World Bank Anatomy of a hit job: The Wolfowitz Affair (formerly Paul's Girl)

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ttp://www.ibtimes.com/photonews_new2.htm?image=72474

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http://www.ibtimes.com/photonews_new2.htm?image=72474

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http://www.humanevents.com/article.php?id=20290

[Crafty_Dog]

CCP:

First, please remember to accompany URLs that you may post with a description of their contents and why you are posting them.

Second, turning to the merits, here's this from the WSJ:

Marc
=================

The Wolfowitz Files
The anatomy of a World Bank smear.

Monday, April 16, 2007 12:01 a.m. EDT

The World Bank released its files in the case of President Paul Wolfowitz's ethics on Friday, and what a revealing download it is. On the evidence in these 109 pages, it is clearer than ever that this flap is a political hit based on highly selective leaks to a willfully gullible press corps.

Mr. Wolfowitz asked the World Bank board to release the documents, after it became possible the 24 executive directors would adjourn early Friday morning without taking any action in the case. This would have allowed Mr. Wolfowitz's anonymous bank enemies to further spin their narrative that he had taken it upon himself to work out a sweetheart deal for his girlfriend and hide it from everyone.

The documents tell a very different story--one that makes us wonder if some bank officials weren't trying to ambush Mr. Wolfowitz from the start. Bear with us as we report the details, because this is a case study in the lack of accountability at these international satrapies.





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.

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.

Needless to say, none of this context has appeared in the media smears suggesting that Mr. Wolfowitz pulled a fast one to pad the pay of Ms. Riza. Yet the record clearly shows he acted only after he had tried to recuse himself but then wasn't allowed to do so by the ethics committee. And he acted only after that same committee advised him to compensate Ms. Riza for the damage to her career from a "conflict of interest" that was no fault of her own.

Based on this paper trail, Mr. Wolfowitz's only real mistake was in assuming that everyone else was acting in good faith. Yet when some of these details leaked to the media, nearly everyone else at the bank dodged responsibility and let Mr. Wolfowitz twist in the wind. Mr. Melkert, a Dutch politician now at the U.N., seems to have played an especially cowardly role.

In an October 24, 2005 letter to Mr. Wolfowitz, he averred that "because the outcome is consistent with the Committee's findings and advice above, the Committee concurs with your view that this matter can be treated as closed." A month later, on November 25, Mr. Melkert even sent Mr. Wolfowitz a personal, hand-written note saying, "I would like to thank you for the very open and constructive spirit of our discussions, knowing in particular the sensitivity to Shaha, who I hope will be happy in her new assignment."

And when anonymous World Bank staffers began to circulate emails making nasty allegations about Ms. Shaha's job transfer and pay in early 2006, Mr. Melkert dismissed them in a letter to Mr. Wolfowitz on February 28, 2006, because they "did not contain new information warranting any further review by the Committee." Yet amid the recent media smears, Mr. Melkert has minimized his own crucial role.





All of this is so unfair that Mr. Wolfowitz could be forgiven for concluding that bank officials insisted he play a role in raising Ms. Riza's pay precisely so they could use it against him later. Even if that isn't true, it's clear that his enemies--especially Europeans who want the bank presidency to go to one of their own--are now using this to force him out of the bank. They especially dislike his anticorruption campaign, as do his opponents in the staff union and such elites of the global poverty industry as Nancy Birdsall of the Center for Global Development. They prefer the status quo that holds them accountable only for how much money they lend, not how much they actually help the poor.
Equally cynical has been the press corps, which slurred Mr. Wolfowitz with selective reporting and now says, in straight-faced solemnity, that the president must leave the bank because his "credibility" has been damaged. Paul Wolfowitz, meet the Duke lacrosse team.

The only way this fiasco could get any worse would be for Mr. Wolfowitz to resign in the teeth of so much dishonesty and cravenness. We're glad the Bush Administration isn't falling for this Euro-bureaucracy-media putsch. Mr. Wolfowitz has apologized for any mistakes he's made, though we're not sure why. He's the one who deserves an apology.

[Crafty_Dog]

WSJ:

REVIEW & OUTLOOK

Africans for Wolfowitz
Third World reformers resist a coup by rich Europeans.

Friday, April 27, 2007 12:01 a.m. EDT

One of the most revealing subplots in the European coup attempt against World Bank President Paul Wolfowitz is who is coming to the American's defense. The rich European donor countries want him to resign, while the Africans who are the bank's major clients are encouraging him to stay.

You wouldn't know this from the press coverage, which continues to report selective leaks from the bank staff and European sources who started this political putsch. The latest "news" is that the European Parliament has asked Mr. Wolfowitz to resign, thus sustaining that body's reputation for irrelevant but politically correct gestures. If Mr. Wolfowitz leaves, no doubt some of the europols will angle for the job.

The more telling story is the support for the bank president from reform-minded Africans. At a press conference during this month's World Bank-IMF meetings in Washington, four of the more progressive African finance ministers were asked about the Wolfowitz flap. Here's how Antoinette Sayeh, Liberia's finance minister, responded:

"I would say that Wolfowitz's performance over the last several years and his leadership on African issues should certainly feature prominently in the discussions . . . . In the Liberian case and the case of many forgotten post-conflict fragile countries, he has been a visionary. He has been absolutely supportive, responsive, there for us . . . . We think that he has done a lot to bring Africa in general . . . into the limelight and has certainly championed our cause over the last two years of his leadership, and we look forward to it continuing."





