Wolfowitz Defends Conduct Over World Bank Lover Row

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Wolfowitz defends conduct over World Bank lover row

http://rawstory.com/news/afp/Wolfowitz_defends_conduct_over_Worl_04092007.html

Published: Monday April 9, 2007

World Bank president Paul Wolfowitz, under fire for massive pay raises given by the powerful development organization to his girlfriend, insisted Monday he had always upheld staffing rules.

In an extraordinary statement to staff that did not mention the name of his Libyan-born partner, Shaha Riza, Wolfowitz accepted "full responsibility" over the case but said he had "acted on the advice" of the bank's ethics committee.

Heading into an annual World Bank meeting, the Riza row has stoked criticism of the former Pentagon deputy chief's management style as he steers through a controversial campaign against corruption.

"I would like to assure the staff that I have always acted to uphold these rules to the best of my ability, and I will continue to do so," Wolfowitz said in his statement to the World Bank's 10,000 employees.

"As president of this institution, I accept full responsibility for the actions taken in this case," he said. On Thursday the bank's board of governors, who are appointed by national governments, ordered an investigation into a "possible violation of staff rules in favor of a staff member closely associated with the president."

"I have already indicated to the board my intention to cooperate fully in their review of the details of the case," stressed Wolfowitz, who separated from his wife in 2001.

"What remains of the utmost importance to me is the protection of the interests of this institution as a whole, and our need to remain focused on our agenda of helping the world's poor."

A circular last Tuesday from the World Bank's internal staff association said it had been "inundated with messages from staff expressing concern, dismay and outrage" over the Riza case.

She was pulled off her job as a communications officer at the World Bank and seconded to the US State Department in September 2005, shortly after Wolfowitz took over at the lender's helm.

The move was reportedly made over Wolfowitz's objections at the insistence of the board of governors, to abide by bank rules that forbid members of staff who are romantically linked from working under each other.

Riza was then rapidly promoted and ended up earning nearly 200,000 dollars at the State Department, more than Secretary of State Condoleezza Rice herself, sparking the internal fury.

Staff have highlighted apparent discrepancies between accounts of her employment given by Wolfowitz and members of the World Bank's board and ethics committee.

According to the Washington-based Government Accountability Project (GAP), neither the committee nor the board approved Riza's hefty pay hikes as claimed by Wolfowitz's office.

The row risks undermining Wolfowitz at a time when he is leading his campaign to clean up corruption in the World Bank's multibillion-dollar lending.

The drive will again be under the spotlight when the bank, in conjunction with the International Monetary Fund, holds its spring meeting this weekend.

"It's ironic that Mr. Wolfowitz lectures developing countries about good governance and fighting corruption, while winking at an irregular promotion and overly generous pay increases to a partner," said Bea Edwards, the GAP's international director.

Wolfowitz has also ruffled feathers among staffers by appointing Republican allies to key World Bank positions, including in charge of its anti-corruption unit.

The March issue of Vanity Fair, meanwhile, said that Riza served as a consultant to military contractor SAIC while a World Bank employee in the run-up to the 2003 Iraq invasion, which Wolfowitz helped engineer.

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World Bank mulls Wolfowitz's fate

http://news.bbc.co.uk/2/hi/business/6556791.stm

4/15/2007

Senior World Bank officials have begun a key board meeting, during which the fate of the organisation's chief Paul Wolfowitz is due to be discussed.

Mr Wolfowitz has been under pressure to quit after admitting helping his partner win a promotion and pay rise.

Although the US continues to support Mr Wolfowitz other nations have questioned his position.

Mr Wolfowitz is due to appear before the press after the meeting for the first time since the controversy broke.

British Development Minister Hilary Benn expressed regret that the question of Mr Wolfowitz's fate would overshadow the joint meeting of the IMF and World Bank in Washington.

He said the incident had "damaged the bank" and should never have occurred.

Germany's development minister said Mr Wolfowitz should ask himself whether he was still able to continue in his role.

"At this point it is my conclusion that he has to decide for himself whether in regard to this mistake he can credibly fulfil his duties," Heidemarie Wieczorek-Zeul said.

Sunday's news conference in Washington will come at the end of the three-day meeting of G7 finance heads, the World Bank and the International Monetary Fund.

A controversial nominee to the role from the beginning due to his part in driving forward the war in Iraq, Mr Wolfowitz has been a divisive figure during his two years at the bank, analysts say.

Shortly after he took on the job, his girlfriend, Libyan-born Shaha Riza, was seconded to the US state department to avoid creating a conflict of interest.

But rapid rises in her tax-free World Bank salary to about $193,000 (£97,000) - more than the $186,000 Secretary of State Condoleezza Rice receives before tax - raised questions about his involvement in the transfer.

