Montenegro learns true cost of China-backed $1 bn road to nowhere

Yahoo – AFP, Olivera Nikolic, May 27, 2021 

Chinese wprkers have spent six years carving tunnels through solid rock and
raising concrete pillars above gorges and canyons in Montenegro, but the road
in effect goes nowhere

Two sleek new roads vanish into mountain tunnels high above a sleepy Montenegrin village, the unlikely endpoint of a billion-dollar project bankrolled by China that is threatening to derail the tiny country's economy. 

The government has already burnt through $944 million in Chinese loans to complete the first stretch of road, just 41 kilometres (25 miles), making it among the world's most expensive pieces of tarmac. 

Chinese workers have spent six years carving tunnels through solid rock and raising concrete pillars above gorges and canyons, but the road in effect goes nowhere. 

Almost 130 kilometres still needs to be built at a likely cost of at least one billion euros ($1.2 billion). 

"The construction looks impressive, but we must not stop at this," says 67-year-old Dragan who retired to the village of Matesevo. 

"It's like buying an expensive car and just leaving it parked in the garage." 

Critics question how the rest of the road will be paid for and highlight environmental damage caused by the construction along with corruption allegations over the awarding of work contacts. 

But locals are inclined to talk up the positives. 

"This story has some good sides for us villagers. Some managed to sell their land and leave, which was impossible before," said one villager, whose two-storey home now sits metres from gargantuan concrete pillars propping up the four-lane highway. 

"I manage to sell some vegetables and chickens to the workers," added the man who did not want to be named, reflecting also that dirt mounds from the construction site stop the river from flooding. 

If Montenegro cannot pay its debt to China, it faces arbitration in Beijing and could
be forced to give up control of key infrastructure, according to the contract.

'Big trouble' 

The section linking Matesevo to a town near the capital Podgorica -- the most difficult part to build -- is set to open in November. 

But the road is meant to connect the Adriatic port of Bar in the south with the Serbian border in the north, with the intention that the Serbians will then extend it to their capital, Belgrade. 

It is unclear where the money will come from or how Montenegro -- a country with a GDP of 4.9 billion euros -- will repay its existing debt to China. 

If Montenegro cannot pay, it faces arbitration in Beijing and could be forced to give up control of key infrastructure, according to a copy of the contract seen by AFP. 

China has been widely criticised for saddling small countries with unmanageable debt as part of its global Belt and Road Initiative. 

Critics worry that it will use financial leverage to boost its political power, in what they dub "debt-trap diplomacy". 

But Chinese officials have strenuously denied any ulterior motive to the investment in Montenegro and the wider region. 

"This cooperation is mutually beneficial and win-win," said China's Montenegrin embassy in a statement last month. 

"If someone puts negative labels on China's investment, it is not only unfair to China, but also disrespectful to the countries of the western Balkans." 

With Montenegro's first repayment due in July, it could become the first European country to put those claims to the test. 

"If we do not find sources of funding to build on, then we are in big trouble," Infrastructure Minister Mladen Bojanic told AFP, saying he was committed to finishing the road. 

Critics question how the road will be paid for and highlight environmental damage caused
by the construction along with corruption allegations over the awarding of work contacts.

'Out of public eye' 

Bojanic is now trying to get help from the European Union to rescue a project he bitterly opposed when he was in opposition, labelling it risky and reckless. 

Risky, reckless and, according to campaigners, corrupt. 

More than one-third of local subcontractors chosen to work on the project had links to the former ruling socialists of President Milo Djukanovic. 

There were no public tenders and the relationship between payments received and the work carried out was not clear, according to anti-corruption watchdog MANS. 

"Decisions on construction were wrongly made out of the public eye, and that is something we will now have to pay for," said the group's Dejan Milovac. 

The government has promised to investigate any corruption claims. 

Further questions have been asked about the environmental impact after the construction work ruined a UNESCO-protected stretch of river near Matesevo, the Chinese firm agreeing to fund work to undo the damage. 

