Many thanks for your note and the draft of the letter, which ____ l called me about. I have just had a chance to read the letter.

As I understand from your cover note, the letter is basically final, and I am being asked if I want to sign THIS letter.

The answer is that I do not want to sign THIS letter. I want to explain why.....

My personal assessment of this situation is as follows:

The issue with Shaha:
• It is clear to me that PDW did make a good faith effort to deal with this situation properly.
• It is clear that he hoped that the Ethics Committee would decide it and take it out of his hands.
• It is clear that he was not comfortable when it was turned back to him.
• It is also, in my mind, reasonable that he would not have understood all of the implications of the ways in which the deal was excessive in terms of standard practice at the Bank.
• It is also reasonable, in my mind, that he might have expected to have been told by the VP for HR if the proposal was unreasonable in terms of standard Bank practice. I have seen nothing that suggests that this was done.

The bottom line on this, in my mind, is thus:
1. that PDW made a mistake by dictating the terms of her contract
2. that the culpability of the Board in instructing him to do this, approving it, reviewing it and approving it, was a serious error
3. that HR, by apparently not alerting him to the unreasonableness of the solution and by not refusing to agree to the beyond-the-pale elements, also committed a serious error.
• Her contract showed, in my mind, that he did not make a good decision on an issue which he knew was important. It certainly showed poor judgment. But it was, in my mind, a venal sin on PDW's part, with two at-least-equally-guilty other parties, namely the Board and HR.

The underlying issues:

I believe the underlying issues can be divided in two.

Issue 1 -- Could "the architect of Iraq" ever be accepted by staff? The answer is probably no. I thought (before I ever met PDW) that the Staff Association vote on "do you want him to be President", with 92% voting "no" is evidence of this and evidence of an organized hostility that it would be very difficult to overcome.

Issue 2 -- It was (and is) my belief that PDW could nevertheless have overcome this start by being a good leader and manager. But to my mind he has not lived up to this, on three major counts:

• He needed to bring new blood and new ideas into high levels of Bank management. Instead of finding the world class development leaders who he could have mobilized, he brought with him a few people who knew (and know) nothing about the Bank's business, who did not show any commitment to it, and who treated those who did know and did care and could contribute with disdain. In a substantial number of cases those around him treated our borrowers, too, with disrespect and behaved in ways that are not acceptable for Bank staff. PDW knew that this was the case a long time ago, and he did nothing to change this.
• He needed to articulate a vision for the Bank which would make it the partner which our borrowers need. He did not do this. Instead he waded into the crusade against corruption without a game plan and did not show any willingness to change course as he heard from people who wished him well that this should not be THE mission of the Bank.
• It would appear that the "line of defense" raised by some areas of the media -- "the corrupt officials of the World Bank are rejecting him because he is against corruption" -- has been stimulated by PDW’s media machine. PDW has done nothing to say publicly that this is not his view.

The bottom line is that in his two years as President of the Bank he has not built any capital, either on policy or through people, on which to call when the road got bumpy. This has left him hugely exposed to the inevitable "exposure" (which would have been something else if it had not been Shaha).

All of which brings me to the draft letter which you sent.

I do not like the letter, for several reasons.

First, because it seems to me to add nothing to the substance, but simply looks like "piling on". This is something I did not like in high school, I did not like it in the IEG letter and I do not like it in this letter.

Second, because I think the draft CD letter falls into a trap of making THE issue the contract with Shaha. As I have outlined above, in my mind the evidence on that (as I know it) is that culpability rests at least as much with the Board and HR as it does with PDW. And if we want him to resign over it, then what about the others who are implicated? And if he "beats this rap", then what? Do we, the CDs, then believe that we can go back to doing our business? The answer is obviously "no".

If there were to be a CD letter, then, it seems to me that it needs to be able to meet three tests:
1. does it add anything of substance to what has already been laid out?
2. does it address the real underlying issues (of strategic and human leadership)?
3. does it propose practical measures to be taken should the immediate issue (of Shaha’s contract) be "resolved"?

I believe that the CD letter passes none of these tests.

Finally, let me add a personal note. I had never met PDW before he came to the Bank. From the initial email correspondence I had with him when I was in Delhi, through the subsequent two years, I am left with the following impressions:
1. I thought a President of intelligence, commitment and experience could take the Bank to a higher level. I have been disappointed by his lack of strategic leadership, and the poor quality of most of his personnel and management decisions.
2. I have had explicit personal conversations and exchanges with PDW of emails on virtually all of the issues above (with the exception of Shaha’s contract!). He has always treated those opinions respectfully (although he seldom chose to act in ways that were consistent with my suggestions.)
3. Finally, I have talked with him about personal integrity a number of times and have always been impressed by the high importance he gave this. I believe he has been a poor leader of the Bank, but I do not believe that he is a corrupt person, and I think it is wrong to "hang" him for alleged corruption.