The deputy prime minister for Mauritius, Rama Krishna Sithanen, then piped in that "he has been supportive of reforms in our country . . . . We think that he has done a good job. More specifically, he has apologized for what has happened."
Sub-Saharan Africa is the world's poorest region, and Mr. Wolfowitz has appropriately made it his top priority. On his first day on the job, he met with a large group of African ambassadors and advocates. His first trip as bank president was a swing through Burkina Faso, Nigeria, Rwanda and South Africa. He also recruited two African-born women vice presidents, a rarity at the bank.

If you're surprised by that last fact, then you don't appreciate that the World Bank has always been a sinecure for developed-world politicians. They get handsome salaries, tax free, and their performance is measured not by how much poverty they cure but by how much money they disperse.

Mr. Wolfowitz has upset this sweetheart status quo by focusing more on results, and especially on the corruption that undermines development and squanders foreign aid. Yet many of the poor countries themselves welcome such intervention. At the same April 14 press conference, Zambian Finance Minister N'Gandu Peter Magande endorsed the anticorruption agenda:

"We should keep positive that whatever happens to the president, if, for example, he was to leave, I think whoever comes, we insist that he continues where we have been left, in particular on this issue of anticorruption. That is a cancer that has seen quite a lot of our countries lose development and has seen the poverty continuing in our countries. And therefore . . . we want to live up to what [Wolfowitz] made us believe" that "it is important for ourselves to keep to those high standards."





The real World Bank scandal is that Mr. Wolfowitz's enemies don't care much about Africa. The French and Brits who want him ousted have never entirely shaken the paternalism they developed during the colonial era. Their real priority is controlling the bank purse-strings and perquisites.
As for the coup attempt, Mr. Wolfowitz's fate now rests with the 24-member bank board. Europeans dominate, while we saw only two Africans listed on the bank's Web site. These profiles in buck-passing have asked Mr. Wolfowitz to meet with them on Monday; his lawyer can join him but won't be allowed to speak.

The noisy leaking and staff protests are aimed at getting Mr. Wolfowitz to make their life easy by resigning. But that would only validate their campaign to oust him for giving his girlfriend a raise that the bank's own ethics committee advised him to deliver after he had tried to recuse himself. Since our editorial reported on all of these "ethics" details two weeks ago, no one has even tried to dispute our facts. The critics have shifted to a new line that, because his "credibility" has been damaged by these selective smears, Mr. Wolfowitz must now resign "for the good of the bank."

Let's hope the White House doesn't fall for this rot, and, by the way, it's about time Treasury Secretary Hank Paulson spent some of his political capital and defended Mr. Wolfowitz. He'd be in good company among Africa's progressive leaders.

Mr. Berkowitz is a research fellow at the Hoover Institution at Stanford University.

[Crafty_Dog]

The WSJ continues its coverage of this:

REVIEW & OUTLOOK

Dutch Rub-Out
Wolfowitz and the World Bank's Euro-cabal.

Monday, April 30, 2007 12:01 a.m. EDT

World Bank President Paul Wolfowitz faces an "ad hoc committee" investigating his alleged ethics violations today, but it seems the committee has reached its conclusions even before he has a chance to defend himself. This fits the pattern of what is ever more clearly a Euro-railroad job.

On Saturday, the Washington Post cited "three senior bank officials" as saying that the committee has "nearly completed a report" concluding that Mr. Wolfowitz "breached ethics rules when he engineered a pay raise for his girlfriend." The Post also reported that, "According to bank officials, the timing of the committee's report and its conclusions have been choreographed for maximum impact in what has become a full-blown campaign to persuade Wolfowitz to go." So there it is from the plotters themselves: Verdict first, trial later.

None of this is surprising when you consider that the "ad hoc committee" is dominated by Europeans who have been leading the campaign to oust Mr. Wolfowitz. Four of the committee's seven members are European, including its Dutch chairman, a Frenchman, Norwegian and Russian. The others hail from Ethiopia, Mexico and China, but the Europeans have the majority and are running this railroad.





The "ad hoc" chairman is Herman Wijffels, a Dutch politician who has his own blatant conflict of interest in the case. One of the main "witnesses" against Mr. Wolfowitz is Ad Melkert, another Dutch politician who had previously run the bank board's ethics committee that advised Mr. Wolfowitz to give the raise to his girlfriend that is now the basis for the accusations against him. Whom do you think Mr. Wijfells is going to side with: His fellow countryman, or an American reviled in Europe for wanting to depose Saddam Hussein?
Mr. Melkert has played an especially craven role by running from his own responsibility in the case. As head of the ethics committee in 2005, he refused to let Mr. Wolfowitz recuse himself from dealings with Shaha Riza, who had been long employed at the bank. Then Mr. Melkert advised him to ensure that Ms. Riza got a new job that included some kind of raise or promotion to compensate for the disruption to her career. Now, however, Mr. Melkert claims he was an innocent bystander who knew nothing about Ms. Riza's raise.

How very European. This is the same Ad Melkert, who on October 24, 2005, after Ms. Riza had been told of her new job and salary, wrote in a letter to Mr. Wolfowitz that "Because the outcome is consistent with the [Ethics] Committee's findings and advice above, the Committee concurs with your view that this matter can be treated as closed."

And it is the same Ad Melkert who absolved Mr. Wolfowitz after inspecting two whistleblower emails from an anonymous "John Smith" that circulated around the bank in early 2006 and charged malfeasance. A January 21 whistleblower email included a reference to Ms. Riza's "salary increase of around US$50,000" and was sent to the entire bank board.

On February 28, 2006, Mr. Melkert wrote to Mr. Wolfowitz, saying that he and the ethics committee had "reviewed two emails from 'John Smith'" as well as relevant "background documents." He went on to write that "On the basis of a careful review of the above-mentioned documents . . . the allegations relating to a matter which had been previously considered by the Committee did not contain new information warranting any further review by the Committee."

