Subject: World Bank, UN, Work On Anti-Corruption Strategy In E Timor

Associated Press November 14, 2000

World Bk, UN, Work On Anti-Corruption Strategy In E Timor

DILI, East Timor (AP)--The World Bank opened an anti-corruption training course in East Timor Wednesday after it withdrew a number of loans to small businesses because of suspected irregularities in the award procedure, a senior official said.

"This is the beginning of a close collaboration with the United Nations to combat what we see as a serious threat to the development of East Timor," bank spokesman Malcolm Ehrenpreis said.

He said the workshop was the first in a series aimed at clamping down on the nepotism and graft, which were rife under Indonesia's 24-year military occupation of East Timor.

Indonesia is regularly ranked as one of the most corrupt nations in the world.

Jemal-ud-din Kassum, vice president of the World Bank's East Asia and Pacific region, said stamping out the culture of corruption was one of the biggest challenges facing the fledgling nation.

East Timor, which broke free from Indonesia last year after an independence referendum, is being administered by the United Nations during its transition to full independence.

"The fight against corruption is a behavioral and cultural fight that has to go on for years at a time," said Kassum.

Earlier this month, the World Bank withdrew a number of small enterprise loans after it discovered nepotism in the award procedure, he said.

Five beneficiaries were eliminated from the program after it was discovered they were related to the credit analysts at a local bank that distributed the funds.

"The selection of some of the beneficiaries was not entirely consistent with the approach that we expected and as a result there was a handful of beneficiaries who were actually extracted from the program," Kassum said.

The Small Enterprise Program in East Timor has distributed about $1 million to businesses such as shops, restaurants, transportation, guest houses and small-scale manufacturing.

Sarah Cliffe, who heads the World Bank's operations in East Timor, said talks were underway with the U.N. transitional authority about developing an effective anti-corruption strategy. This would include adequate pay for civil servants, honesty incentives, protection for whistle blowers and transparency and accountability in government procedures.

"You can't get rid of 25 years of a corrupt system overnight," she said. "There's always the risk that it re-emerges once the civil service is recruited."

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