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Saturday, October 3

Indonesia's earthquakes and President Obama's promise of American aid. Not so fast, sir.

Akhiruddin displayed the list of 15 contractors on his Microsoft Excel spreadsheet, showing a web of companies and subcontractors. Most appear to be controlled by a few individuals related to one another. “They were supposed to sink foundations up to 60cm,” he said. “But we found they’d just propped wooden stilts on stones and dug no foundations at all. The timber was substandard and already warping.”

A tragedy is unfolding in Indonesia, which was hit by powerful earthquakes on Wednesday and Thursday in the country's Sumatra region. The current death toll is around 750 but the United Nations estimates that as many as 4,000 people could be buried under rubble.

The impulse for those standing outside the tragedy is to race to help, and aid organizations from around the world have already converged on Indonesia.

Yesterday President Barack Obama spoke with Indonesian President Susilo Bambang Yudhoyono and according to a White House statement "offered, on behalf of the United States, to do everything we can to help alleviate the suffering and provide assistance to the relief operation."

I appreciate that he made the offer. Yet the story unfolds with sickening predictability, an old story, always the same story in Indonesia and in many parts of the world. In one area the only people who survived the earthquakes were those who were not caught in the death trap of their houses. Concrete, particularly sub-standard concrete and building practices, earthquakes, and humans don't mix well.

The stench of corruption in Indonesia is as strong as the stench of decomposing corpses after every natural disaster to strike that country, which sits in the Pacific "Ring of Fire," and which sees frequent earthquakes, volcanic eruptions, and tsunamis.

This is not the time for recriminations but it's never a good time. Aid workers and government officials can become furious when the subject of corruption is broached, particularly while a disaster is unfolding. They say, 'Yes, forty percent of all aid is stolen, but that's not a reason to withhold aid to the neediest.'

The problem is that the theft of forty percent (the figure is just an estimate; in many instances theft from an aid/loan project is much higher) has become the global standard. This is because aid from wealthy governments, and the NGOs that work with them, has been based largely on defense and trade considerations.

The desire of the wealthy donor governments to buy influence with the recipient governments, not the desire to help the neediest, has been the motive for much charity and many development loans. Given that mindset, corruption has been greatly tolerated by the donor governments because it's considered part of the cost of doing business.

So over the past half century, which saw the veritable industrialization of international aid and development loans, corruption that was spawned by stealing from such funds spread like a cancer across the world; it financed criminal networks and terrorist organizations, which are now threatening to destroy civilization.

Another argument is that emergency relief assistance is a special category of aid that shouldn't be constrained by draconian attempts to rein in corruption. The spirit of the argument has merit but it doesn't square when donor governments are deeply in debt and have to borrow in order to give aid.

The page has turned. We're in a new era, and foreign aid initiatives of all kinds must adjust to the new realities. For the Americans, that means every aid dollar from public and private sources is precious.

Indonesia's government has been working hard in recent years to address their country's corruption, which is so endemic that President Suharto once told Paul Wolfowitz, "What you Westerners consider corruption we call taking care of family."

I can't speak for the entire West but what we Americans should consider corruption is the theft of our dollars from us.

I once suggested on this blog in all seriousness that Soccer Moms be put in charge of budgets for U.S. aid projects. I'm talking about the kind of mothers who calculate whether driving ten miles to a sale is worth the price of the gasoline used in the round trip.

That penny-pinching attitude must rule U.S. foreign aid from here on out. It's based on the view that only by conserving our funds can we afford to donate to a host of good causes in other countries. That means we develop zero tolerance for corruption no matter how awful the tragedy crying out for aid. On a very limited budget, we can only afford to help the neediest when we don't let ourselves be robbed blind.

To pound home the point I've dredged up this April 16, 2006 report from the (London) Sunday Times Online
Massive fraud hits tsunami aid
Michael Sheridan, Banda Aceh

THIS was supposed to be the scene of the world’s greatest aid effort, but endemic corruption has drained it of millions of pounds while leaving tens of thousands of tsunami victims stranded in tents.

Banda Aceh was ground zero in the tsunami of Boxing Day 2004, which claimed more than 200,000 lives across the Indian Ocean. More people died here than anywhere else.

Now two charities that raised unprecedented sums in Britain have fallen victim to rip-offs that ruined their efforts to house the survivors and have forced them to suspend key projects.

Save the Children and Oxfam were both targeted by unscrupulous building contractors who took their money, only to build structures so flimsy that a new wave would wash them away.

Save the Children may have to write off more than £400,000 worth of building contracts. Oxfam, which counts its losses in “tens of thousands of pounds”, has stopped its construction work around Banda Aceh until investigators establish the extent of the abuse.

Indonesian anti-corruption campaigners, who uncovered the Save the Children case, have also assembled a dossier of fraud and incompetence that reveals why the Jakarta government and international aid agencies have failed in their promises to the survivors of Aceh.