Either Mr. Melkert is lying now, or he was negligent when he wrote that letter. But there's no excuse for his current Sgt. Schultz routine from "Hogan's Heroes" that "I know nothing. Nothing!" Mr. Wijffels succeeded Mr. Melkert as the Dutch representative on the bank board, so he has a clear conflict of interest in judging his countryman's abdication. He also has a conflict because he's in a position to protect fellow board members who were also alerted to Ms. Riza's salary by the whistleblower email. Mr. Wijffels should resign from the ad hoc committee and be replaced by someone from outside the bank's Euro-cabal.





By the way, today's "ad hoc" bank meeting is designed to coincide with President Bush's summit with European Commission President Jose Manuel Barroso and German Chancellor Angela Merkel, whose bank representative is among the anti-Wolfowitz ringleaders. The hope among the Euro-plotters is that Mr. Bush will bow to the European leaders on Mr. Wolfowitz in return for some other policy concession, and thus encourage him to resign. That would spare the Europeans a difficult bank vote. But it would only make Mr. Bush look even weaker than he already is if another of his appointees can be run out of town on a phony scandal.
Ms. Riza will also get her first hearing today in this kangaroo court, and she ought to blast them for the way the bank has violated its own rules in leaking details of her salary and damaged her career--all in the name of preventing a "conflict" that was no fault of her own. The real disgrace here isn't Mr. Wolfowitz or Ms. Riza but the bank itself and its self-protecting staff and European directors. Their only "ethic" is to oust an American reformer so they can get back to running the foreign aid status quo.

[Crafty_Dog]

Gagging Shaha Riza
Why won't the World Bank let her have her say?
WSJ
Friday, May 4, 2007 12:01 a.m. EDT

Since the misnamed "Wolfowitz scandal" broke last month, enemies of the World Bank president have engaged in selective press leaks and calculated smears intended to oust him. Most of these leaks have come from within the bank itself, not that we've seen any effort by the institution to stop them.

Meanwhile, the bank bureaucracy has systematically sought to prevent Mr. Wolfowitz and his girlfriend Shaha Riza from telling their side of the story. Exhibit A is the bank's refusal to allow Ms. Riza--whose raise and promotion are the central issue--to defend herself even in a newspaper op-ed.

That was the order she received this week from one W. Paatii Ofosu-Amaah, a longtime bank bureaucrat from Ghana who serves as its vice president and corporate secretary. Both Ms. Riza and her lawyer declined to comment and were not our sources, but others who've seen the letter tell us that Mr. Ofosu-Amaah cited the bank's disclosure policies regarding board proceedings to forbid Ms. Riza from taking her case to the public.

That's more than odd, given that Ms. Riza currently works at a State Department affiliate; her salary continues to be paid by the bank as part of an agreement to avoid a "conflict of interest" claimed by the bank's own ethics committee. Bank sources also tell us that Mr. Ofosu-Amaah was among those who opposed letting Mr. Wolfowitz and Ms. Riza testify on Monday to the "ad hoc committee" investigating the case. One source adds that, "like several other vice presidents, Paatii took the position that a verdict could be reached through the documentary evidence alone."

Maybe that explains why this kangaroo court was prepared last week to reach a guilty verdict against Mr. Wolfowitz before either he or Ms. Riza had been given a chance to appear, according to "three senior bank officials" cited on Saturday by the Washington Post. Mr. Ofosu-Amaah's office didn't return our calls, naturally.

[Crafty_Dog]

The Whistleblowers' Tale
The real disgrace at the World Bank.

BY BRET STEPHENS
Tuesday, May 8, 2007 12:01 a.m. EDT

In the summer of 1997, two senior World Bank officials published an academic article under the cheerful title, "Africa on the Move: Attracting Private Capital to a Changing Continent." The authors, Jean-Louis Sarbib of France and Callisto Madavo of Zimbabwe, were responsible for the bank's work in Africa, and they took an optimistic view. "A new spirit of social and economic progress has energized much of the region," they wrote, "and gradually the rest of the world is beginning to take notice."

Among the bank's own contributions to this African Renaissance, as it was then being billed, was something called the Niger Health Sector Development Program. It had been approved by Mr. Sarbib the year before with the stated objectives of improving the quality and coverage of basic health services, expanding the population's access to generic drugs and reforming the health sector. The plan anticipated expenditures of $275 million over five years, starting with an initial grant of $40 million--big sums for a small, highly indebted and politically unstable country.

Months before the project was formally approved by the bank's board, however, doubts about its size, nature and prospective efficacy were being raised by a midlevel bank officer named Bahram Mahmoudi. An Iranian-born economist with extensive field experience in Africa, Mr. Mahmoudi had been in Niger in April 1996 on a separate project. But he had seen enough of the health program to share his misgivings about it with its manager.

Why, for instance, were most of the program funds being allocated to construction projects when the World Bank's own "assistance strategy" to Niger emphasized rural and preventive care? Why were 13 staff members--more than double the usual size--assigned to the program? Why--despite two years and nearly $1 million worth of "concept development"--had there been no adequate financial and economic analysis of the program's feasibility? Did Niger have the institutional capacity to handle such large investments? And was it appropriate for team members to be using their time in Niger to take their spouses on sightseeing tours?





