"Hissing, Booing, And Chanting 'Resign. . . . Resign'"

by hilzoy

I wasn't very happy when Paul Wolfowitz was nominated to run the World Bank. But I never expected this (from the Financial Times):

"When Mr Wolfowitz became president of the World Bank he also became the boss of his girlfriend, Shaha Riza. To resolve this situation – inconsistent, rightly, with Bank rules – Ms Riza was seconded to the US State Department.

So far, then, so unproblematic. Yet, it is alleged, the terms of the appointment, which appear astonishingly generous, violate a number of Bank protocols. Worse, it now appears Mr Wolf owitz personally directed the Bank’s head of human resources to offer his girlfriend these exceptional terms. Worse still, this has come out after misleading claims by a senior official that the ethics committee of the board, in consultation with the general counsel, approved the agreement.

What then do we see here? The answer is: an apparent violation of Bank rules; favouritism that borders on nepotism; and a possible cover-up. It is true Mr Wolfowitz and Ms Riza were put in a difficult position. Even so, what has come out would be bad in any institution. In an institution that spear-heads the cause of good governance in the developing world, it is lethal."

By "astonishingly generous" terms, the Financial Times means that Wolfowitz arranged for Riza's salary to be raised from $132,660 to $193,590, tax-free. This makes her the highest-paid person at the State Department -- for comparison, Condoleeza Rice makes $186,000, and she has to pay taxes on her salary. Moreover, this violates Bank rules, according to its Staff Association:

"The association claims that Ms Riza’s promotion did not conform to bank procedures, that she was given an initial pay increase more than double the amount allowed by the staff rules and that she was then given an annual pay rise that was above the rate applied to bank staff on external assignment."

Question: why do people do this stuff? When you're a public figure, your conduct will be scrutinized. This is beyond obvious. I would have thought it would also be beyond obvious that in view of that fact, if a public figure tries to pull this kind of thing, he or she is very, very likely to end up regretting it. So I would have thought the obvious thing to do, just on prudential grounds, would be to bend over backwards not to break the rules in order to get your girlfriend a salary that's considerably higher than the Secretary of State's. It always amazes me when people don't get this. -- I mean: I would of course hope that they'd do the right thing on principle, but in cases like these, the right thing is also very obviously the smart thing. And yet, over and over again, purportedly smart people do things like this. One of life's little mysteries, I suppose.

In any case: there are two further problems with what Wolfowitz did. First, he seems to have lost the confidence of a considerable part of the Bank's staff. It can be hard to govern an organization when things like this start happening:

"Wolfowitz attempted to address about 200 staffers gathered in the bank's central atrium but left after some began hissing, booing, and chanting "Resign. . . . Resign.""

Second, and more importantly, an important part of the Bank's job is to try to persuade the governments of developing countries to become less corrupt. Wolfowitz, in particular, has started a broad new anticorruption policy. It is hard to see how it can credibly try to promote good government when its own President does not practice what he preaches. As the Financial Times says:

"The World Bank has moved from being a self-proclaimed exemplar of best practice in corporate governance to an example of shoddiness. As long as Mr Wolfowitz stays, this can be neither repaired nor forgotten, be it outside the Bank or inside it. In the interests of the Bank itself, he should resign. If he does not, the board must ask him to go."

Comments

[JeffL]

About those 109 documents. The WSJ reports on them here

http://www.opinionjournal.com/editorial/feature.html?id=110009948

The World Bank released its files in the case of President Paul Wolfowitz's ethics on Friday, and what a revealing download it is....

Ms. Riza was on a promotion list at the time, and so the bank's ethicists also proposed that she be compensated for this blow to her career. In a July 22, 2005, ethics committee discussion memo, Mr. Danino noted that "there would be two avenues here for promotion--an 'in situ' promotion to Grade GH for the staff member" and promotion through competitive selection to another position." Or, as an alternative, "The Bank can also decide, as part of settlement of claims, to offer an ad hoc salary increase."

Five days later, on July 27, ethics committee chairman Ad Melkert formally advised Mr. Wolfowitz in a memo that "the potential disruption of the staff member's career prospect will be recognized by an in situ promotion on the basis of her qualifying record . . ." In the same memo, Mr. Melkert recommends "that the President, with the General Counsel, communicates this advice" to the vice president for human resources "so as to implement" it immediately.

And in an August 8 letter, Mr. Melkert advised that the president get this done pronto: "The EC [ethics committee] cannot interact directly with staff member situations, hence Xavier [Coll, the human resources vice president] should act upon your instruction." Only then did Mr. Wolfowitz instruct Mr. Coll on the details of Ms. Riza's new job and pay raise.

If the journal is correct (and that's a BIG "if"), then it appears Wolfowitz was just acting on orders from the ethics committee.

Now it's the opinion journal, so I'm immediately skeptical of this. But if there's a way to track down those documents so we can see for ourselves, I'd love to have access to them.

The reason I'm invested in this story is that Wolfowitz, for all his flaws, I believe did want to help reform the World Bank and focus on helping developing countries. African ministers have praised him shifting the Bank's focus to Africa. Plus, if you read the New Yorker article, I think it's pretty apparent that he cares more for the plight of poor countries than given credit for.

Now maybe I'm completely wrong, and if I am than I'd be glad to see him go. But if I'm right, then as someone who cares deeply about the extreme poverty in Africa, this sadddens me greatly.