The construction work ruined a UNESCO-protected stretch of river near Matesevo
Montenegro. The Chinese firm agreed to fund work to undo the damage

Tolls not enough 

Problems with the project were not unforeseen -- experts queued up a decade ago to tell the government that it was not viable. 

They warned that any benefits to commerce and tourism on the Adriatic, or development for poorer northern regions, would never outweigh the costs. 

The current government has admitted revenue from tolls will not even cover the road's annual maintenance, estimated at 77 million euros ($94 million). 

"It would take at least 22-25,000 vehicles a day for the highway to pay off," civil engineer Ivan Kekovic told AFP, roughly four times the number he could envisage on the busiest stretch. 

Even this gloomy assessment may be optimistic if all Montenegrins do their sums like Zeljko Rajkovic, a 55-year-old teacher in Kolasin, close to Matesevo. 

He weighs up the benefits of heading to Podgorica on the new road: 30 minutes travel time rather than 90 minutes on the old road, improved safety. 

Then he considers the downsides: tolls each way, extra fuel consumption. 

"I'll only use the new road if there's a big storm or an emergency," he concludes.

Russian governor resigns over deadly mall blaze

Yahoo – AFP, Anna SMOLCHENKO, April 1, 2018

At least 64 people including 41 children died in the mall fire in Siberia
last weekend (AFP Photo/Dmitry Serebryakov)

Moscow (AFP) - The longtime governor of a Russian region where a huge mall inferno killed dozens of people -- most of them children -- resigned on Sunday after bitter criticism over his response to the tragedy.

Aman Tuleyev, who had been at the helm of the coal-mining region of Kemerovo since 1997, said in a video address that he could no longer remain at his post with "such a heavy burden" and that quitting was "the only right choice".

The Kremlin swiftly said that President Vladimir Putin had accepted his resignation.

Tuleyev's move is unusual as top officials in Russia rarely resign over failings in the emergency response to deadly tragedies.

But the huge fire which ravaged a shopping centre in the Siberian industrial city of Kemerovo last Sunday, killing at least 64 people including 41 children, plunged Russia into shock.

Some parents lost all their children, and the youngest victim was a two-year-old boy.

Many people who lost relatives have said they perished because of inaction by firefighters and police lacking the necessary equipment and skills, while some said a cinema door was locked, trapping children inside.

Kremlin about-face

Tuleyev, who himself lost a young relative in the blaze, came under heavy criticism for failing to visit the scene of the tragedy in the first few days or meet with angry relatives.

Putin had initially refused to sack the 73-year-old governor despite a rare protest which saw thousands of people pack a square in Kemerovo on Tuesday, the same day Putin travelled to the scene of the tragedy.

Aman Tuleyev, shown with Putin after a mine explosion in 2010, was one of 

Russia's longest-serving top governors (AFP Photo/ALEXEI NIKOLSKY)

Tuleyev apologised to the president over the rally -- where protesters also called for Putin's resignation -- calling its organisers troublemakers.

Officials have said that multiple safety rules were violated, the fire alarm system was not working and staff did not follow correct emergency procedures.

The four-storey shopping mall was redeveloped several times and previously housed a sweet factory.

Seven people have been arrested in the aftermath of the blaze, investigators said.

The ailing Tuleyev had long been expected to leave the post.

The Kemerovo region of around 2.7 million people has traditionally been considered one of Russia's most troubled areas and some have feared that Tuleyev's departure could spark a leadership crisis there.

Tuleyev, who first became governor in the era of president Boris Yeltsin in 1997, is one of Russia's longest-serving top officials.

A makeshift memorial has been set up in tribute to the victims of a deadly shopping 
mall fire in the Siberian city of Kemerovo (AFP Photo/Dmitry Serebryakov)

He was credited with helping pacify the region which was beset by miners' strikes in the turbulent 1990s but had come to symbolise the worst excesses of authoritarianism in his later years, critics say.

'Hated by everyone'

Lev Shlosberg, a former lawmaker and rights activist, said Tuleyev "had become senile", adding that the tragedy had clearly shown that Russia turned into a "mafia" state.

