Money Pit; Reconstruction Contracts in Aceh Are Ripe for Corruption

Newsweek International, January 31, 2005 | Go to article overview

Money Pit; Reconstruction Contracts in Aceh Are Ripe for Corruption


Byline: George Wehrfritz and Joe Cochrane

Ari Asri is lucky for what she didn't lose in last month's tsunami: her family's construction business. Homeless yet eager to work on the reconstruction of her homeland, she traveled to the provincial capital, Banda Aceh, last week to seek work building a large resettlement camp Jakarta has earmarked for her home village. The camp in question--one of four financed by the international Christian charity World Vision--will house up to 2,500 people for as long as two years and cost roughly $750,000 to build. But when she got there, Asri discovered that another contractor, the brother of a prominent Acehnese businessman, was already in line for the contract.

So it begins. Even as international donors met in Jakarta to discuss a $4.5 billion, five-year blueprint for Aceh's reconstruction last week, questions began to emerge about the very first deals. Experts recognize that saving lives trumps all other concerns in an emergency. That's why normal purchasing practices, bidding rules and oversight are set aside in the hours and days after a crisis such as the tsunami. "But when do you switch from the emergency phase?" asks a prominent Jakarta-based development economist. "Things like temporary shelters can become permanent [because] there are those who want the situation to stay as blurred as possible. You end up with a very nontransparent way of doing business."

The threat is greater in Indonesia, the country worst hit by the tsunami, than in many of the other affected countries. By the time the dictator and crony capitalist Suharto was forced from office in 1998, corruption accounted for some 2 percent of GDP. Since then the number has risen, and the country has fallen 25 places in the Transparency International ranking of the world's most corrupt countries. The process of reconstruction after the tsunami has all the makings of a second disaster--billions of dollars in loosely monitored funds, chaotic if not nonexistent oversight on the ground and a system driven by nepotism, connections, insecurity and fear.

Little wonder that many disaster victims discount Jakarta's pledges to rebuild. "Long before the tsunami, the Indonesian government always had unfair policies toward us," says Jumuddin Hamzah, a local leader in the town of Krueng Raya. "We have little confidence in them." Suharto allowed his military to loot the province for dec-ades. His successor, B. J. Habibie, pledged peace and a railway link but delivered neither. Reformist President Abdurrahman Wahid allegedly pocketed part of a $2 million donation for humanitarian relief in Aceh from the sultan of Brunei, a scandal that contributed to his 2001 impeachment. Megawati Sukarnoputri followed, cutting a highway through Aceh's primeval forests.

New President Susilo Bambang Yudhoyono started to rebuild trust in the province when, shortly after his election last fall, he allowed the arrest on corruption charges of Acehnese Gov. Abdullah Puteh, long considered untouchable because of his broad political ties; Puteh is currently on trial in Jakarta. Yet tsunami relief presents new pitfalls. For starters, ambitious Vice President Jusuf Kalla--a wealthy businessman whose family conglomerate includes construction and cement companies--has been accused of attempting to take control of the relief effort.

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