who will be next World Bank President What will they do


Muckraking (UPDATED) seems to know no limits. In a Forbes article Gary Weiss says, "aw, shucks, what he did ain't so bad." Better informed people disagree.

At issue is the very smallest of small potatoes. Let's dwell on it for a moment, because this anthill has been turned into an Everest by the people who want to kick him out. Did Wolfowitz bend or break the bank's ethics rules when he arranged a hefty pay increase for his girlfriend, bank staffer Shaha Riza? At the time, she was being forced to transfer to the State Department to avoid a conflict of interest. Riza didn't want to leave. She--rightly--didn't think it was fair that her career at the bank was being cut short. So Wolfowitz arranged for her transfer, and for her to get additional cash as recompense for the forced departure.

If Wolfowitz had been a rogue elephant, scheming behind everybody's back on behalf of his girlfriend, I could understand why this might be a slightly distressing incident.

It turns out there was a fair bit of scheming, and breaking of rules, and then having spokesman Kevin Kellums tell both the Washington Post and the New Yorker that the Board had approved all this. Even Wolfowitz has backed off that canard.

However, it has been known for weeks--since Richard Behar broke the story on FoxNews.com April 14--that the bank's own ethics committee "had known the terms of the settlement with Riza for at least a year." Fox found that while Wolfowitz "did indeed dictate the lucrative terms of Riza's salary to the bank's human resources chief, he also took steps to try and determine if what he was doing was right--seemingly trying to navigate his way through an arcane bureaucracy with a maze of unusual rules and procedures."

Again, found out. Not so. And now even his lawyer, Bob Bennett, acknowledged that the source of the "lost career" scenario, and the salary projection, was none other than Shaha. And the doubling of her pension (from $56,000 to over $100,000 per year) certainly helps, too. Wolfowitz, a veteran of State, and Defence, and Johns Hopkins SAIS, should certainly know how to navigate bureaucracies far more arcane than the Bank's.

Wolfowitz has already apologized for what he describes as a "mistake"--about as severe a term as one can use--so he has already shown the requisite remorse. So why not let him stay?

But since his humble apology at the Spring Meetings opening press conference, he seems to have hired an expensive lawyer, who's produced two backpeddling documents. The first said "my client has nothing to apologize for" and, the second, when that didn't work "well, let's just say that mistakes were made and everyone acted in good faith." Sounds like two attempts for a deal.

Let's not forget that in late March, word leaked out that China had threatened to stop borrowing if the anti-corruption drive wasn't watered down. "Making loans to developing countries is central to the bank's very reason for existence," FoxNews reported at the time, "so the threat to quit borrowing is a blow at its mission, and to the job security of some 26,000 World Bank bureaucrats, staffers and consultants around the world."

We will never know for sure why the China memo leaked out, and who leaked it. Buy think for a minute about some possible reasons.

China is no longer a big borrower, compared to the $2-3 bn they borrowed annually in the 90s. China could pay off its debt to the Bank and IDA in a heartbeat, if they wanted, and we all know that. If you were trying to embarrass China by suggesting that they didn't take corruption seriously, and weren't on-side with the unanimously approved GAC strategy and action plan, that would be another matter. Probably untrue, since China deals pretty firmly with corrupt officials (in general, but with significant exceptions, but other superpowers do, too). Maybe the reason they won't let INT look at corruption allegations in China is, like extraditions from Europe, the death penalty is a reason to be cautious about turning up something that might invoke criminal penalties.

And why would anyone try to embarrass China? Who would do that, and how would it serve them? Certainly not the Bank (whether you accept FOX's analysis or not).

Deep Insider ~ May 04, 2007

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