who will be next World Bank President What will they do


PARSING THE ED'S STATEMENT IN DETAIL. An anonymous source has taken the trouble to do a line by line analysis of the ED's statement. Conclusion: it's not as bad as you may think...


Strip away the diplomatic language, instead of exonerating PW, the statement basically said in no uncertain terms that PW was forced to resign or he would have been terminated for cause.

The key to reading the statement is to reread the Ad Hoc Group Report first, and then to insert the implicit references to the report in each sentence. Note that the EDs did not distance themselves from the Report, and indeed, by making favorable references to it, affirmed it de facto.

The gist is the EDs at no point deny that PW is guilty of breaking Bank rules. PW also agreed with that as well. The only point of dispute was his motive. The ED's statement effectively says that PW thinks he acted ethically and in good faith, the EDs accepted that he said this but NOT that he did.

PW and Bennett basically lost his shirt in this game.

Here are the details:

Washington, May 17, 2007


Over the last three days we have considered carefully the report of the ad hoc group, the associated documents, and the submissions and presentations of Mr. Wolfowitz.

What this says is that they have taken all the evidence into consideration before making a decision. While it does not expressly endorse the ad hoc Group report, it at no point says that it disagree or deny the findings.

In the absence of an affirmative denial or repudiation of a document that has been made public, the default interpretation has to be that the document carry the endorsement of the EDs even without a formal adoption.

Our deliberations were greatly assisted by our discussion with Mr Wolfowitz.

This sentence is rather odd --- what did PW add in his "discussion"? Is it a CONFIRMATION of the observation in the report that PW, "....places Mr. Wolfowitz's personal interests ahead of institutional interests" (ad hoc Group Report, para 106), "President's actions are inconsistent with his obligation to "maintain the highest standards of integrity in [his] personal and professional conduct and observe principles of good governance...." (para 107)

He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution, and we accept that.

The key here is, "He assured us he acted ethically and in good faith in what he believed were best interests of the institution"

The report states, "... that in actuality, Mr Wolfowitz from the outset cast himself in opposition to the established rules of the institution. He did not accept the Bank's policy on conflict of interest, so he sought to negotiate for himself a resolution different from that which would have applied to the staff he was selected to lead..." (Para 140)

Sure, he acted ethically and in good faith based on his own conception of the rules, but not the Bank's established rules.

In other words, PW SAYS he acted ethically and in good faith...... and the EDs accepted that he said that but NOT that the EDs accepted that he did in fact act ethically and in good faith.

"What he believed were the best interest".... in his mind... but not the EDs.

In other words, what he believed to be in the best interest of the institution is NOT what is in fact in the best interest of the institution from the ED's point of view.

Another way to say this is, "PW insist he acts ethically and in good faith, so we accept he said that, but we do not accept that he did in fact act ethically and in good faith".

"He certainly did not act in the best interest of the institution EXCEPT in his mind. In his mind, he cannot distinguish between his selfish interest and that of the institution."

Note that the Statement DID NOT state that PW is cleared from violating the Bank rules. In fact, it affirmed it. The issue of ethically and in good faith only dealt with motives, not what was actually done.

Actus Rea (violation of Bank rules, has been ceded by PW and Bennett). Mens Rea has also been ceded by PW because it is clear from the above discussion that the Bank do not accept his explanation. It only accept that he said it.

We also accept that others involved acted ethically and in good faith.

This is unqualified.

What it means is that although the individuals concerned could have worked harder to prevent malfeasance by PW, they acted ethically and in good faith even though at the end, they caved into PW out of fear. Hence, they are absolved of blame. See next sentence.

At the same time, it is clear from this material that a number of mistakes were made by a number of individuals in handling the matter under consideration, and that the Bank’s systems did not prove robust to the strain under which they were placed.

The key point here is "Bank's systems did not prove robust to the strain under which they were placed".