None of these observations went down well with the management. Mr. Mahmoudi made himself even more of a nuisance at the bank in 1998, when he raised a flag with Messrs. Madavo and Sarbib over the dismissal, ostensibly on budgetary grounds, of a dozen employees, mostly from developing countries, and their subsequent replacement with a dozen mostly European ones. In July 1999, an independent investigation by the law firm Dewey Ballantine concluded this was not, as Mr. Mahmoudi believed, a case of racial discrimination, although it did cite "significant management problems."
Yet by the time that conclusion was reached Mr. Mahmoudi had left the bank, having ended a 20-year career with a sharp downward turn in his performance reviews and a pink slip. A review given a year prior to his criticism of the Niger program praised Mr. Mahmoudi's work in Africa for its "dynamism and perspicacity." By contrast, a review from 1997 notes that his work in Niger, "which initially received favorable comments from peer reviewers . . . was not endorsed by the management team which felt he had moved too quickly without carrying out sufficient dialogue."

Convinced he had been sacked for his whistleblowing, Mr. Mahmoudi appealed his termination to the bank's administrative tribunal. In May 2000 the tribunal agreed he had been wrongfully dismissed--albeit on procedural grounds--and ordered his reinstatement. In an extraordinary step, the bank cited presidential discretion to refuse reinstatement and instead offer compensation of 18 months salary.

Given usual bank practices, Mr. Mahmoudi was lucky to have gotten even that much. "Keep in mind that nobody is truly independent at the Word Bank," says former bank official Anthony Van Vugt. "Not the ethics officers, not the judges, not the staff association. The managers are very severe about anyone who speaks out."

The Dutch-born Mr. Van Vugt has his own bitter experience as a whistleblower. In 1995, he discovered that $100,000 had been misappropriated by his managers from a trust fund intended to finance water-sector reform in the Philippines. At his retirement that year, he submitted an audit certificate for the project making note of the misused money. Several months later he requested a copy of the certificate. "What I found," he recalls, "was a substitute statement that was signed in my name. The qualification [regarding the $100,000] that I had included in the original statement had disappeared."

Mr. Van Vugt then filed an ethics investigation. "I made the point to quite a few people that $100,000 had been used improperly, and that made people uncomfortable. Eventually, I find a piece of paper that says that Tony Van Vugt mismanaged his project and for that reason he shall be denied any future employment with the bank." The ethics investigation went nowhere.

For Mr. Van Vugt, that note foreclosed the often lucrative consulting opportunities many retired bank officials enjoy. For midcareer officials, the bank's hex can be absolutely devastating. It can make its enemies unemployable. A foreign national who loses his job can have his U.S. visa revoked. The result is a culture of conformity, silence and fear. "As soon as you're seen blowing the whistle," says Mr. Van Vugt, "your own colleagues won't even sit next to you in the cafeteria."





As for Mr. Mahmoudi, a vindication of sorts came several years later when the bank quietly released a report assessing the Niger health program. The program, on which $50 million was ultimately spent, was rated as "unsatisfactory" for bank performance, borrower performance, sustainability and "quality at entry." A comparative analysis of project performance across six regions shows that during the tenure of Messrs. Sarbib and Madavo, Africa had the highest number of projects yet the lowest likely sustainability percentage, the lowest satisfactory percentage for bank performance and the lowest satisfactory borrower performance at implementation.
Mr. Sarbib was subsequently promoted to senior vice president before retiring last year. Mr. Madavo is a visiting professor at Georgetown. Both men recently signed a public letter calling on Paul Wolfowitz to resign for damaging the bank's reputation.

Mr. Stephens is a member of The Wall Street Journal's editorial board. His column appears in the Journal Tuesdays.

[Crafty_Dog]

Corruption Fighter
By BAMBANG HARYMURTI
May 14, 2007

JAKARTA -- Fighting corruption is a hazardous mission. In poor and developing countries you can be assassinated, which happened to journalists Georgy Gongadze in Ukraine and Carlos Alberto Cardozo in Mozambique in 2000. Even in France there is danger, as magistrate Eva Joly discovered.

Ms. Joly prosecuted the state-owned Credit Lyonnais, which had incurred billions of dollars of losses through mismanagement; her seven-year investigation of the Elf Aquitaine oil company exposed corruption at the highest levels of business and political life. As a result she was subjected to intimidation and death threats and had to be constantly under police protection; her adversaries even produced a film portraying her as an unstable zealot. In 2002 the Norwegian government asked her to return to her native land, and promptly appointed her a special adviser in the Ministry of Foreign Affairs and Justice.

But Ms. Joly, whom I have been privileged to know, remains steadfast in her efforts against official corruption, and assists, where she can, other anti-corruption activists all over the world. She gathered international support for me when I was sentenced to one year of incarceration by an Indonesian court in 2004.

My crime was that of being the editor in chief of a newsweekly magazine that published a story about the possibility of arson in one of Indonesia's largest traditional markets. Instead of using our story as preliminary information to start an investigation, the police decided to investigate us -- and we ended up as defendants in a criminal defamation case. And it was during this difficult time that another friend, Paul Wolfowitz, wrote an op-ed in the New York Times about my case. He was then second in command at the Pentagon and a very busy man. Yet he came forward to help.

Now it is Mr. Wolfowitz who is having a very difficult time. As president of the World Bank, he is accused of secretly helping his girlfriend, Shaha Riza, get a hefty pay raise; some former high officials of the bank have demanded his resignation. I was shocked when I read the news. I have known Mr. Wolfowitz for more than two decades and I have never doubted his personal integrity. I have also known Ms. Riza for more than a decade. We share a passion: advocating for a more liberal and democratic interpretation of Islam than what is now prevalent in the Middle East. Since I have been covering news for more than a quarter century, my reporter instinct automatically went to work.