"This is not an emotional or symbolic but a very concrete state of the authorities: they do not represent people and absolutely do not defend the interests of citizens because they do not depend on them in any way and do not hear them," he wrote in a blog.

"The life of an ordinary man in a mafia state costs nothing."

"Tuleyev is an example of how one climbs down from the throne after failing to leave on time: disgraced and hated by everyone, with stains of blood and someone else's tears," one commentator said on Twitter.

Opposition politician Vladimir Milov said it would take "decades" for the region to recover from Tuleyev's 21-year rule.

Thousands of people packed a square in Kemerovo to protest over the Russian 

authorities' response to the deadly mall fire (AFP Photo/Dmitry Serebryakov)

Sergei Tsivilyov, who has been Tuleyev's deputy since March, has been appointed acting governor, the Kremlin said.

Tsivilyov is a business partner of one of Putin's closest lieutenants, Gennady Timchenko, who has been under sanctions imposed on Russia for its role in the Ukraine conflict.

Tsivilyov's behaviour in the aftermath of the blaze has raised eyebrows.

Igor Vostrikov, a man who lost his wife, sister and three children aged two, five and seven years, accused the authorities of treating people "like dirt".

Tsivilyov responded by accusing him of a "PR stunt" but later went down on his knees in front of the crowd massed in Kemerovo, asking for forgiveness over the fire.

Polls to elect a new governor will be held in September.

Italy's deadly flirtation with illegal building

Yahoo – AFP, Ella IDE, August 23, 2017

The Ischia quake measured just 4.0 Magnitude -- on the seismic scale, a modest
event. Yet houses collapsed and two people died. Now experts are pointing the
finger at Italy's chronic problem of illegal construction (AFP Photo/Handout)

Rome (AFP) - As Italy reels from another earthquake, experts warned Wednesday that widespread illegal construction is putting millions across the country at risk of being killed.

The tremor that shook the island of Ischia on Monday, toppling houses and killing two women, has sparked much soul-searching in a country with a weakness for rule-breaking -- particularly when it comes to building or renovating houses.

Geologists insisted that the relatively minor 4.0-magnitude quake should not have killed anyone and the civil protection agency laid the blame on the "many structures built with shoddy and illegal materials" on the island.

Residents there have put in 28,000 requests for amnesties for infringement of building regulations in the last 30 years.

Attempts by the council to tear down illegal constructions have sparked fury, with locals clashing with riot police.

The same battle is waged daily across Italy -- predominantly in the poorer south, the playground of Italy's mafias.

The mayor of Licata in Sicily was ousted this month by councillors infuriated by his campaign against illegal housing.

Italy's national statistic institute (ISTAT) warned last year of a "decisive rise in the level of illegality" in construction, involving nearly 20 new buildings in every 100. That number rose to 60 in every 100 in some regions in the south.

The scale "has no equal in other advanced economies," it said.

Worse, buildings allegedly restored under strict anti-seismic norms collapsed in quakes last year, including schools.

And while some buildings at risk due to poor-quality materials or unlicensed extensions are subject to demolition orders, only around 10 percent of them are carried out.

Corruption, incompetence

The worst offender is the Calabria region, followed by Sicily and the Basilicata in the instep of boot-shaped Italy.

But it is Campania -- encompassing Naples and Ischia island -- which is dubbed the "Russian Roulette of Italy" by experts because of its deadly mix of illegal houses, a high-density population and the active volcano Vesuvius.

There are over 4,500 schools, 259 hospitals and nearly 900,000 buildings in the highest-risk areas of the region.

"For at least the last 20 years the scientific community has been explaining the problem to the institutions, above all pushing for prevention measures," said Stefano Carlino, researcher at the national geographic institute in Naples.

"They are expensive of course, but also fundamental. Unfortunately the issue has not been given the attention it needs," he said.

Geologist Mario Tozzi warns Vesuvius is nothing compared to the activity seen at the nearby volcanic Phlegraean Fields over the last few years, including a rise in the ground-level of 25 centimetres (inches), tremors and ever-hotter gases.

