who will be next World Bank President What will they do


Another Take on the Wolfowitz Mess (UDPATED) from a group of current and retired World Bank staff. They find it hard to imagine what defense PW can put forward in his 11th hour rebuttal, that the Board is now scrutinizing after a meeting Friday that went late into the evening. Let's go over what he might say.

He did not realize there was a conflict of interest:

Hardly credible, given Roberto Danino's testimony and the written evidence of the discussions that PW had with the Ethics Committee and others. He did realize that there was a conflict of interest and offered to recuse himself from personnel decisions but that was rejected by the Board's Ethics Committee so he had to do something else.

Alas, the facts here are pretty clear. Wolfowitz knew he was in a conflict of interest under Bank rules: Danino told that to his lawyers in writing. They proposed recusal with ongoing professional contact as the way to handle it. The Ethics Committee told him, also in writing, that his relationship constituted a de facto conflict of interest under Staff Rules. The Ethics Committee never rejected his recusal from personnel actions. I t rejected his demand to keep ongoing professional contact with SR despite Bank rules. The EC told him recusal was insufficient. By the way, his recusal was also unnecessary because, being in a conflict situation, he was precluded from taking any actions with regard to the other party in conflict. So the conclusion is pretty clear: NOT CREDIBLE

He did not realize that directly negotiating her "settlement/secondment" was a conflict of interest:

Not credible. He already had offered to recuse himself from personnel matters regarding Shaha, so it it not credible the he did not realize that directly negotiating the terms of her arrangement was, de facto and de jure, conflict of interest. Also, his own admission at the Spring Meetings opening press conference (nearly a month ago now) that he "made a mistake" and should have followed his own gut instinct and not been involved in the decisions affecting Shaha is the most damning evidence that he knew it was wrong.

The Bank's rules on this are unclear so in the absence of further instructions from the Ethics Committee he thought he was doing the right thing/acting in good faith:

Well yes maybe but not when you think about it. Sure, the Bank's code of conduct doesn't tell managers exactly what to do when. There is a certain element of common sense. But the principle is clear: if there is a conflict of interest then the manager should not be involved in any decisions affecting the other person. PW was told this from the very beginning.

In the absence of very specific instructions from the Ethics Committee, PW had no one to turn to and had to make the arrangements himself despite the fact that he knew that there was a conflict of interest:

Hold on there! What does he have the Board, MDs, VPs, advisors, etc., for? The bottom line is that he did not trust any of the Bank staff/VP-HR for example, to handle this issue. One can imagine that an unhappy Shaha might have been tough to live with. And Robin certainly was not one who had a keen nose for conflicts of interest, having gotten Secretary Roche to dash off a quick email to a large defense contractor putting in a good word for her job-seeking brother. But that is why this is a case of conflict of interest--the intention of the Bank's policy is precisely to have someone dispassionate/not involved/with no stake in the outcome come up with and negotiate a fair settlement.

He only did what the Bank would likely have done anyway, so there was no real extra cost to the Bank.

Oh my. Let's look at what would have been a fair settlement: Shaha is a 50+ year old woman in the Bank: how many of those get promoted each year? What was the probability of her being promoted? (From G to H to I to J in 10 years, which was the substance of her deal.) It is very likely that she would have stayed where she was for the rest of her career, especially since she did not qualify for a promotion in the communications stream (lack of experience, no specialized degree, lack of knowledge outside the Middle East, etc). There is only one very senior gender specialist in the Bank. Guaranteed outstanding merit increases: well, what have been her past merit raises? Has she been in the top category before? If so, then yes, one might be more optimistic about her chances of getting more than average raises in the future. Every year, though? These are things that could have been looked at objectively by a dispassionate person. He clearly was not: m he was new to the Bank and didn't really understand the Bank's personnel and compensation system so he may have gone overboard but he did it in good faith. And then there's the impact on her pension, virtually doubling it to over $100,000 per year, by some calculations

Sure, and what other mistakes did he make in his first few months at the job? Do we forgive him for those too? If he was not competent enough to understand the Bank's compensation system--or seek out the right advice-- why was he in the job in the first place? Hardly a good defense to say that you didn't know what you were doing, and didn't know who to ask. But how would he, cosseted in his office with his ex-USG and SAIS cronies (Robin Cleveland, Kevin Kellums, Karl Jackson and, soon, Suzanne Rich Folsom--"ethics lawyer" and wife to George Folsom at IRI--and one of his deputies from the Pentagon, Ray DuBois) as well as a Bank staff member who was one of Shaha's former bosses.

End game: PW is damaged goods and he has no credible defense that leaves him in a position to be able to lead the Bank. He is any combination of excessively willful, blinded by his personal relations, stupid and/or incompetent. And, of course, corrupt, as NYU Professor Paul Light argued brilliantly on NPR.

Take your pick.

Deep Insider ~ May 13, 2007

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