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April 16, 2007

Wolfowitz Deflects Questions About Role in Scandal

by Jim Lobe

As the World Bank handed out a communiqué that talked about "transparency" and "equity," beleaguered bank President Paul Wolfowitz deflected a barrage of questions from journalists seeking more information about allegations of nepotism involving a bank employee who is personally involved with him.

But despite his diminishing credibility at the helm of the bank, Wolfowitz, who started his tenure in June 2005, said he wants to keep his job.

"This is important work, and I intend to continue it. I have many expressions of support," Wolfowitz told reporters at the close of the annual spring meetings of the World Bank and the International Monetary Fund, which were largely overshadowed by the scandal.

"I believe in the mission of this organization, and I can carry it out. We need to work our way through this," he added.

During a 30-minute press conference, Wolfowitz kept referring reporters to the 24-member Board of Directors of the bank, which is dominated by countries from the Group of Seven most-industrialized nations and which is investigating the case.

"The board is looking into the matter. We'll let them complete their work," he said.

His words failed to appease a roomful of reporters thirsty for details over why he paid his girlfriend and co-worker at the bank, Shaha Riza, an unusually high salary above and beyond bank rules, and seemingly tried to cover it up later.

In a near chaotic scene, the moderator of the panel on which Wolfowitz spoke tried to cut short a Swiss reporter who told Wolfowitz that he had "lost the trust" of his staff and some of the shareholders at the bank. A bank employee even tried to seize the microphone from the reporter.

Another reporter asked whether it was "hypocritical" on Wolfowitz's part to continue at the bank, preaching anti-corruption and transparency – especially to African nations – when he is embroiled in allegations of cronyism.

A third sounded awkward as he searched for a word to describe the 52-year-old woman at the heart of the scandal. "Your girlfriend," he finally told Wolfowitz, president of an institution that lent $23 billion to developing nations last year.

Of the nine questions allowed during the session, six were about the Riza affair.

The issue also dominated the two-day meetings.

Finance and development ministers from around the world who gathered under tight security in Washington for the spring meetings of the World Bank and the IMF appended their statement with a call for openness and good governance at the World Bank.

"The current situation is of great concern to all of us," the communiqué said. "We expect the bank to adhere to a high standard of internal governance."

The governors, however, said they would endorse the board's actions in looking into the matter.

"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," they said.

Meanwhile, calls for Wolfowitz's resignation – which started on Thursday with the 10,000-member World Bank Staff Association – continued to trickle in.

"He has become a distraction, not a leader, at a moment when leadership is sorely needed," said Nancy Birdsall, president of the Washington-based Center for Global Development, in a statement earlier in the meetings.

"There are other reasons, too: With shareholders and staff questioning his judgment on the conflict of interest issue, he cannot lead by influence and inspiration, as the World Bank's global mission so obviously requires," she said.

Birdsall said that the scandal is a major diversion from other pressing global issues such as poverty, climate change, cross-national money laundering, drug and sex trafficking, and avian flu, among others.

"We are in a new and dangerous global century. We need a strong World Bank to wield its financial and technical weight in a concerted collective attack on these global challenges," she said. "By resigning now, Mr. Wolfowitz can rescue for himself a lasting legacy. He can do so by linking his own resignation to a clarion call for a transparent and openly competitive process in the selection of his successor, in which it is merit not politics and power that matter."

These sentiments were echoed by several development groups.

"With Wolfowitz, the World Bank is losing face. If it wants its policies on corruption to be taken seriously, it must first look within," said Amy Gray of ActionAid.

However, others fear that if Wolfowitz leaves, the anti-corruption campaign at the bank that he started may be derailed.

"Has he damaged the bank's reputation as the Bank staff representative association suggested? Get real, I'd say," said Pat Adams of the Canadian anti-corruption watchdog Probe International. "The bank's role as architect and sponsor of Third World corruption and bad governance was firmly established by the bank and its previous presidents, Boards of Governors, ED's (executive directors), and staff long before Wolfowitz came on the scene."

But she added that despite criticisms of Wolfowitz's signature crusade in the bank, it had the seeds of seriousness.

"I do think Wolfowitz took tougher measures to rein in the bank as an accomplice to the crime of corruption. I don't think he went far enough, but I think he went further than his predecessors," she said.

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  • Jim Lobe, works as Inter Press Service's correspondent in the Washington, D.C., bureau. He has followed the ups and downs of neo-conservatives since well before their rise in the aftermath of the September 11, 2001 attacks.

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