"The Phlegraean Fields is a supervolcano made up of some 30 craters -- gaily occupied today by hippodromes and hospitals -- the eruption of which would spark the permanent exodus of half a million people," he said.

And how to forget Marsili, the undersea volcano south of Naples which is "70 kilometres (43.5 miles) long and 3,000 metres tall (10,000 feet), and just off the Calabrian coast", where an eruption could trigger a tsunami as well as devastate cities and towns.

As Italy marks the anniversary of a 2016 quake in central Italy that killed 299 people, Tozzi insisted it was not nature that buries children alive in rubble but "corruption, political incompetence and our incapability to learn from history".

And sometimes not even a tremor is needed to topple buildings: eight people died in July when an apartment block collapsed near Naples, killing among others the municipal architect in charge of building security checks in the area.

Brazil's Odebrecht, Braskem pay record fine in bribery case

Yahoo – AFP, Heather Scott, with Sebastian Smith in Rio de Janeiro, December 22, 2016

Brazilian construction company Odebrecht pled guilty to paying hundreds of
millions to bribe government officials in countries on three continents (AFP
Photo/YASUYOSHI CHIBA)

Washington (AFP) - Scandal-plagued Brazilian construction giant Odebrecht and petrochemical affiliate Braskem have agreed to pay a record $3.5 billion to settle a vast international bribery case, US officials said.

Odebrecht, a key player in the Petrobras corruption scandal gripping Brazil, agreed to a fine of $4.5 billion but said it was only able to pay $2.6 billion, the US Justice Department said in a statement. Braskem, meanwhile, will pay $957 million.

The fines are to be paid to Brazilian, Swiss and US authorities, the department said, calling it "the largest-ever global foreign bribery resolution."

It is the latest in a string of terrible headlines for Odebrecht, which Brazilian investigators say was one of the ringleaders of a scheme to plunder billions of dollars from state oil company Petrobras.

Revelation of the scandal has rocked Brazil's political and business establishment to its foundations, with ex-president Luiz Inacio Lula da Silva facing trial and current President Michel Temer reportedly under suspicion.

The bribery case settled Wednesday includes the Petrobras allegations, but is even bigger.

The Odebrecht conglomerate pleaded guilty to bribing government officials and political parties to the tune of $788 million to secure business on three continents -- mostly in Brazil, but also 11 other countries in Latin America and Africa.

"Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit -- a 'Department of Bribery,' so to speak -- that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents," US Deputy Assistant Attorney General Sung-Hee Suh said in a statement.

"Such brazen wrongdoing calls for a strong response from law enforcement, and through a strong effort with our colleagues in Brazil and Switzerland, we have seen just that."

Political fallout

In the main scheme, Odebrecht targeted top Brazilian politicians and executives at Petrobras for more than a decade starting in about 2001. The bribes were used to secure inflated contracts and even get favorable legislation passed in Congress.

Suh praised Brazil's judiciary for tackling the issue head on.

"I cannot praise their efforts enough. They have been under enormous pressure, done an extraordinary job of initiating the investigation and carrying it through," she said.

The Brazilian probe, known by its codename Operation Carwash, has cast dark shadows over two of Brazil's most important companies, Petrobras and Odebrecht, adding to economic pain as the country flounders in deep recession.

Odebrecht's jailed boss Marcelo Odebrecht and 76 other current and former executives have signed plea deals agreeing to tell all in exchange for lighter sentences.

The Brazilian press has described the deal as potentially apocalyptic for the political establishment.

Panama, meanwhile, said it would request information from the United States about alleged Odebrecht bribes paid in Panama to secure contracts, its foreign ministry said.

Shattered record

The previous record bribery settlement was $1.6 billion for German engineering group Siemens in 2008. It settled charges of systematically using bribes and slush funds to land public works contracts around the world.

Margarida Gutierrez, an economist at the Federal University of Rio de Janeiro, told AFP that this settlement, Odebrecht's newest move to come clean, would open the door for its return to the market.

"Right now they are unable to participate in any bids in Brazil or probably out of Brazil," she said. "Now they can start again, and try to clear their name. They will succeed but it will be hard."

