White_Male_Canada
04-15-2007, 06:57 AM
World Bank Power Play
The bureaucracy bites back at Paul Wolfowitz.
Sunday, April 15, 2007
When Paul Wolfowitz became President of the World Bank in 2005, our private prediction was that it would take about a year before the bureaucratic interests at the bank and in the global "development" industry made a play to oust him. We were off by a few months.The forces of the World Bank status quo are now making their power play, demanding that the bank's board ask him to resign over an ethics flap involving his girlfriend. The dispute is so trivial that it betrays that this fracas has little to do with Mr. Wolfowitz's ethics. The real fight here is over his attempt to make the bank and its borrowers more accountable for results, especially by exposing and punishing corruption.
Given his role in the Bush Administration, Mr. Wolfowitz was never going to have an easy time of it at an "international" institution as hide-bound as the World Bank. Its employees make tax-free salaries far larger than most would make at home, or in the private sector. For decades they have been measured not by how much poverty they alleviate, but by how much "lending" they shovel out the door.
Mr. Wolfowitz has tried to institute more accountability, especially on corruption. Who could be against fighting corruption? Well, for starters, a global poverty industry that thinks "governance" is a distraction from the only real measure of development, which is how much money "rich" nations choose to redistribute to poor ones. Never mind that many of these countries stay poor year after year precisely because they squander or steal foreign aid. "Governance" ought to be a crucial lending criterion, but in trying to make it so Mr. Wolfowitz is bucking decades of old thinking.
His opponents tried to rein in his corruption initiative by demanding a probe of the integrity department that was formed under previous bank President James Wolfensohn. But that effort failed when Mr. Wolfowitz won a fight in the board and put Paul Volcker, the former Federal Reserve Chairman, in charge of the probe. Mr. Volcker is if anything more of an anti-corruption crusader than Mr. Wolfowitz.
So now his enemies have turned to "ethics," specifically Mr. Wolfowitz's allegedly improper assistance to his girlfriend, Shaha Riza, who already worked at the bank when he became President. The notion of any "cover-up" here is preposterous since Mr. Wolfowitz disclosed his relationship with Ms. Riza while negotiating his employment contract.
He offered to recuse himself from any decision involving her career, and the matter was taken up by a three-person ethics committee of the 24-member bank board. That ethics committee concluded that the relationship constituted a de facto conflict of interest, and so Ms. Riza would have to leave the bank.
Keep in mind that Ms. Riza's job at the time was acting manager for external affairs in the Middle East department of the bank. She reported to a deputy vice president, who reported to a vice president, who reported to a managing director, who in turn reported to Mr. Wolfowitz. That's one very long chain of command for a "conflict of interest," especially in the modern workplace where romantic relationships are common.
But the ethics committee advised Mr. Wolfowitz that Ms. Riza had to find some other job, and that he had to be the one to see that it got done. The allegation is that Mr. Wolfowitz proceeded to get her a job affiliated with the State Department and pad her pay. But the reality is that the "conflict of interest" judgment by the board effectively ended her World Bank career, and as such she would likely have been entitled to a substantial lump sum payment as a settlement. She might very well have had cause to sue the bank, because the "conflict of interest" was hardly her creation.
The raise in pay was intended as an alternative to compensate Ms. Riza for her lost future earnings and prospects at the bank, and to do so without giving her cause for suing the bank for wrongful dismissal. And, by the way, her current job is not some make-work exercise but is a serious project promoting democracy in the Middle East.
In retrospect, Mr. Wolfowitz should have insisted to the board that he have nothing to do with any of this. He should have known that his enemies would find some way to use it against him.
But the calls that he resign because he can no longer credibly speak out about "governance" are being made by the same people who wink at corruption-as-usual in World Bank lending. Others hoping he'll be forced out include Europeans who'd like nothing better than to finally get one of their own into a post that has traditionally gone to an American. (Europe typically gets the top IMF job.) It's also no accident that all of this leaked to the media shortly before the World Bank-IMF meetings in Washington this weekend. The point is to subject Mr. Wolfowitz and Ms. Riza to a public trial by innuendo.
Mr. Wolfowitz issued a statement last week apologizing for his "mistake" in judgment and saying he'll live by any decision by the board. Our view is that if Mr. Wolfowitz is forced to resign, then the entire World Bank board should also resign for its role in this mini-flap--and for letting such ethical minutiae interfere with the serious cause of reducing corruption so the World Bank can do some good for a change.
http://www.opinionjournal.com/editorial/feature.html?id=110009943
The bureaucracy bites back at Paul Wolfowitz.
