The latest hypocrisy and corruption of the neo-Con

World Bank board debates Wolfowitz's fate

Richard Adams in Washington
Friday April 13, 2007
Guardian Unlimited

Paul Wolfowitz's position as head of the World Bank looked increasingly untenable today after he was forced to retreat from a meeting after being booed by his employees and the bank's governing board met overnight to decide his fate.

The 24-member executive board met late into the evening yesterday debating how to handle the matter. At around 10pm Washington time, the bank released a letter sent by Mr Wolfowitz to the board, asking that "all the documents related to the board's current review of the case" be made public - prompting another round of discussions.

The unprecedented events, amid calls for his resignation, were the latest twist in the saga that saw Mr Wolfowitz yesterday repeatedly apologise for his role in arranging a promotion and pay rises for his partner, in possible violation of bank rules.

Mr Wolfowitz's position was further undermined by a tepid response from the Treasury, which deals with the bank for the US government. Asked if the Treasury had confidence in Mr Wolfowitz, a senior official said: "There is a mechanism in place, and I am going to allow that mechanism to work rather than inject myself into the middle of it."

Attempting to address around 200 World Bank employees gathered in the atrium of the bank's plush Washington headquarters yesterday afternoon, Mr Wolfowitz quickly left after a knot of staff began chanting "resign, resign" while others also hissed and booed.

One staff member who was in the atrium said: "To see the bank's president being heckled by his own staff was amazing. He looked shocked, very shocked, by the reaction and the anger."

Earlier, the bank's staff association - which represents the majority of the bank's Washington-based employees - called on Mr Wolfowitz to "act honorably and resign", saying it was "impossible for the institution to move forward with any sense of purpose under the present leadership".

Alison Cave, the head of the staff association, said: "The president must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank and has destroyed the staff's trust."

Calls mounted for his resignation after revelations this week that Mr Wolfowitz personally intervened to secure a substantial pay rise - from $132,660 to $193,590, tax free - for his girlfriend Shaha Riza, a bank employee, when Mr Wolfowitz was first appointed president in 2005. Bank rules forbid couples from working together.

Mr Wolfowitz wrote a memo to the bank's head of human resources detailing salary increases for Ms Riza - contradicting earlier claims that the matter was dealt with by others.

Aid agencies said the controversy was distracting the institution from carrying out its role as a leader in development at a vital time. "The world's poor cannot afford a lame duck president at the World Bank," said Oxfam.

In a strongly worded editorial, the Financial Times also called on Mr Wolfowitz to stand down. Calling the controversy "lethal" to the bank's credibility, the paper's leader column said: "In the interests of the bank itself, he should resign. If he does not, the board must ask him to go."

During a highly charged press conference in Washington, Mr Wolfowitz apologised for becoming involved in his girlfriend's compensation, but denied that he had done so voluntarily or for personal reasons. "In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations," he said.

Mr Wolfowitz's fate now lies in the hands of the bank's executive board members, each representing the World Bank's major donor nations, ranked by shares reflecting the importance of their stake. The bank's regulations allow the president to be dismissed by a simple majority of votes by shareholders - the US being the largest with 16% of shares.

So far, individual countries have not voiced any public support for Mr Wolfowitz, with executive board members awaiting instructions from their country's finance ministers, who are gathering in Washington this weekend for meetings.

While there is a real possibility the board will ask Mr Wolfowitz for his resignation, or otherwise make his position untenable, it may simply reprimand Mr Wolfowitz, thus allowing him to step down in a few months time when attention has died away.

A controversial figure since his role as a leading advocate of the US invasion of Iraq, during his time as deputy defence secretary in the Bush administration, Mr Wolfowitz was appointed by President Bush to the post at the World Bank.

That appointment, and Mr Wolfowitz's subsequent behaviour, has strengthened calls for changes to be made to the way that the World Bank's president is appointed, with aid agencies such as Oxfam calling for the appointment to be made on merit.

The whole affair is a huge embarrassment for the bank and Mr Wolfowitz, especially given his desire for a tough stance against corruption and rewards for good governance. Critics say that Mr Wolfowitz's own actions have now made a mockery of those aims.

Original article posted here.