The US Justice Department will conduct an "inability to pay analysis" by March 31 to determine the final amount that Odebrecht must come up with. Sentencing has been scheduled for April 17.

Under the plea agreement, Brazil will receive 80 percent of Odebrecht's fines, while the United States and Switzerland will garner 10 percent each.

Braskem, which is traded on the New York Stock Exchange through American Depositary Receipts (ADR), saw its shares soar after the deal was announced, closing up four percent.

It will pay a criminal fine of $632 million, and another $325 million penalty to the US Securities and Exchange Commission.

Under the Braskem deal, Brazil will receive 70 percent of the fines, while US and Swiss authorities receive 15 percent. Sentencing for the firm has not yet been scheduled.

Brazil's Odebrecht, Braskem pay record fine in bribery case https://t.co/Wn8k2rgyX2 pic.twitter.com/RM9Shs8gzG

— AFP news agency (@AFP) December 22, 2016

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Kabul locked down as minority Hazaras protest over power line

Yahoo – AFP, May 16, 2016

Kabul locked down as minority Hazaras protest over power line

Kabul (AFP) - Tens of thousands of minority Shiite Hazaras marched through the streets of the Afghan capital Monday to protest at the proposed route for a major power transmission line, in a brewing political crisis for the beleaguered government.

Security forces locked down central Kabul, blocking key intersections with stacked shipping containers as the protesters marched on the presidential palace -- demanding that the line linking energy-rich Central Asia pass through a central Hazara-dominated area in Afghanistan.

The demonstration highlights the war-torn nation's turbulent politics. It follows one of the biggest anti-government rallies for years last November, which was sparked by the beheading of a group of Hazaras.

Some protesters threw stones at officials and banged on the sides of containers but the demonstration was largely peaceful.

"(President) Ashraf Ghani is hiding himself behind blast walls," Dawood Naji, a Hazara leader, told flag-waving demonstrators, drawing rousing applause.

"We can break down these containers if we want but we are here to protest in a civilised way for our rights."

Authorities shut down roads to the presidential palace, fearing a repeat of the violence in November when protesters tried to storm the compound.

The 500-kilovolt TUTAP power line, which would connect the Central Asian nations of Turkmenistan, Uzbekistan and Tajikistan with electricity-starved Afghanistan and Pakistan, is seen as a crucial infrastructure project.

But it has been mired in controversy, with leaders from the minority group demanding that the line be routed through Bamiyan which has a large Hazara population.

The line was originally set to pass through the central province but the government decided to reroute it through the mountainous Salang pass north of Kabul, saying the shorter route would speed up the project and save millions of dollars.

Persecuted community

Hazara leaders in the ethnically divisive nation lashed out at the Pashtun president, saying the decision to reroute the line was a sign of discriminatory policies -- a charge that Ghani denies.

"Bamiyan has seen no development in 15 years (since the Taliban were toppled from power)," Hazara lawmaker Arif Rahmani told AFP.

"We are demanding justice, not charity."

The rally comes in the midst of the Taliban's annual spring offensive launched last month and authorities have warned that it could be targeted by insurgents.

"Staging peaceful protests is the civil right of every Afghan citizen," the interior ministry said in a statement.

"We respectfully request that our countrymen not allow the enemy (to) misuse this opportunity and disrupt public security."

The dispute, which highlights the challenges of modernising the country, threatens to overshadow the TUTAP project, which is due to be implemented by 2018 and could help ease nationwide blackouts.

Hazara protesters repeatedly heckled Ghani during an anti-corruption summit in London last week.

The president faces rising unpopularity amid endemic corruption, rampant unemployment and growing insecurity.

The three million-strong Afghan Hazara community has been persecuted for decades, with thousands killed in the late 1990s by Al-Qaeda and the mainly Pashtun and Sunni Taliban.

There has been a surge in violence against the community, with a series of kidnappings and killings in recent months that have triggered a wave of fury on social media.

Last November thousands of protesters marched coffins containing the decapitated bodies of seven Shiite Hazaras through the Afghan capital.