In short, I hope all you Wolfowitz haters are right about him, assuming he leaves the Bank.

[JeffL]

In further reading of the Opinion Journal article, it seems that while the ethics committee advised Wolfowitz to give her a promotion, I don't see where they advise her to give the pay raise as well. In fact it seems it was an either/or scenario. Promotion "or" a pay raise. Not both.

Well, any promotion usually comes with a pay raise. But that's a pretty massive pay raise for a promotion.

[JeffL]

"You mean a guy who destroyed his lover's career? She had a job - and was in line for an earned promotion - when Wolfowitz became PoWB. It's explicit she did not want to be transferred over to the State Department away from her job.

Well, according to the journal at least, the reason she had to leave her job was because the ethics board decided there was a conflict of interest. And decided to give her a promotion to another position.

The paper trail shows that Mr. Wolfowitz had asked to recuse himself from matters related to his girlfriend, a longtime World Bank employee, before he signed his own employment contract. The bank's general counsel at the time, Roberto Danino, wrote in a May 27, 2005 letter to Mr. Wolfowitz's lawyers:

First, I would like to acknowledge that Mr. Wolfowitz has disclosed to the Board, through you, that he has a pre-existing relationship with a Bank staff member, and that he proposes to resolve the conflict of interest in relation to Staff Rule 3.01, Paragraph 4.02 by recusing himself from all personnel matters and professional contact related to the staff member." (Our emphasis here and elsewhere.)

That would have settled the matter at any rational institution, given that his girlfriend, Shaha Riza, worked four reporting layers below the president in the bank hierarchy. But the bank board--composed of representatives from donor nations--decided to set up an ethics committee to investigate. And it was the ethics committee that concluded that Ms. Riza's job entailed a "de facto conflict of interest" that could only be resolved by her leaving the bank.

Now the journal could be completely wrong, but wouldn't it be prudent to withhold making judgement until we are sure we have all the facts necessary to make a correct analysis?

I just have this horrible feeling in the pit of my stomach that a grave mistake is being made. I pray that I'm wrong and you're all correct.

[JeffL]

On the other hand, I'm sure that whoever else is appointed to be his successor would also likely carry on with fighting corruption in th World Bank and shift attention to the more needed countries, without the stigma that Wolfowitz brings. So maybe this will be a blessing in the end.

Let's hope.

[Jesurgislac]

JeffL: Well, according to the journal at least, the reason she had to leave her job was because the ethics board decided there was a conflict of interest. And decided to give her a promotion to another position.

No: the reason she had to leave her job was because Wolfowitz decided to put his career as a Bush flunky above her career with the World Bank.

On the other hand, I'm sure that whoever else is appointed to be his successor would also likely carry on with fighting corruption in th World Bank and shift attention to the more needed countries, without the stigma that Wolfowitz brings.

I'm sure that the next flunky Bush appoints will carry on fighting corruption in the World Bank with the same dedication and eptness as Wolfowitz has.

Alberto Gonzales seems likely to need a new job very soon...

[jwo]

Just to note, I was listening to BBC World News this morning and there was a discussion about how the US economy was not as dominant as it had been in the past, and how there are emerging economies (no names, but far and middle east mentioned....) who will be vying for top economic position, and so on and so forth, all leading to stating that it might be a good time to have someone other than an American as President of the WB.

[johnt]

John Thullen, or is it Sullen? Sorry old bean but it was also reported in the NY Times. You would, if you could, have to wade through twenty five paragraphs to find it in the Newspaper of Record and then encapsulated in a very few words, but there it is.

Now don't be a nitpicker with the not reported if an editorial jive. Put your upset mind to rest and regard it as information, and no nitpicking ! I know you are to big a man for that,or at least I'll give you the benefit of the doubt, which I might add, you are working very hard to erase.

Calmer people then you have already posted and quoted from the WSJ piece and you might even try reading it yourself. At the very least it throws a monkey wrench in 90 some odd posts.

Look at like this John, you were had. You were fed a bull---- story, you went for it and you had company. As always the media you follow gave you a twisted and incomplete story and the worst part about it is you are angry at the stories additional facts.

Given that maybe another JOHNT should consider meds.

Glad to see you follow me on Redstate, you will realize that you are getting off easy here. Next time you visit RS jump in and join us.

I'll skip the love and just sign off,
The Real johnt
Accept no imitations.

[John Thullen]

I feel better now.

Ugh will be along soon to give you some wise-guy lessons.

Thank you for capitalizing.

I have three mindreading trophies on my mantle, courtesy of Charles Bird, a funnier man than either of us.

I could send you one, champ.

[JeffL]

All right, it does seem that Wolfowitz acted improper, but not for the reasons commonly mentioned. It seems that the ethics committee did tell Wolfowitz to give Riza a promotion to compensate for her losing the job at the World Bank. The problem though was that the pay raise that Wolfowitz gave her was more than the Bank's rules allow, an 8% pay raise instead of the maximum 3.7% pay raise she would have been allowed. And that's what he's in hot water for.

[Rufus]

The girlfriend's salary is tax free. Is Wolfowitz's salary tax free? Are World Bank salaries exempt from U.S. taxes? Or, is the girlfriend's salary tax free as a special perk from Wolfowitz's special contract efforts. Anyone know?