World Bank Affair

Money or Love

Wolfowitz' career in the World Bank is not presumed to last for a long time. Before the 'Riza-schandal' he already had to face a lot of criticism. He was never famous for his managing skills. Some people were opposed to his appointment because he is no specialist in any of the major problems of poverty, for instance water management, economy or pubic health. Now he is under fire for the promotion of his partner, it does not seem he will last a lot longer


By CELINE te BRAAKE
from Groningen, The NETHERLANDS


Last month Paul Wolfowitz, President of the World Bank, made the news because he is being accused of helping his girlfriend, Shaha Riza, getting a pretty big promotion, including a salary to match. That does not look good on the boss of an organization that made the fight against corruption one of its main spearheads. But, as we all know so well, headlines are not always very subtle and maybe even Wolfowitz is not as bad as it seems.

First, let me say a few things about the World Bank and its highest chief, Paul Wolfowitz. The International Bank for Reconstruction and Development, the original name of the World Bank, was first founded in 1944 to stimulate reconstruction and development after the Second World War. By now the goal is to help (developing) countries to a higher level of wealth by giving out loans with low interests. Because the help can only be used for the good cause if it falls into the right hands, the bank also acts against corruption.

The bank has 185 member countries. They could be compared to shareholders. Ministers of these countries, usually of finance or development, form the board of Governors. They are responsible for the Bank's policy. They only meet once a year, so the daily management is in the hands of the 24 executive directors. The President of the bank, Paul Wolfowitz, could be compared to a chief executive, the 'big boss' of the whole organization.

Wolfowitz was approved as President of the World Bank in 2005. Before that, he had a career in politics. He was U.S. Ambassador in Indonesia, was active in policy making in Washington, especially on East Asia affairs. The network of people he knew from his political years he brought with him to the World Bank. This did not make him very popular; he placed familiar faces on high functions, something that is emphasized in the current matter of the promotion of his partner.

So what happened? When Wolfowitz became President of the bank, his partner was already working for the bank. Of course this could be a problem, because everybody (including Wolfowitz) wanted to avoid the image of someone being favored because of his/her personal connections. Anticipating on this, Wolfowitz wanted to be ahead of the problems by 'recusing himself from all personnel matters and professional contact related to the staff member.' He informed the bank's Ethics Committee on this matter. However, according to the EC's Chairman, Ad Melkert, 'the EC cannot interact directly with staff member situations, hence Xavier (Coll, vice president Human Resources, ed.) should act upon your instruction', which is what, happened.

According to these statements, released by the World Bank in April, Wolfowitz wanted to stay out of decisions concerning Riza's career, but this was waved by the Ethics Committee. Then why did he give her that promotion? Could he not foresee the problems that would arise from this? The problem is that not only one wants to avoid conflict of interests, but one also has to keep in mind that Riza has her own rights as well: she should not be promoted just because she is closely connected to the President, but, the other way around, she should also not be held back in her career, because of her relation with Wolfowitz.

Here's a dilemma for Wolfowitz. Yes, the easiest thing would have been for him to withdraw from all matters concerning Riza, but this did not happen. According to him the Ethics Committee is to blame for this. However, his actions right after his appointment as President did not make him popular at all in the organization. Therefore it is hard for him to get the benefit of the doubt in this matter.

What happens now? Wolfowitz' career in the World Bank is not presumed to last for a long time. Before the 'Riza-schandal' he already had to face a lot of criticism. He was never famous for his managing skills. Some people were opposed to his appointment because he is no specialist in any of the major problems of poverty, for instance water management, economy or pubic health. Now he is under fire for the promotion of his partner, it does not seem he will last a lot longer. His coming resignations might officially have nothing to do with this matter, but I believe it will make sure he will not stay at the bank until the end of the year.

As for Riza; she will have some difficulty shaking of the image of 'sleeping her way up', but I don't think this means the end of her career. She will probably stay at the World Bank, or find a nice position somewhere else. I suggest she does not follow Wolfowitz to his next job...