Their bodies were found in the southern province of Zabul, which is under Taliban control and has been the scene of clashes between rival militant factions.

Ghani called the killings "the shared pain of a nation" and accused the militants of trying to divide Afghanistan.

More than 20 killed as flyover collapses in Indian city

Yahoo – AFP, Sailendra Sil, March 31, 2016

The wreckage of a collapsed flyover in Kolkata, India, on March 31, 2016
 (AFP Photo/Dibyangshu Sarkar)

Hundreds of emergency workers in India battled Thursday night to rescue dozens of people still trapped after a flyover collapsed onto a busy street, killing at least 22 people and injuring nearly 100.

The flyover was under construction when a 100-metre (330-feet) section collapsed suddenly onto a crowded street in the eastern city of Kolkata around lunchtime, crushing pedestrians, cars and other vehicles under huge concrete slabs and metal.

"The death toll has risen to 22," Javed Ahmed Khan, disaster management minister for the state of West Bengal, told AFP.

Anil Shekhawat, a spokesman for the National Disaster Response Force (NDRF), said seventeen survivers out of 92 rescued were still undergoing treatment at hospital.

Most suffered multiple fractures and were in a critical condition, Shekhawat added, saying that the death toll was expected to rise, with an unknown number of people still trapped under the wreckage.

Specialist rescue teams armed with concrete and metal cutters, drilling machines, sensors to detect life and sniffer dogs were sifting through the rubble.

India (AFP Photo)

Anurag Gupta, a spokesman for the National Disaster Management Authority, told AFP hundreds of rescuers would work through the night to rescue the trapped victims.

"Four hundred men from NDRF and 300 Indian army men along with hundreds of police and local officials are at the spot," Gupta said.

Authorities sealed off the accident site to members of the public, who in the initial hours were seen trying to pull away concrete slabs with their bare hands.

Workers struggled to get cranes and other large machinery through the narrow streets of Burrabazar, one of the oldest and most congested parts of the city, where locals desperately waited for news of missing loved ones.

"Everything is finished," screamed Parbati Mondal, whose fruit-seller husband had not been seen since the accident.

An injured builder told AFP at the scene that he had been working on the structure before it collapsed and had seen bolts come out of the metal girders.

"We were cementing two iron girders for the pillars, but the girders couldn't take the weight of the cement," said 30-year-old Milan Sheikh before being taken away to hospital.

"The bolts started coming out this morning and then the flyover came crashing down."

Construction on the two-kilometre-long flyover began in 2009 and was supposed to be completed within 18 months but has suffered a series of hold-ups.

The disaster is the latest in a string of deadly construction accidents in India, where enforcement of safety rules is weak and substandard materials are often used.

'Like a bomb blast'

Many locals said they were fleeing their houses for fear that more of the damaged structure could collapse.

"We heard a massive bang sound and our house shook violently. We thought it was an earthquake," 45-year-old resident Sunita Agarwal told AFP.

"We're leaving -- who knows what will happen next."

The disaster came just days before the World T20 cricket final, which is set to draw thousands of fans to the city this Sunday.

Television footage showed one bloodied body trapped under a concrete slab, and also the hand of a person sticking out from under twisted debris.

An eyewitness at the scene described a loud bang "like a bomb blast and suddenly there was a lot of smoke and dust".

A crane was seen lifting a mangled car from under the debris and part of a crushed bus was visible protruding from the rubble, although it was unclear if it had been carrying passengers.

K.P. Rao, a representative of the Indian construction company IVRCL, which was contracted to build the giant flyover, called the disaster an "act of God".

Their offices in Kolkata were sealed by investigators and police filed an initial charge of "culpable homicide not amounting to murder" against the company.

The firm was given an 18-month deadline and a budget of nearly $25 million to complete the project in 2009, but after seven years only about 55 percent of the work has been done.

In 2014 the company wrote to the city's development authority to say it was running out of funds to complete the project.

Mamata Banerjee, the chief minister of West Bengal of which Kolkata is the capital, told reporters those behind the disaster would "not be spared".

