who will be next World Bank President What will they do


'Key players take their distance': Fox News. Coming from Fox, which has supported Wolfowitz strongly in current months, this is definitely bad news for Paul Wolfowitz. Two key players in the scandal over his girlfriend’s compensation package have further distanced themselves from Wolfowitz's actions.

Former General Counsel Danino
First is the Bank's top lawyer at the time, former prime minister of Peru Roberto Danino.

The bank’s former general counsel told Fox he didn’t know the final details of Riza’s pay-and-promotion deal by September 2005 — when the deal was finalized — because Wolfowitz cut him out of the loop. Asked why he believes this happened, Danino told Fox; “Because [Wolfowitz] didn’t like my advice.”

That advice to the bank president, offered in late May 2005 — a month before Wolfowitz took over the presidency on July 1 — was that Wolfowitz’s initial offer in May to recuse himself from all personnel matters involving Riza (while retaining “professional contact” with her) didn’t go far enough to resolve the conflict of interest. Wolfowitz appealed Danino’s decision to the board’s ethics committee, which backed the view of the general counsel. Danino is scathing about the document extracts released by Wolfowitz's office on Saturday (see my previous post). Danino's legal opinion on the extracts: "false, very misleading; that was not the advice rendered to the president — at no time.”

After his advice was turned down things went from bad to worse for Danino, making him one of the first senior casualties of the Wolfowitz administration (for others see this post). Fox News continues: Danino says that his relationship with Wolfowitz never recovered. “It started with this, but then he basically avoided all professional contact with me.” Danino, who served as prime minister of Peru from 2001-2002, says this shunning by Wolfowitz prompted him to resign as the bank’s top lawyer in January 2006.

Ethics Committee Chair Ad Melkert
Richard Behar, the journalist who contributed the Fox article, has this to say on Ad Melkert. Melkert's full memo released a couple of days ago is below.
Melkert, now the No. 2 official at the United Nations Development Program, denied in an email yesterday to Fox News that the committee “was aware or should been aware of the terms and conditions” of Riza’s contract. He said the role of the committee was “to advise, not instruct” Wolfowitz about the matter. “I never saw the full official terms,” he tells Fox News. Nor, he adds, did he ever attempt to learn what those details were.

“It was Mr. Wolfowitz’s decision not only to instruct [human resources chief Coll] to settle the matter, but also to direct the terms and conditions,” insists Melkert. “Whether or not those terms and conditions were reasonable, in the context of the bank’s standing practice, was entirely management’s [Wolfowitz’s] responsibility.” As such, the ethics committee had no basis for separately probing the Riza salary terms in 2006, Melkert added.

Melkert's full memo, sent to www.worldbankpresident.org by another journalist, is below.


17 April 2007

As the former Chair of the Ethics Committee, I reject any direct allegation or suggestion that the Ethics Committee was aware or should have been aware of the terms and conditions of Ms. Riza’s contract for her secondment outside of the World Bank.

The following facts are relevant for clarification of different roles and responsibilities.

 The Ethics Committee of the Executive Board, on the basis of established procedures, advises on ethics matters involving Board members, including the President of the Board. It is an exclusively advisory body that cannot assume responsibilities belonging to individual Board members or the Executive Board or the Board of Governors as statutory organs. The responsibility to advise on staff issues resides with management and other bodies at the Bank.

• In the case involving President Wolfowitz and his partner, the precise role of the Ethics Committee was to advise – not instruct -- Mr. Wolfowitz, as a member of the Board, including in his responsibilities as Executive Head of Management, on options for terminating professional contact between himself and the staff member concerned. Given its remit, it was never expected, nor would it have been appropriate, for the Ethics Committee to have had any involvement in the terms and conditions of any arrangement for the staff member.

• The Ethics Committee did not consider sufficient Mr. Wolfowitz’s proposal to recuse himself from dealing with Ms. Riza. It advised him to ensure that she would not any longer be under the scope of his authority and to consider different options for the staff member: either a position within the Bank beyond the scope of his authority (such as the Evaluation Group) or a secondment outside the Bank or a separation – in all cases with a possible arrangement that might take into account compensation for the interruption of the staff member’s career at the Bank.

• As the Ethics Committee can not and should not deal directly with staff matters, its responsibility was to advise the President on options, and it was then up to the President to instruct relevant managers on how to proceed. Technical documents provided by Bank management to the Ethics Committee had given rise to the expectation that in pursuing any of the potential options, normal practice and relevant staff rules would be taken as the guideline for implementation. It was Mr. Wolfowitz’s decision not only to instruct the Vice President of Human Resources to settle the matter, but also to direct the terms and conditions.
• Mr. Wolfowitz informed me on 12 August 2005 that he had decided that the potential conflict of interest would be solved by having the staff member detailed outside of the Bank. After and because this had been implemented, I informed him on 24 October 2005 that the Ethics Committee considered the matter closed. At no time did Mr. Wolfowitz or anyone else in Bank management disclose to the Ethics Committee the terms and conditions of the external assignment. Whether or not the terms and conditions were reasonable, in the context of the Bank’s standing practice, was entirely management’s responsibility.

The advice of the Ethics Committee (to consider having the staff member redeployed beyond the authority of the President and to take into consideration appropriate compensation for the interruption in her career) was a good faith effort to meet some of the personal concerns (of Mr. Wolfowitz in his personal relationship) whilst saving the Bank from a damaging ongoing debate on the potential conflict of interest.

There are also different perceptions on the role of the Ethics Committee relating to anonymous emails received by all Board Members in January and February 2006. The Ethics Committee reviewed the matter as follows
 In the case of Ms. Riza the Ethics Committee was not in a position to comment on any salary increase for the same reason that led to its earlier conclusion that it could not become involved in the original negotiation of her terms and conditions, i.e. these were the responsibility of management.
 The cases of Ms. Cleveland, Mr. Kellems and Mr. Jackson centred on management decisions vis-à-vis staff and therefore did not pertain to the Ethics Committee’s role. For that reason the Ethics Committee informed Mr. Wolfowitz that they did not appear to pose ethical issues appropriate for further consideration by the Committee.

Alex Wilks ~ April 20, 2007

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