'Deep unhappiness'
The bank's staff association is leading the call for his resignation, saying he should "act honourably and resign" as he had "destroyed" the trust of the international lending agency's employees.

Mr Wolfowitz has apologised for his mistake and, in a World Bank memo published by Associated Press, he expressed his "deep unhappiness" at becoming involved in her case.

Documents released by the bank also show that Ms Riza said she was forced to leave her job because of her close relationship with the bank's chief.

"I have now been victimised for agreeing to an arrangement that I have objected to and that I did not believe from the outset was in my best interest," she said in a note to the World Bank board.

The BBC's Justin Webb in Washington says Mr Wolfowitz is hanging on, but his position is looking very weak, with the White House the only player coming out squarely in his favour.

The case has caused huge embarrassment to Mr Wolfowitz, who has campaigned against corruption and for sound governance since he was appointed head of the bank in 2005.

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Wolfowitz Rebuffs Calls to Quit World Bank Leadership

http://www.bloomberg.com/apps/news?pid=20601087&sid=aG.4vj.wbUVs&refer=home

By Sheyam Ghieth and Christopher Swann

April 15 (Bloomberg) -- World Bank President Paul Wolfowitz rejected calls for him to quit less than halfway through his five-year term, saying he still has important work to do alleviating poverty in the developing world.

"I believe in the mission of this organization and I believe I can carry it out,'' Wolfowitz, 63, told a press conference in Washington today. "This is important work and I intend to continue it.''

His comments came minutes after the group's Development Committee released a statement describing the promotion of a colleague that Wolfowitz dated as a "great concern.'' The panel, which represents the bank's 185 member nations, said the organization must adhere to high standards.

World Bank directors are weighing Wolfowitz's future as head of the largest development agency after finding that he personally dictated the terms of his partner's salary increase and promotion. The raise was twice as large as allowed by bank rules, according to the Staff Association, which represents 13,000 employees and is demanding Wolfowitz resign.

France and Germany, among the largest shareholders in the bank, have declined to support Wolfowitz, leaving him dependent on the support of the Bush administration -- the largest World Bank donor. Even some American allies, such as Britain, have admonished the former U.S. deputy secretary of defense.

The World Bank was founded in 1944 to provide financing for the reconstruction of Europe after World War II, and it has since changed its mission to focus on fighting poverty. It lends about $23 billion a year.

Credibility, Reputation
"We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as the motivation of its staff,'' the Development Committee said in the statement. "The current situation is of great concern to all of us.''

"We endorse the Board's actions in looking into this matter and we asked it to complete its work,'' the statement added. "We expect the bank to adhere to a high standard of internal governance.''

The language means that Wolfowitz is under mounting pressure from stakeholders to leave, regardless of the president's defiant stance, according to Devesh Kapur, a professor at the University of Pennsylvania in Philadelphia.

"The noose has been tightening,'' said Kapur, co-author of the official history of the World Bank. "The fact that the normally anodyne Development Committee issues such a strong statement suggests that his presidency is irreparably damaged.''

Apology
Wolfowitz apologized last week for granting the raise to Shaha Riza, an eight-year bank veteran who worked as a communications officer. To comply with bank regulations that forbid one partner to report to another, she was transferred to the State Department while remaining on the bank payroll.

The uproar was caused by the decision to give Riza a promotion and a 36 percent pay raise that was twice as large as staff rules allowed. The following year, she got a 7.5 percent raise, bringing her salary to $193,590, more than is earned by Secretary of State Condoleezza Rice.

"The whole business has damaged the bank and should never have happened,'' U.K. International Development Secretary Hilary Benn told reporters in Washington on April 14.

Questions About Future
The probe of Riza's promotion overshadowed the semi-annual meetings this weekend of the World Bank and the IMF. Every press conference was dominated by questions about Wolfowitz's future.

The bank's president by convention is nominated by the White House and is a U.S. citizen. The IMF's managing director, currently former Spanish Finance Minister Rodrigo de Rato, has always been a European.

Wolfowitz, a former political science professor who also worked for Presidents Ronald Reagan and George H.W. Bush as a diplomat and policy maker, came to the World Bank bearing the baggage of his role as an architect of the Iraq war.

His plan to beef up the bank's office in Baghdad and to speed lending there has opened him to charges that he is seeking to vindicate his war record. He is often heckled by anti-war protesters during trips around the U.S. and abroad.

"It's not the World Bank's credibility but Mr. Wolfowitz's credibility that's on the line,'' Swiss Economics Minister Doris Leuthard told reporters. "He's never been a popular person. We have to find a solution quickly.''