The material available to the public shows that Mr. Wolfowitz declared his special relationship with Ms. Riza to the bank's ethics committee when he first took his position and asked to be recused from matters relating to Ms. Riza, a longtime bank employee. The ethics committee denied this request and recommended that Mr. Wolfowitz have her leave the bank promptly and be compensated fairly. Mr. Wolfowitz followed this advice and, subsequently, the chairman of the ethics committee sent him two letters, thanking him for his action and acknowledging that the matter was considered closed.

Judging from all the documents that are available to the public, it seems to me it is the conduct of the ethics board, and not that of Mr. Wolfowitz, that should be investigated by an independent team. Perhaps headed by Eva Joly. This should be done promptly in order to save the World Bank from losing its effectiveness in its main goal of eradicating global poverty.

In fact, this crisis can turn out to be a great opportunity to show the world how to handle problems of conflict of interest in high places. This is a common problem among World Bank clients, the developing countries.

Poor countries usually lack skilled managers, and many of their competent managers are clustered in a few big families and, among those families' members, intermarriages are quite common. Hence conflicts of interests are much more prevalent, and a solution for handling this problem is greatly needed. The World Bank, which prides itself as being a knowledge bank, is well positioned to provide the answer. The question now is: Can the bank accept this challenge?

I am quite confident that Mr. Wolfowitz can, based on how he handled "odious debt" at the World Bank -- the situation in which loans are made with the knowledge that a big chunk of the money will probably be stolen. He did not give in to the pressure from the left to write off odious debt, and he did not give in to the pressure from the right in the opposite direction. His answer was to increase the corruption-prevention and asset-recovery capabilities of poor countries.

He has found many champions in this endeavor. Nuhu Ribadu, the chairman of the Economic and Financial Crime Commission of Nigeria, is one. Under his leadership, and with $5 million of assistance from the World Bank, his commission has been able to recover $5 billion worth of stolen assets, and to prevent further aid money from being corrupted. It is not by coincidence that Mr. Ribadu has publicly stated his support for Mr. Wolfowitz to remain the president of the World Bank.

Many critics of Mr. Wolfowitz's anti-corruption policy argue that suspending a loan is bad policy, even if there is indication of corruption, because poor people will suffer the most. But consider one of the most successful World Bank projects in my country: the Kecamatan Development Project (KDP), which has given more than $1.3 billion to millions of poor people in 35,000 subdistricts. The poor people decide by themselves, in a very democratic way, which project the money should be spent on. Not a single penny goes through government coffers and, therefore, nothing can be stolen by public officials. The project is done in a transparent way and is supervised by the whole community, and funding will be stopped by the bank if any misuse is detected. This threat of suspension as a collective punishment works very well.

For many poor people in Indonesia, this is the first time that any outsider has helped them in building public infrastructure in their area. It is such a successful program that many countries are now mimicking it. China, for instance, is planning to implement a similar project.

In Indonesia, it is widely believed that around 30% of foreign loans disbursed in the past were stolen. The World Bank has given $25 billion in loans to my country since 1968, which means almost $8 billion of these loans ended up in the wrong places. Imagine how much more effective the World Bank would be if its entire loan program was free from corruption.

Fortunately, some of the stolen money may still be recovered if countries like Indonesia can learn from the Nuhu Ribadu experience and are assisted by the bank. This is an exciting challenge and all the more reason to support the Wolfowitz presidency. I am writing this not just to support a friend in need, but to help save a great institution. Mr. Wolfowitz is on the right track and has the passion needed to succeed in the difficult task of changing the mistaken and deeply embedded paradigm at the World Bank.

Mr. Harymurti is the editor of the weekly newsmagazine and daily newspaper published by Tempo Interactive.

[Crafty_Dog]

World Bank Jobbery
More evidence the Wolfowitz accusers chose to ignore.

Tuesday, May 15, 2007 12:01 a.m. EDT

The World Bank board meets today to consider the fate of President Paul Wolfowitz, and the truth is that the verdict may already be in. The board will consider the report of an investigating committee dominated by the same European nations that have been orchestrating the media campaign to depose him.

As almost daily newspaper leaks have disclosed for weeks--in violation of bank rules--the committee concludes that Mr. Wolfowitz violated bank rules in awarding a promotion and salary increase for his girlfriend, Shaha Riza. We've previously reported on the World Bank documents that make it clear this was at worst a misunderstanding--if not a setup by bank officials who wanted his fingerprints on any raise for Ms. Riza. Mr. Wolfowitz had tried to recuse himself, only to be told he couldn't do so and would have to be the one to give her the raise and new job. (See "The Wolfowitz Files," April 16.)

But we've now seen two other documents that reveal the investigating committee's clear bias against Mr. Wolfowitz. They concern its key witness, Xavier Coll, the bank's vice president of human resources, who has joined those saying Mr. Wolfowitz dictated a raise he knew was excessive and then tried to cover it up. In his testimony, Mr. Coll claims that "there is no doubt that the President [Mr. Wolfowitz] knew or had been made aware of by me that this was outside the rules." The investigating panel relies heavily on Mr. Coll's claims to support its findings against Mr. Wolfowitz.

But to reach that conclusion, the committee had to ignore a pair of August 2005 memos in which Mr. Coll told a very different story. Mr. Coll dictated those memos for his own files and marked them "Strictly Confidential and Personal--For Xavier Coll's eyes only unless authorized explicitly by Xavier." They are a contemporaneous account of his negotiations with Ms. Riza and Mr. Wolfowitz.