What this means is that they did not set up a system whose goal is to prevent malfeasance by the President. A President who had the power to bypass the 'safety checks' like the Corporate Counsel, the VP HR, the Ethics committee, etc. Since PW controlled all this staff, and in addition, INT via his appointment, there was effectively no restraint on him except for the EDs. Even the EDs proved to be reluctant to act until the scandal engulfed the whole Bank.

When individuals handling the matter made mistakes, it is because PW threatened them, bypassed them, and ultimately, forced them out. When PW didn't get the answer he wanted, he just got it from somewhere else --- including the use of an outside counsel in lieu of an in house counsel.

Yes, the individuals could have made a stand against PW, and not make a 'mistake', but it would have cost them their jobs or worst. PW imposed his own rules on the institution even when it is against established rules, so who is a lowly VP or MD to disagree or resist him?

One conclusion we draw from this is the need to review the governance framework of the World Bank Group, including the role as well as procedural and other aspects of the Ethics Committee.

Never again, will a President have so much power. Expect to see an Ethics committee and probably INT that reports directly to a committee of the Board.

The Executive Directors accept Mr. Wolfowitz’s decision to resign as President of the World Bank Group, effective end of the fiscal year (June 30, 2007).

The sentence is placed immediately after a discussion about whether PW and others acted ethically and in good faith, and the 'mistakes' of others who did not put up a stronger fight to stop him. That implies that the reason his resignation is being accepted is directly related to his ethical lapses.

In all but name, taken together with the first sentence that says the ad hoc Group's materials were considered carefully, says that is the reason PW is resigning.

The Board will start the nomination process for a new President immediately.

A bombshell.

Since when have the Board initiated the nomination process? It was the prerogative of the US to do that.

So this sentence implies that the fundamental formula for selecting the President of the Bank has changed. The US no longer solely nominate the President.

The US may still have a veto, may submit names to be nominated via their ED member, but the implied is that other Board members can submit nominations.

Details of what actually changed would be one of the most significant part of this scandal.

We are grateful to Mr. Wolfowitz for his service at the Bank.

However, note there is no connecting phrase / comment that links his service to what was done in the next few sentences.

It begs the question, did the EDs want to say, the following were done IN SPITE OF PW? Certainly they did not want to mean because / due to / as a result of PW.

Much has been achieved in the last two years, including the Multilateral Debt Relief Initiative, the Clean Energy Investment Framework, the Africa Action Plan, and the Avian Flu Initiative. 2006 was a record year for IDA lending, especially in Africa. The Bank has launched emergency action programmes in Liberia, the Democratic Republic of the Congo and the Central African Republic, and played a key role in the Lebanon and Afghanistan donors conference. In March, after an unprecedented global consultation process, we adopted a new strategy for the Bank’s work on Governance and Anti-Corruption. And we have new strategies for Rapid Response in Fragile States, for the Health Sector and for the Financial Sector.

It says that in spite of PW, the Bank staff carried on. A great compliment to the staff.

We thank Mr Wolfowitz for his leadership and for championing the Bank’s work across so many areas.

The question is, what does it mean to separate leadership and championing the Bank's work?

If the 'and' were taken out of the sentence, it would imply that leadership AND championing the Bank's work are both one and the same. ie... 'his leadership championing the Bank's work'. By separating them, it suggest that his leadership is separate from the work --- he didn't lead the effort, but he did champion it (as in give a speech on this and that, the ceremonial part of the work). A subtle putdown.

It is regrettable that these achievements have been overshadowed by recent events.

The implied is that these are the achievements of the Bank staff, not PW.

Mr Wolfowitz has stressed his deep support for and attachment to the World Bank and his responsibility, as its President, to act at all stages in the best interests of the institution.

In other words, he finally realized that for the good of the institution, he has to go. The word "at all stages" suggest that he did not do so in previous stages before the resignation.

This sense of duty and responsibility has led him to his announcement today.

He finally saw the light that he either do the right thing, or it will be done for him.

We thank him for this and underscore our appreciation for his commitment to development and his continuing support for the World Bank and its mission.

He better abide by the deal and not play any more games.

Sameer Dossani ~ May 18, 2007

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