Sunday, April 15, 2007
When Paul Wolfowitz became President of the World Bank in 2005, our private prediction was that it would take about a year before the bureaucratic interests at the bank and in the global "development" industry made a play to oust him. We were off by a few months.The forces of the World Bank status quo are now making their power play, demanding that the bank's board ask him to resign over an ethics flap involving his girlfriend. The dispute is so trivial that it betrays that this fracas has little to do with Mr. Wolfowitz's ethics. The real fight here is over his attempt to make the bank and its borrowers more accountable for results, especially by exposing and punishing corruption.
Given his role in the Bush Administration, Mr. Wolfowitz was never going to have an easy time of it at an "international" institution as hide-bound as the World Bank. Its employees make tax-free salaries far larger than most would make at home, or in the private sector. For decades they have been measured not by how much poverty they alleviate, but by how much "lending" they shovel out the door.
Mr. Wolfowitz has tried to institute more accountability, especially on corruption. Who could be against fighting corruption? Well, for starters, a global poverty industry that thinks "governance" is a distraction from the only real measure of development, which is how much money "rich" nations choose to redistribute to poor ones. Never mind that many of these countries stay poor year after year precisely because they squander or steal foreign aid. "Governance" ought to be a crucial lending criterion, but in trying to make it so Mr. Wolfowitz is bucking decades of old thinking.
His opponents tried to rein in his corruption initiative by demanding a probe of the integrity department that was formed under previous bank President James Wolfensohn. But that effort failed when Mr. Wolfowitz won a fight in the board and put Paul Volcker, the former Federal Reserve Chairman, in charge of the probe. Mr. Volcker is if anything more of an anti-corruption crusader than Mr. Wolfowitz.
So now his enemies have turned to "ethics," specifically Mr. Wolfowitz's allegedly improper assistance to his girlfriend, Shaha Riza, who already worked at the bank when he became President. The notion of any "cover-up" here is preposterous since Mr. Wolfowitz disclosed his relationship with Ms. Riza while negotiating his employment contract.
He offered to recuse himself from any decision involving her career, and the matter was taken up by a three-person ethics committee of the 24-member bank board. That ethics committee concluded that the relationship constituted a de facto conflict of interest, and so Ms. Riza would have to leave the bank.
Keep in mind that Ms. Riza's job at the time was acting manager for external affairs in the Middle East department of the bank. She reported to a deputy vice president, who reported to a vice president, who reported to a managing director, who in turn reported to Mr. Wolfowitz. That's one very long chain of command for a "conflict of interest," especially in the modern workplace where romantic relationships are common.
But the ethics committee advised Mr. Wolfowitz that Ms. Riza had to find some other job, and that he had to be the one to see that it got done. The allegation is that Mr. Wolfowitz proceeded to get her a job affiliated with the State Department and pad her pay. But the reality is that the "conflict of interest" judgment by the board effectively ended her World Bank career, and as such she would likely have been entitled to a substantial lump sum payment as a settlement. She might very well have had cause to sue the bank, because the "conflict of interest" was hardly her creation.
The raise in pay was intended as an alternative to compensate Ms. Riza for her lost future earnings and prospects at the bank, and to do so without giving her cause for suing the bank for wrongful dismissal. And, by the way, her current job is not some make-work exercise but is a serious project promoting democracy in the Middle East.
In retrospect, Mr. Wolfowitz should have insisted to the board that he have nothing to do with any of this. He should have known that his enemies would find some way to use it against him.
But the calls that he resign because he can no longer credibly speak out about "governance" are being made by the same people who wink at corruption-as-usual in World Bank lending. Others hoping he'll be forced out include Europeans who'd like nothing better than to finally get one of their own into a post that has traditionally gone to an American. (Europe typically gets the top IMF job.) It's also no accident that all of this leaked to the media shortly before the World Bank-IMF meetings in Washington this weekend. The point is to subject Mr. Wolfowitz and Ms. Riza to a public trial by innuendo.
Mr. Wolfowitz issued a statement last week apologizing for his "mistake" in judgment and saying he'll live by any decision by the board. Our view is that if Mr. Wolfowitz is forced to resign, then the entire World Bank board should also resign for its role in this mini-flap--and for letting such ethical minutiae interfere with the serious cause of reducing corruption so the World Bank can do some good for a change.
http://www.opinionjournal.com/editorial/feature.html?id=110009943