The accident comes as the West Bengal government is about to face state elections, with voting scheduled to start in early April and run until May.

Related Article:

Three people arrested in connection with deadly overpass accident in Kolkata

6.7 bln yuan misused in power grid project

English.news.cn, 2014-06-16

BEIJING, June 16 (Xinhua) -- Around 6.7 billion yuan (1.1 billion U.S. dollars) was misappropriated in building and operating China's key trans-regional power transmission project, the country's top auditing office revealed on Monday.

The results were based on audits conducted between April and July 2013 on the investment, construction and financial management of 21 projects that are part of the west-to-east power transmission program, the National Audit Office (NAO) said in a report.

The office found companies winning construction contracts without required bidding or other irregularities in the tendering and bidding process that involved 3.44 billion yuan, accounting for 16 percent of total funds audited.

Similar foul play in bidding was found in equipment, material procurement and activities involving bidding agencies, accounting for about 819 million yuan of illegal gains.

The NAO also noted that some grid companies made too many rough estimates for project investment, resulting in unnecessary expenses that added up to 1.04 billion yuan of over-stated investment.

Some also created fraudulent contracts or receipts, and swindled 1.38 billion yuan in project construction funds from their superior power companies.

The NAO said it has passed relevant leads to legal departments and regulators. Audit results were also presented to the State Grid Corporation and China Southern Power Grid, two state-owned firms in charge of the power transmission project.

The west-to-east electricity transmission program was initiated in 1993 and designed to transmit power from China's western hinterland to power-hungry eastern areas. By June 2013, 43 of 48 approved projects were completed and put into use, with 179 billion yuan being invested.

Editor: Yang Yi

In Public Housing, the Rot of Corruption

Jakarta Globe, Mar 12, 2014

A housing complex is being completed in the Greater Jakarta area.
(JG Photo/Safir Makki)

The Public Housing Ministry has come under the public glare as officials in East Nusa Tenggara investigate the possible embezzlement of funds allocated for the construction of houses for low-income residents in nine districts there.

Mangihut Sinaga, the chief judge of the East Nusa Tenggara High Court, said on Wednesday that his office had launched in inquiry into the allegation that as much as Rp 1 trillion ($88 million) had been embezzled from the fund between 2011 and 2013.

Mangihut called the case “interesting,” citing a number of irregularities that his office had uncovered in the building project, starting from the specification of the houses, to the timeline for the project, up to the use of funds for the project.

He said the funds alleged to have been embezzled covered the construction of new housing as well as other aid programs that were connected to the housing project.

“Aside from the partners and the managers of those funds, anyone in the Public Housing Ministry who is involved will be investigated, because the funds came from the ministry,” Mangihut said.

Court investigators will also be looking at the individuals responsible for the implementation of the project, with Mangihut noting that the ministry typically appointed a working unit that would have the authority over the use of funds in the region.

The court has reportedly investigated Felix Soba, the head of Ngada district, who confirmed that there was an inquiry under way into the housing project.

Felix said that under the project, 300 homes were to be built in Ngada, although only 150 units had to date been built.

“As for other issues, I cannot explain in detail because we have been questioned by the prosecutor,” he said, adding that the questioning had focused on information about the progress of the throughout the three-year period.

The court said it was also expanding its investigations to eight other districts and their top officials, including Kupang district and Kupang municipality, South Timor Tengah district, North Timor Tengah district, Belu district, East Flores district, Alor district and Central Sumba district.

The Atambua High Court in Belu is also gathering information about the public housing project in Belu and Malaka districts in 2012, according to a report on Wednesday by Tribunnews.com. The court is reportedly targeting 57 contractors involved in the project as part of its investigation.

Roberthus Takoy, the chief judge, said on Tuesday that investigators had questioned dozens of witnesses linked to the case and had decided to pursue a full criminal investigation.

“We are now focusing on the contractors handling the supply and installation of energy-saving lights and low-voltage electricity for the five villages of Saenama, Wesey, Faturika, Bisesmus and Rinbesihat,” Roberthus said, referring to the two of the programs that were part of the wider housing project.

