Corruption Jeopardizes Lucrative “Oslo” Deals

The billions of dollars that Indonesia stands to earn every year in climate-change deals could be at risk if it fails to stamp out corruption in its forestry sector, antigraft authorities warn.

Norway is preparing to pay the first $30 million of the $1 billion it agreed to give Indonesia as part of a UN scheme in which rich nations will pay developing countries not to clear woodlands.

Agus Purnomo, the head of the National Council on Climate Change, has estimated national revenue from emissions cuts could reach $15 billion a year by 2030.

But considerable obstacles stand in the way. Indonesia’s lucrative palm oil plantations and mining sector say the moratorium on converting forests will hinder expansion and profits, while the forestry sector has long had a reputation for mismanagement and graft.

An Ernst & Young audit found that in just four years in the mid-1990s, the reforestation fund lost $5.25 billion through mismanagement and fraud.

Antigraft officials are concerned that the vast sums on offer under the UN scheme could lead to further trouble.

“The forestry sector is a source of unlimited corruption,” said Chandra M Hamzah, a deputy chairman of the Corruption Eradication Commission (KPK).

Wandojo Siswanto, a senior forestry official who helped negotiate the Norwegian deal and represented Indonesia at the Copenhagen climate talks last year, is a suspect in a corruption case, adding to concerns.

The KPK has spent two years probing allegations that forestry officials, legislators and businessmen at private contractor Masaro Radiokom conspired to ensure the firm won a lucrative radio project. The KPK estimated it cost the state Rp 70 billion ($7.75 million).

The KPK alleges Wandojo, who was in charge of the procurement project, received $10,000 in bribes from Anggoro Widjojo, a director of Masaro, to ensure the project was included in the Forestry Ministry budget.

It says Wandojo awarded the contract to Masaro rather than going through a tender process. A travel ban was imposed on him last year after Copenhagen.

Wandojo maintains his innocence, saying he found the $10,000 on his table, and called Anggoro to ask what the money was for.

“I wasn’t brave enough to make a report to the KPK at that time,” he said, adding that he held on to the money for four months before handing it to the authorities.

Wandojo has said his staff pushed to award the contract without holding a tender. “I was advised by my committee that it was conducted every year this way,” he said. “I was a victim of the situation.”

As part of the same investigation, the KPK last year raided the office of the ministry’s secretary general, Boen Purnama, where they found $20,000 in cash, allegedly also from Anggoro. Purnama would not comment and has so far not been named a suspect.

Anggoro has fled the country since being named a suspect.

The KPK said there was no evidence to suggest forestry officials would try to steal the Norwegian funding, but added Norwegian government officials had asked the KPK to play an oversight role to ensure the money was used properly.

The Norwegian International Climate and Forest Initiative, part of the Environment Ministry, said the $1 billion deal was designed in such as way as to reduce the risk of corruption.

“It is an unfortunate fact that there are significant governance challenges, including issues of fiduciary management, in most tropical forest countries,” a statement said. “Clearly, dealing with these challenges is a priority.”

Adnan Topan Husodo, a deputy coordinator of Indonesia Corruption Watch, said a graft suspect should not have been part of the team that negotiated the deal with Norway.

“The credibility of the team involved in the agreement is at stake,” he said. “This is huge money we’re talking about.”

Kuntoro Mangkusubroto, who oversees implementation of the deal, said the money would be kept separate from the government budget. 

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