In an August 22 memo, Mr. Coll reports that "I also felt that we were in a very difficult situation--with no precedent at the Bank--and that it had enormous potential to damage the Bank's reputation. In balance, I thought that the situation required more flexibility than in other past cases and that there was great risk to the Bank if we could not come to a workable agreement in a few days." Yet the investigating panel now asserts that the situation wasn't all that unusual and that Mr. Wolfowitz should have been allowed no such "flexibility" in how he tried to settle the matter.
In the same memo, Mr. Coll also reports that he had urged a lump-sum settlement with Ms. Riza as she left the bank, and concedes that Mr. Wolfowitz "agreed that I should raise this alternative with Ms. Riza. . . . I felt comfortable that I raised my points of concern with the President and that he has taken these seriously and given due consideration."

And regarding a later conversation Mr. Coll had with Ms. Riza, Mr. Coll wrote, "I indicated that while the President wanted to come to an agreement quickly (he was leaving that afternoon for an overseas trip) he also wanted to make sure that we came to the right solution, both for the institution and the staff." Mr. Coll added that Ms. Riza rejected his proposed "financial settlement."

Only then did Mr. Wolfowitz decide to settle the matter by dictating its terms to Mr. Coll. After Mr. Coll recommended that any future raises for Ms. Riza should be contingent on a review of her work outside the bank by "a committee of her peers," Mr. Coll wrote that "this addition brought the process for potential promotions more in line with current practice at the Bank. I felt that, on balance, this was a reasonable way to move forward and find a solution given the very complex and difficult set of circumstances."

Based on our fast reading late yesterday of the final investigating committee report, we could not find these quotes from Mr. Coll's memos. Yet they clearly show that Mr. Coll thought at the time that Mr. Wolfowitz was trying his best to come to a fair conclusion that would not harm Ms. Riza, would protect the bank from any possible litigation, and would do well by bank rules.

All of this is further evidence that what Mr. Wolfowitz is facing here is a kangaroo court. The Europeans and bank staff thought they could get him to leave quietly if they smeared him and Ms. Riza enough in the press. But now that he has fought back to clear his name, the Europeans led by Dutch politician Herman Wijffels have decided to ignore evidence to justify their one-sided conclusions. They also largely ignore Ms. Riza's own statements to the committee while condemning her for objecting to a process that all but ended her career at the bank.


So now the full 24-member board will take up the case, even as European ministers try to browbeat the White House and Treasury to get Mr. Wolfowitz to resign as part of some "plea bargain." But what does Mr. Wolfowitz get out of that--except more leaks saying he left under a cloud?

President Bush should understand that none of this is about Mr. Wolfowitz's "ethics." It is all about the European desire to punish a Bush appointee for his support for the Iraq war and his determination to change the bank's policies to fight corruption rather than simply push taxpayer money out the door. If the board really wants to oust Mr. Wolfowitz, the White House should insist on a recorded vote. We wonder if Europeans really want this showdown.

And oh, yes: President Bush could also help by declaring that, if the Europeans do oust Mr. Wolfowitz, his likely choice as a successor would be Paul Volcker, the former Fed Chairman who has made a recent career of fighting corruption. There is certainly a lot of that to clean up at the World Bank.

[ccp]

Thanks Crafty.  Your posts show anothyer story totally ignored in the MM.   If this was a Clinton appointee and Billary were President we would see the talk shows flooded with the likes of Lanny Davis repeating over and over their side of the story.   With the Bush Presidency we hear very little.  He seems to have thrown Wolfowitz to the wolves.  Perhaps he feels he cannot defend him since he was a prime architect of the Iraq invasion and/or he risk pissing off the Europeans who appear to like their influence at the WB for whatever reasons some probably corrupt.  In any case W. appears to feel the political fallout is not worth the risk of defending Paul.  I agree it would be a terrible personal tragedy for Wolfowitz if his reputation is tarnished as a result of the very same corruption he was trying to clean up.

I have not seen this side of the story on CNN.  It's amazing.  Every time I turn on CNN it has a story that has a negative slant towards Bush.  It is never partial or objective but always the Left's point of view.  Always.  To think my nephew dated Wolf Blitzer's daughter.  He has since moved on and married.  (Actually I hear she is a nice girl and he is probably a very good father.)  But he is clearly politically left - not partial.

George Will's piece:

http://jewishworldreview.com/cols/will051007.php3

[Crafty_Dog]

You're very welcome-- and thank you for being open to considering a different line of thought.  That is a rare thing!

It is quite impressive to see a hit job like this and to realize how deep and thorough something like this can be-- a very important lesson!

The Will piece is dead on about the WB.  Good find!

[Crafty_Dog]

World Bank Justice
Wolfowitz's resignation offers a window into a corrupt institution.

Friday, May 18, 2007 12:01 a.m. EDT

So after weeks of nasty leaks and media smears, the World Bank's board of executive directors yesterday cleared President Paul Wolfowitz of ethical misconduct for following the board's own advice on how to handle a conflict of interest involving his girlfriend. And Mr. Wolfowitz in turn will resign from the bank at the end of June. Run that by us again?

We've said from the beginning that the charges against Mr. Wolfowitz were bogus, and that the effort to unseat him amounted to a political grudge by those who opposed his role in the Bush Administration and a bureaucratic vendetta by those who opposed his anti-corruption agenda at the bank. That view was vindicated by yesterday's statement, which showed how little the merits of the case against Mr. Wolfowitz had to do with the final result.

Mr. Wolfowitz "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 directors said, thus rejecting the findings of a rigged investigating committee that had ignored key evidence. The most damning judgment the directors could muster is that "a number of mistakes were made," including by the bank's own ethics committee that had refused to let Mr. Wolfowitz recuse himself from matters involving his girlfriend, Shaha Riza.