Tribunnews.com reported that the condition of the houses that had already been built in Haliwen ward in Kupang, the provincial capital, were very poor, with most of them consisting of rusty iron frames, while others were only half-built.

Similar conditions were reportedly found in Fatubenao and Manumutin wards, where only the frames of the houses have been built, most of which have also started rusting due to the rainy season.

“The frames were built in August 2013,” said Yosep, a resident.

“Back then, they came unloading sand three times, without cement. Those working on the project even asked for our old houses to be demolished for them to be able to build new ones, but we refused.”

East Nusa Tenggara is not the only region suffering from the alleged misuse of funds in the government’s regional housing projects.

Last month, the West Kalimantan High Court detained two corruption suspects contracted by the Public Housing Ministry — Tri Eddy Nuryanto, the managing director of builder Pilar Persada, and Eko Wahyudo, an official from the company’s branch in Pontianak, the West Kalimantan capital, Inilah.com reported.

The two men were arrested on charges of alleged graft in the construction of special housing in Bengkayang district, which was included in the Public Housing Ministry’s 2012 budget.

The government has reportedly disbursed 100 percent of the Rp 6.7 trillion contract for the construction of 100 homes there, out of which only 66 were built.

In East Java, the Pamekasan High Court is also reportedly looking into alleged embezzlement of funds for a similar project targeted for some 313 low-income households in the region.

Each household reportedly received just Rp 3.5 million of the Rp 7.4 million worth of aid allocated to them by the Public Housing Ministry.

Earlier this year, Firdaus Djaelani, the executive chief for non-banking financial industry monitoring at the Financial Services Authority (OJK), said Indonesia’s need for housing stood at approximately 800,000 units annually, adding that the government still had a backlog of 15 million housing units.

The number of houses built using the Housing Finance Liquidity Facility (FLPP) — a mortgage program subsidized by the ministry to help low- and middle-income families own homes — stood at 87,765 units, or 72.5 percent of the targeted 121,000 units for 2013.

Efforts to provide more affordable housing units for low-income families also remain hampered, with the public housing savings bill, which is meant to offer an alternative and more affordable funding scheme, still being deliberated at the House of Representatives, despite Public Housing Ministry Djan Faridz declaring late last year that it would be passed by January.

In a report by Kompas.com, Panangian Simanungkalit, the executive director of the Indonesian Center of Property Studies, deplored the lack of coordination by the ministry in organizing its programs.

“The public housing savings bill is actually very vital because it has the potential to expand [Indonesia’s] capacity in funding the construction of public housing. The capacity of the FLPP has the potential to grow. If it isn’t ratified, Indonesia’s housing deficit will only grow,” he said as quoted by Kompas.com.

“The Public Housing Ministry is very weak in its coordination, not just with the House of Representatives but also with other ministries. The Public Housing Ministry is taken lightly, so it doesn’t have the government’s strong support.”

Although some supported the postponement of the bill’s passage, Panangian said the move could worsen the public’s negative perception of the government.

“The public will continue to remain apathetic and will always be negative toward housing policies and programs,” he said.

Speaking at the Public Housing National Assembly last month February, public policy expert Andrinof Chaniago dubbed the government’s public housing policy an “anomaly.”

“This anomaly in housing developments and policies is very clear,” he said.

He cited public housing policies in Singapore, Hong Kong and South Korea, which he said were much clearer compared to that of Indonesia, where the government’s policies had failed to improve the welfare of the people.

“Landed homes predominate [in Indonesia], but how does this impact the people’s welfare?” he said.

“The cost of living is very high and the existing mechanism forces people to live out in the suburbs as they are haunted by the illusion that land prices will be much cheaper in those areas.”

Andrinof said that in a country as densely populated as Indonesia, the government should build more apartment blocks for its people, which could also put the brakes on rising land prices.

“We have to realize that our problem is in adopting the wrong paradigm from the 1980s up until now,” he said.

“Otherwise, our backlog will continue to grow.”