anticorruption