Indonesia: World Bank Issues Sanctions In ASEM-EU Asian Financial Crisis Response Fund

WASHINGTON, May 25, 2005 ¾ The World Bank announced the debarment of five individuals and two firms for corrupt and fraudulent practices in relation to the implementation of a $203,000 grant under the World Bank- administered “ASEM-EU Asian Financial Crisis Response Trust Fund.”  This grant was provided for the purpose of strengthening, safeguarding, and monitoring social safety net programs in Indonesia.  The Regional Planning and Control Project (RPCP) unit of the National Development Planning Agency implemented the grant, on behalf of the Republic of Indonesia.  The Bank found evidence of misrepresentation of bona fides, bid collusion and kickbacks.  The full amount of the project funds involved in this scheme was later refunded by the Government of Indonesia to the World Bank.

These firms and individuals will be ineligible to receive any new World Bank-financed contracts for the periods of their debarments. 

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/brief/corruption.

World Bank Country Director Andrew Steer said, "As we have said before, the World Bank's funds must go to help alleviate poverty for the people of Indonesia.  As this case shows again, we will be vigilant with regard to the use of Bank funds.  When we find instances of fraud and corruption, we will report them openly to the Government and work with them to see that action is taken.  All of us must work together to fight corruption and ensure that development works for the people most in need."

The World Bank investigation was handled by the World Bank’s Department of Institutional Integrity (INT) and involved the collection and analysis of documents as well as the interviewing of many witnesses in Indonesia.  The World Bank’s Sanctions Committee issued notices of debarment to firms and individuals involved in fraudulent and corrupt practices under the project.  All of the firms and individuals were granted the opportunity to dispute the charges. 

On October 2001, the World Bank, acting as administrator of grant funds provided from the ASEM-EU Asian Financial Crisis Response Fund, agreed to make a grant of US$573,025 to the Republic of Indonesia, of which only $203,000 was disbursed.  The grant was provided to fund the Strengthening, Safeguarding and Monitoring in and Beyond Social Safety Net Programs (SSMP) in Indonesia and became effective on November 26, 2001.  The Regional Planning and Control Project (RPCP) unit of the National Development Planning Agency (BAPPENAS) implemented the grant.  The purposes of the grant were to assist in improving the implementation of safeguarding and monitoring practices in social safety net programs, and strengthening and institutionalizing the various activities; as well as supporting provision of consultants’ services and workshops and training at the local level.

The debarred firms and individuals engaged in corrupt and fraudulent practices as defined by paragraphs 1.25(a)(i) and (ii) of the Bank’s 1997 “Guidelines (for) Selection and Employment of Consultants by World Bank Borrowers.”  Specifically, they engaged in fraudulent practices by misrepresenting the bona fides of the procurement process and contract execution and engaging in bid collusion.  With the exception of PT Planosip and its Managing Director Mr. Mansoer, these firms and individuals also engaged in a corrupt scheme whereby approximately 94% of the value of a $33,000 contract was paid as a kickback to officials working for the project’s implementing agency, the RPCP.

List of Debarred Firms and Individuals

The firm and individual listed below are debarred under the grounds of Consultant Guidelines 1.25(a)(ii).  Their ineligibility period is for 1 year from April 25, 2005 to April 25, 2006:

1. PT Planosip Nusantara Engineering, Bandung, Indonesia
2. Mr. Mohammad Mansoer, Bandung, Indonesia

The individual listed below is debarred under the grounds of Consultant Guidelines 1.25(a)(i).  His ineligibility period is for 1 year from April 25, 2005 to April 25, 2006.

1. Mr. Ade Imam Budiman, Bandung, Indonesia

The firm and individuals listed below have been debarred under the grounds of the Consultant Guidelines 1.25(a)(i) and (ii).  Their ineligibility period is for 3 years from April 25, 2005 to April 25 , 2008.

1. Mr. Luthfi Djatnika, Bandung, Indonesia
2. Mr. Hary Kustiawan, Bandung, Indonesia
3. PT Pemeta International, Bandung, Indonesia
4. Mr. Triko Eko Warso, Grogol, Jakarta Barat, Indonesia

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 Integrity Department (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, via email at: investigations_hotline@worldbank.org or on-line at http://www.worldbank.org/integrity

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

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