In other words, this was all about politics. And all that mattered to Mr. Wolfowitz's accusers was to be rid of him, whatever the pretext or methods. The least they can do now is restore Ms. Riza to her job, assuming she wants to be part of an organization that treated her so shabbily.





This all may pass as World Bank justice. For the rest of us, it has served as a window into an institution that seems to observe no rule other than the interests of the unaccountable mandarins who consider themselves its rightful owners. There have been plenty of outrages in the bank's treatment of Mr. Wolfowitz, but for sheer chutzpah nothing exceeds the argument of last week's report by the investigating committee of the board that he had put the institution "in a bad and unfair light" by daring to defend himself publicly against selective and false media leaks designed to smear him. Had Mr. Wolfowitz taken that advice, he would have been out on his ear without so much as the benefit of the formal acquittal he has now received.
As for the Bush Administration, it might be in a better position now had it defended its man as vigorously as he defended himself. Instead, its officials were slow to understand what was happening and--with the exception of President Bush himself--largely mute as the coup unfolded. Treasury Secretary Hank Paulson took the line that the U.S. would allow the bank process to work itself out, when it ought to have been clear that the process itself was rigged.

Secretary of State Condoleezza Rice remained on the sidelines until the very end, and her reported "quiet diplomacy" on Mr. Wolfowitz's behalf was precisely the wrong way to fight a battle being waged on front pages. Her behavior in this case is reminiscent of her pre-emptive capitulation on the famous "16 words" in President Bush's 2003 State of the Union, words that Britain's Butler Report later concluded were "well-founded" but which now are a defining myth of the left's "Bush lied" theology.

Mr. Paulson and Ms. Rice may think that by staying on the sidelines of the Wolfowitz fight they have safeguarded their own political capital. Perhaps, but the precedent being set by Mr. Wolfowitz's departure will damage not just the Bush Administration in the time it has left but U.S. interests for years to come.

An American appointee has been ousted from a multilateral institution by a staff and media cabal on trumped-up charges solely because they disliked Mr. Wolfowitz's priorities. The inmates are now in charge. Yet the U.S. will still be expected to provide the bulk of funding to these institutions--more than 16% at the World Bank--while it cedes de facto control of its operations to a multilateral elite. That's a recipe for declining American influence.

If there is a silver lining here, it is that the public has been able to get a glimpse of how the World Bank works and what it actually accomplishes. Among other lowlights, we've recently been reminded that the bank annually pushes billions in loans to countries like China and Mexico that can easily get credit in private capital markets. We've seen that many of those loans go to projects in places like India or Kenya that are riddled by corruption; the bank may have lost as much as $8 billion to corruption in 25 years of lending to the Suharto regime in Indonesia. We've also learned that the bank funds literally hundreds of projects from Albania to Niger that were ill-conceived and proved to be failures.

We've seen that senior bank personnel, such as former Indonesia country director Dennis de Tray, openly argue that corruption is no big deal and should not get in the way of the bank's "helping people." We've seen how the bank trashed the careers of longstanding and well-regarded employees such as Bahram Mahmoudi, who blew the whistle on a misamanaged project. We've seen how Shengman Zhang, the bank's No. 2 under former President Jim Wolfensohn, seems to think there's nothing amiss with calling for Mr. Wolfowitz's resignation despite the fact that Mr. Zhang's wife was swiftly promoted while working under him.

We've seen how the board of directors apparently covered for one of their own--British Executive Director Tom Scholar--when he was accused of having a conflict of interest because of a personal relationship with an employee at the bank. And we've seen how the bank has served as a well-paid sinecure for out-of-office politicians such as Dutchman Ad Melkert, who has moved comfortably within multilateral institutions making an enviable tax-free salary while performing incompetently and behaving dishonorably.





In a better world, the bank would shrink to perform only its core mission of helping the world's poorest nations. That's not going to happen, however, so the best that President Bush can do now to minimize the damage of the Wolfowitz putsch is by replacing him with someone who shares his agenda and will clean the place up. No European should have a chance to do that given what has transpired, not even Tony Blair. Nor should he name another well known member of the Council on Foreign Relations seminar circuit whom the Europeans and staff can quickly capture.
We've suggested former Federal Reserve Chairman Paul Volcker, who saw first-hand how these institutions function while investigating the U.N.'s Oil for Food scandal. But whoever it is, the core task of Mr. Wolfowitz's successor should be to clean the World Bank stables, or shut it down.

[Crafty_Dog]

WSJ

Epitaph to a Smear
December 14, 2007; Page A20
Given the campaign of vilification endured earlier this year by the World Bank's Shaha Riza, we thought readers might like to know the results of an investigation into a concocted scandal about her. Don't expect to read about this in the media that was once so eager to trash her.

Ms. Riza is the bank employee whose personal relationship with then-bank President Paul Wolfowitz created the bogus conflict of interest that ultimately led to his resignation in June. The principal charge concerned the details of her allegedly excessive pay raise, which brought her salary in line with roughly 1,400 other employees of the bank. But a subplot about a trip she took to Iraq in the spring of 2003 was conveniently trotted out at the height of the controversy to help force Mr. Wolfowitz out.

Here are the facts. In early 2003, Ms. Riza was invited by the State Department to go to Iraq and advise on ways to set up a democratic government, with a particular focus on civil society and women's issues. The trip got the enthusiastic go-ahead from then-bank President James Wolfensohn.

To comply with bank rules concerning outside work, Ms. Riza agreed to take a month-long unpaid leave from her job, amounting to a loss in salary of about $10,000. To avoid even the appearance of a conflict of interest, she also declined any pay (except travel and other expenses) from the Science Applications International Corp., the Pentagon contractor that organized the trip.