“We calculate that 30% to 40% of all the aid funds, Indonesian and international, have been tainted by graft,” said Akhiruddin Mahjuddin, an accountant who investigates aid spending for the Aceh Anti-Corruption Movement.

The movement is partly funded by foreign donors and its findings are regarded as credible by embassies and aid agencies.

The betrayal is all the more cruel because it has been committed, in the main, by the Acehnese themselves. Indonesia, which lost more than 131,000 people, got the most pledges of aid, totalling $6.5 billion (£3.7 billion). It has already collected $4.5 billion in funds.

The aid effort won praise for saving thousands of lives by prompt action to stop disease and to restore clean water supplies.

Yet the bereaved, the orphans and the dispossessed are eking out their 16th month in tents and shacks flung down amid palm groves and rice paddies around this sweep of ravaged coast, ringed by sharp-toothed green mountains, in the north of Sumatra.

Funds have been frozen. Projects wait on hold while worried aid administrators fly in and out of Banda Aceh clutching audit reports. Bureaucratic and political paralysis means only 10.4% of the funds allocated by the government have actually been spent, said Akhiruddin.

Of the 170,000 homes promised to the people of Aceh, only about 15,000 have been built, one year and four months after the tsunami.

Save the Children intended to help bridge the gap by funding 741 buildings, including schools, in the Bireun, Pidie and Lhokseumawe districts of the province, issuing contracts worth £404,000.

Akhiruddin displayed the list of 15 contractors on his Microsoft Excel spreadsheet, showing a web of companies and subcontractors. Most appear to be controlled by a few individuals related to one another.

“They were supposed to sink foundations up to 60cm,” he said. “But we found they’d just propped wooden stilts on stones and dug no foundations at all. The timber was substandard and already warping.”

His team recommended that Save the Children demolish all 741 buildings and start again. The contractors have been dismissed but neither compensation nor criminal proceedings are likely, he said.

Save the Children issued a statement to the Indonesian media, acknowledging problems with the Aceh projects and promising to put them right.

Jasmine Whitbread, chief executive of Save the Children, said this weekend: “During routine evaluation and monitoring, we discovered the poor workmanship and immediately took steps to rectify the situation, including terminating the contract and instigating repairs. We will tolerate nothing less than the most efficient and effective use of money.”

Oxfam has sent in five investigators, including a former police officer, to unravel the skein of apparent corruption that has led to losses in its Banda Aceh office and forced it to suspend construction.

“We took the decision because of the need for accountability and also to make it clear that aid agencies are serious about these issues,” said Craig Owen, a spokesman. “We are committed to spending £42m here over three years and you have to remember that this is like rebuilding an area the size of Birmingham: it’s a challenge.”

Oxfam plans to resume work in phases while the investigation team prepares its report and recommendations.

According to Akhiruddin, however, these woes are a mere fraction of the frauds. Among the cases that his investigation uncovered were:

o Indonesia’s government reconstruction agency spent £6.3m on temporary housing that was either overpriced or fictitious. “I went to one site in Aceh Besar and found no barracks had been built at all,” said Akhiruddin.

o More than £40,000 was embezzled from a children’s food distribution centre.

o One aid group paid for 70 new houses, only to find that its own local staff had occupied most of them.

o Another bought 100 new fishing boats for £1,166 each when a fair price was £800 per vessel. The cost difference came to £86,600.

o A German aid group sent £1.4m raised from provincial newspaper readers, promising to rebuild 400 homes. So far one has been built.

The government reconstruction agency is trying to fight internal corruption, said Akhiruddin. It cancelled 90% of tenders in one two-month period last year. But having issued a blacklist of 18 companies deemed unsuitable for contracts, it hastily withdrew the list. Kuntoro Mangkusubroto, the agency’s head, is respected for his personal honesty and has pledged to clamp down.

Last week Susilo Bambang Yudhoyono, Indonesia’s president, vowed there would “be no safe haven” for the corrupt. He was backed up by Paul Wolfowitz, president of the World Bank, who has spearheaded tough lending guidelines for borrowers such as Indonesia.

But the politics and scrutiny all take up time. “The consequences are that people’s suffering is being prolonged unnecessarily,” said Akhiruddin.

While the contractors and their accomplices enjoy the fruits of their misdeeds, one young survivor, a girl named Fajriyana, is still living in a blue plastic tent in the mud.

The Sunday Times found Fajriyana there last December and told her story of miraculous survival, of the loss of her mother and her reunion after many months with her father and sisters, who had believed that she was dead.

Fajriyana celebrated her fourth birthday in the tent on February 4. “I have scraped together all our savings to buy us a small piece of land,” said her father, Nasruddin, a mechanic. “Now we are waiting for the government, God willing, to build us a new house.”

It may be a long wait. And the soaking rains, with their cargo of dampness and disease, are coming over the teeth of the mountains soon.

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