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POLITICS: Wolfowitz Is at the Door
By Emad Mekay
WASHINGTON, May 17 (IPS) - World Bank President Paul Wolfowitz, who has been warding off accusations of favouritism
and nepotism at the Washington-based institution, will resign effective Jun. 30, the first
president ever to be forced out.
"The Executive Directors acknowledge Mr. Wolfowitz's decision to resign as President of
the World Bank Group, effective end of the fiscal year (June 30, 2007)," the 24 Bank
directors, who ran the institution's day-to-day affairs with Wolfowitz during his two-year
tenure, said in a statement late Thursday.
The directors appear to have given Wolfowitz the graceful exit he's been fighting for and
accepted, though not so warmly, his request that he resign in return for their
acknowledgement that he was not the only person at fault in the controversy.
In their statement, the directors said that the episode, which started seven weeks ago with
leaks revealing that Wolfowitz had engineered a generous promotion and salary increase
for his girlfriend and fellow Bank employee, Shaha Riza, that did not conform to Bank
regulations, showed that the Bank's governance system needed urgent repair.
Despite his initial public apology, Wolfowitz has lately maintained that the Bank's Ethics
Committee, the board's panel which would have approved Riza's deal, also erred by not
being clear in its directions and guidelines.
"One conclusion we draw from this is the need to review the governance framework of the
World Bank Group, including the role as well as procedural and other aspects of the Ethics
Committee," said the directors.
"It is clear from this material that a number of mistakes were made by a number of
individuals in handling the matter under consideration, and that the Bank's systems did
not prove robust to the strain under which they were placed," they added.
The directors said they would continue discussion on arrangements for the interim period
as well as the governance issues. They also said that they will start the nomination process
for a new president immediately.
In his own statement, the 63-year-old Wolfowitz, who came to the Bank from the
Pentagon in June 2005, said he was pleased that directors consented that he "acted
ethically and in good faith".
He also sided with the directors in calling for reform of the Bank's governance system.
"Hopefully the difficulties of the last few weeks can actually strengthen the Bank by
identifying some of the areas of governance and human resource management where
reform is needed," Wolfowitz said in a lengthy statement, in which he reviewed his work
during his two-year tenure.
Wolfowitz became entangled in the controversy seven weeks ago after Bank whistleblowers
leaked to the Washington based non-governmental organisation Government
Accountability Project (GAP) several document s that showed Wolfowitz pushing a high pay
raise in a secondment deal to the U.S. State Department for his girlfriend, which he
claimed did not violate the Bank's code on conflicts of interest.
The following days and weeks saw Wolfowitz, once the high-riding number two man at the
U.S. Defence Department and the leading architect of the ill-fated Iraq war, trying to cover
up the controversy before eventually making a humiliating public admission that he had
made a "mistake".
Calls from the Bank's staff, senior management and officials from across the world poured
down on the Bank for Wolfowitz to quit the organisation. The nepotisim charges added
fuel to an internal simmering revolt over the conduct of his close aides and the more than
generous pay they were getting.
The Bank, which critics have long accused of getting away with harmful policies and
practices in developing nations away from the gaze of the media, now received
unprecedented media attention because of the evolving controversy.
"There was no way Wolfowitz could have continued on as World Bank president. He and his
associates have been caught repeatedly misleading Bank staff and the media. His
credibility was shot," said Dylan Blaylock of GAP.
The resignation announcement Tuesday quick rekindled calls for fixing the "real problem"
at the Bank - namely its governance structure.
"The scandal surrounding Paul Wolfowitz has exposed systemic problems in the way the
World Bank is run," said Bruce Jenkins of the Bank Information Centre, an independent
watchdog group in Washington.
"While his resignation is a step in the right direction, one must ask: How did a senior
Pentagon official in charge of orchestrating a disastrous war become the leader of the
world's premier development institution in the first place, and why did the Bank's Board of
Directors fail to adequately oversee the actions of the institution's chief executive?"
"The recent furor around Mr. Wolfowitz's actions calls into stark relief the need for the
Bank to swallow its own medicine and to structurally adjust how it is governed or risk
deepening its crisis of legitimacy," added Jenkins.
Since the Bank was established in the 1940s, the U.S. government has designated the
president of the World Bank without consulting other member nations, while European
governments designated the managing director of its sister institution the International
Monetary Fund.
"After 63 years it is time to have open, merit-based selection of these leaders," said Jo
Marie Griesgraber, executive director of the New Rules for Global Finance Coalition.
"The Wolfowitz scandal is but a natural consequence of the 'old boys' club' way in which
the World Bank and IMF have been governed. It provides an opportunity to end the anti-
democratic behaviour of the world's great democracies, whereby the U.S. president names
the World Bank president and a small coterie of European finance ministers name the IMF
managing director," she said.
The international development group, Oxfam, which had early joined in the call for his
ouster, said the next move falls on the shoulders of the rich nations that control the World
Bank - the United States and European nations.
"The U.S. and other rich countries must now show that they are serious about good
governance by allowing the next head of the Bank to be appointed based on merit through
an open accountable process," said Bernice Romero, advocacy director of Oxfam
International.
(END/2007)
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