Thus did matters stand until the phony Wolfowitz scandal blew up this spring. On April 18, the Washington Post ran a story under the headline, "Defense Eyes Wolfowitz Friend's Contract." The same day, National Public Radio followed up with "Wolfowitz Faces New Allegations of Favoritism," quoting Ms. Riza's former supervisor, Jean-Louis Sarbib, saying the trip was "unusual and not terribly above board." Graeme Wheeler, a bank managing director, also included the trip among the reasons for his widely publicized demand at the time that Mr. Wolfowitz resign.

The very next day, however, Reuters reported that in 2005 the Pentagon's Inspector General had looked into Ms. Riza's trip and found there was "insufficient basis to warrant further investigation." The IG noted that Ms. Riza, who has long experience working with Arab reformers and is fluent in Arabic and Turkish, among other languages, was uniquely well qualified for the position. The New York Times confirmed the substance of the Reuters story on April 20, adding that the IG had found that then-Deputy Defense Secretary Wolfowitz had "not exerted improper influence in Ms. Riza's hiring." Oddly, the Times chose to run this news under the misleading headline "Wolfowitz Backed Friend for Iraq Contract in '03."

Despite this finding, in late June of this year Xavier Coll, then the bank's vice president for human resources, hired Canadian law firm Goodmans LLP to investigate Ms. Riza's trip, supposedly because of questions related to the approval process for the trip. Mr. Coll is known to readers of this page for the dishonest account he gave of his role in authorizing Ms. Riza's raise.

Fast forward six months. Following a call from us, a bank spokesman says the investigation has been completed, and that the report finds "no basis to conclude misconduct occurred." The tab for this fishing expedition? The bank won't say, and Goodmans didn't return our calls. But a source estimates the cost to the bank runs north of $500,000.

That figure may be pocket change at the bank, though it is hardly so for the poor people whom the bank ostensibly exists to serve. But the episode is also a revealing example of the lengths to which the bank's bureaucrats were prepared to go to destroy the career of one of their own colleagues, for no greater sin than her connection to Mr. Wolfowitz. And it says something about the media, which in its efforts to "get Wolfowitz" didn't scruple to trash her reputation. In a better world, Ms. Riza's accusers, in the bank and the media, would publicly acknowledge her vindication.

WSJ

[Crafty_Dog]

 
World Bank Confidential
March 10, 2008; Page A14

In January, we reported on a $569 million corruption scandal involving five World Bank health projects in India. Bank President Robert Zoellick called the corruption "unacceptable" and said "the Government of India and the World Bank are committed to getting to the bottom of this." We're now getting a clearer picture of whether the bank is serious, and the early evidence isn't encouraging.

Tomorrow, the bank's governing board will be briefed on the bank's "action plan" to redress the problems. As in past corruption cases, the plan contains promises of better oversight, strengthened safeguards, "smart project design," seminars on fighting corruption and so on. (Read the World Bank report and accompanying Powerpoint presentation.)

All of this might do some good. But as is often the case with the World Bank, the remedial efforts focus on improving systems rather than insisting on accountability. Though the bank promises a "corporate review," none of the bank officials directly responsible for supervising the five corrupted projects has been fired or had his career adversely affected.

Some have gone on to bigger things at the bank. For example, the bank's anticorruption unit (INT) found "a high percentage of procurements showing indicators of collusion, fraud or corruption" in a $125 million "Tuberculosis Control Project." Yet the team leader who oversaw that project is now responsible for the bank's more ambitious $360 million "Reproductive and Child Health II" project.

Most remarkable, Praful Patel, since 2003 the bank's vice president for operations in South Asia, is now the point man organizing the bank's response to the corruption that happened on his watch. This is akin to sending Michael Brown, the FEMA head during Hurricane Katrina, to supervise emergency management reforms.

Meanwhile, the bank says it has "joined forces" with the Indian government to "stamp out corruption." One problem, however, is that the Indian government categorically denies many of the findings in its official response to the INT report. In a conclusion on page four of its response, India even attacks the bank's corruption fighters for "erroneously creating an impression that the health sector delivery system in India is beset with fraud and corruption."

 
This suggests that whatever mechanisms the bank puts in place to address corruption could founder on India's resistance. On that point, an email from an assistant to Mr. Zoellick says that the bank chief privately agrees with Indian assertions that unspecified "mistakes had been made" in the INT report. To his credit, the email adds that Mr. Zoellick does not want those "mistakes" to divert from the "serious problems" that were exposed.

A World Bank spokesman declined comment on the documents but added that the bank is "committed to addressing its own shortcomings and will take disciplinary action against any staff members found responsible for wrongdoing." Yet so far in the wake of the India report, the only relevant people to leave the bank have been INT Director Suzanne Rich Folsom and her two senior deputies, who had been relentlessly hounded by the bank's bureaucracy.

We're happy to see Paul Volcker's name on the search committee to find a replacement for Ms. Folsom, but otherwise the committee is stacked with bureaucrats who represent the bank status quo. They include Jeff Gutman, who oversaw the Cambodia portfolio while some of its projects were exposed as corrupt; Makhtar Diop, who did the same in Kenya; and Alison Cave, a former bank staff association chair who led the staff coup against former President Paul Wolfowitz.

Mr. Zoellick has faced a difficult management task trying to mend fences after the uproar over Mr. Wolfowitz. But as president of an institution that depends on U.S. tax dollars, he has a larger obligation to ensure that corruption findings have real consequences. We hope the bank's directors demand more accountability tomorrow.

See all of today's editorials and op-eds, plus video commentary