L'Ombre de l'Olivier

The Shadow of the Olive Tree

being the maunderings of an Englishman on the Côte d'Azur

08 May 2007 Blog Home : May 2007 : Permalink

The Wolfowitz World Bank "Scandal"

I have been mostly ignoring the ongoing "scandal" about Mr Wolfowitz because I really don't have anything to say. However I cannot but laugh at the FT which seems to be trying to run with the fox and hunt with the hounds by publishing articles by Joeseph Stiglitz (Wolfowtz must go) and Kenneth Anderson (Wolfowitz was framed) and stories that seem to be utter non-stories. To take the latter first, the story says that

Paul Wolfowitz's closest aide was involved in crafting an apparently misleading public statement on the Shaha Riza secondment for dissemination by World Bank spokespeople on an anonymous basis, the Financial Times has found. [...]

Ms Cleveland met Marwan Muasher, the newly arrived director for external relations, on April 4 to discuss how to respond to leaks about the terms and conditions awarded to Ms Riza.

They agreed on a statement that was to be briefed on an anonymous or "background" basis by senior bank officials. This included the apparently misleading claim that "after consultation with the then general counsel, the ethics committee of the board approved an external assignment agreement which was reached with the staff member".

Mr Muasher confirmed the agreed text with Ms Cleveland in an e-mail, a copy of which has been seen by the FT, and its authenticity has been attested to by two bank officials. The statement was then briefed to the FT and other media organisations by senior bank officials.

The claim that the agreement was approved by the ethics committee after consultation with the general counsel was immediately disputed by Roberto Danino, then general counsel, and Ad Melkert, then chairing the ethics committee. [...]

Neither Ms Cleveland nor Mr Muasher responded to a request for comment. In a letter to the panel last week, Mr Wolfowitz said he assumed the ethics committee was aware of the terms and conditions because it decided a later anonymous complaint about Ms Riza's pay "did not contain new information warranting further review".

He said: "I relied on this letter when I advised my staff that they could tell the press that the committee had reviewed the matter."

Or in other words that the so called ethics committee seems to want to deny that it ever had anything to do with this whole case. The memos published on the world bank website seem to make clear that this is not the case, other than in the extremely limited case of the general counsel and ethics committee chairman not being informed of the full details of the precise package offered because they said they weren't allowed to be told these details. As the second editorial explains (blog version) this seems to about what one should expect from this group of highly paid individuals:

The World Bank’s ethics committee should have a sign on the door warning: “Caveat emptor –don’t rely on us.”

The absurd controversy over the tenure of Paul Wolfowitz, World Bank president, whose longstanding romantic partner was at the bank years before he was, can be traced to that committee’s incoherent advice. [...] In 2005, the ethics committee rejected Mr Wolfowitz’s workable proposal to recuse himself on all personnel matters concerning his friend. Instead, it ruled that she would have to leave the bank altogether, disrupting her career and making her forgo a promotion for which she had been shortlisted.

It was an extraordinary decision, raising important questions of gender equity at the bank.

Some have mistakenly supposed that the “advice” was a reflection of settled bank rules. But, in fact, it was quite different from the treatment accorded to some other couples who work there.

Mr Wolfowitz’s friend, Shaha Riza, whose dignity and reticence have been trampled by the bank, testified last week before an ad hoc investigating committee of the bank board of executive directors. Ms Riza said: “I could not understand at the time or now why I was being singled out for this treatment when the then managing director Shengman Zhang’s spouse . . . was working at the bank and before her . . . Caio Koch-Weser’s spouse, when he was managing director. Neither wife was asked to leave the institution.”

I can't read beyond the first couple of paragraphs of Mr Stiglitz and I see no reason to as it starts

The current crisis at the World Bank is a chance finally to fix the governance problems at the world’s major institution for promoting development. It is time for the US to give up its hold on picking the president of the bank and for Europe to give up its grip on choosing the president of the International Monetary Fund. Had the process of picking the president been truly democratic and fair in the first place, it is almost certain that Paul Wolfowitz would never have been selected.

There is now a global consensus that Mr Wolfowitz will have to leave the World Bank. In democratic societies, leadership requires the confidence of those being led. Mr Wolfowitz has lost that confidence and will not be able to restore it in the three years remaining in his lame-duck tenure. He could, of course, try to appoint more loyalists at the top. But that would only lead to more alienation from the more than 10,000 employees who must carry out the bank’s mission.

Mr Stiglitz appears to be confused. The world bank is not a democratic institution, nor does its president require the confidence of his underlings. Indeed given that Mr Wolfowitz has been trying to root out corruption within the World Bank it seems pretty clear that some underlings are going to do anything they can to hamper the president when he tries to sort things out. There is no evidence (yet) that the origin of the whole Wolfowitz "scandal" was leaks by corrupt staffers but it is certainly the case that the world bank staff association seems to have been heavily involved in the affair and one suspects that this organization is not going to be keen to chuck out the slovens and the corrupt. Likewise the agreement that the US appoint the World Bank president is due to the fact that the US is the largest shareholder. Now it is entirely reasonable to say that this rule is wrong but it is common in international organizations such as the various UN bodies, the Bank and the IMF that certain parties select the head. It wouldn't bother me if the World Bank changed the way it did things but it would only seem fair if all other similar tranzi bodies did the same. I'm prepared to bet that no other beneficiary of these schemes would agree to similar reform.

Mr Stiglitz' "global consensus" argument seems particularly weak. Is he trying to say that a majority of the world's population wants to see Mr Wolfowitz gone? or is he actually saying that other tranzi leaders want to see him gone. One suspects the latter, and that no doubt explains why sites such as the BBC have failed to cover the details of the case in the way that the WSJ (or Christopher Hitchens in Slate) has. This is of course further evidence to me that the entrenched tranzis do not want a boss who tries to open things up although it could also be some sort of "Neocon Derangement Syndrome"

I find it curious that all the people who attack Mr Wolfowitz (e.g. blogger Majikthise last week) fail to provide links to the source material which the World Bank has put up at its website. The first link is to a 25 page PDF of relevent documents that makes abundently clear that Mr Wolfowitz was doing his best to follow the guidance of an ethics committee that didn't want to take any responsibility for anything. Given that the attackers often seem to be the people who want more openness and disclosure it seems odd that when source docuemnts are available.

Anyway since it seems likely that (again via Majikthise) the World Bank investigative panel has found Mr Wolfowitz guilty of a "conflict of interest", it is probably worth noting the memo Mr Wolfowitz wrote (page 11 of the PDF) where he explains clearly that he feels he was forced to intervene because of the memo on page 10 where the ethics committee says

1) The EC cannot interact directly with staff member situations, hence Xavier should act upon your instruction.

2) The interaction with the staff member at this stage is only for information purposes, by way of courtesy, as both you and the EC have been preoccupied from the outset to have a procedure in place and an outcome reached that would duly recognize the record and career perspectives of the staff member, taking into account the scope of the EC which is limited to Board officials.

In other words having notified the Ethics Committee of a potential problem the EC then tells him that he has to solve it directly and therefore cause a conflict of interest.

I despise l'Escroc and Vile Pin