Paul Wolfowitz, the intellectual godfather of the Iraq war who got shipped over to the World Bank when that venture went south, is in trouble again. This time it's highly personal, and may cost him his job, again. Here's the story:
When Wolfowitz became President of the Bank in 2005, he discovered that he had a problem with the personnel rules prohibiting Bank staff from supervising relatives, spouses, or spouse-equivalents. That's because his girlfriend was already on staff. So, a deal was arranged under which she would take a secondment to the US State Department for the duration of his term. So far, so good. Oh, but of course this could hurt her career. So to compensate her for this (potential) loss the Bank gave her a promotion, a pay raise well beyond that which normally would accompany that promotion, and a promise to give her the maximum pay raises during the years she was gone, and after her return. The result: She now has a salary of $193,000 tax free, about $10,000 more than her boss, Secretary of State Condoleeza Rice makes--and Rice still has to pay taxes on hers.
There had been rumors from some months about this cushy deal, and people in the know began leaking documents to the Bank's Staff Association. The Association leadership was understandably unhappy on several fronts. First, many long-time Bank staffers (the girlfriend has only been at the Bank for a few years) were offended at the promotion and pay raises without the usual competitive process that they go through. Second, most of the staff were around a few years ago when a popular Bank VP was forced to leave because his brother was hired as Chief Economist. Third, and perhaps most important, since his arrival at the Bank Wolfowitz has been traveling to poor countries to lecture their presidents on "corruption" including precisely these kinds of sweetheart deals (e.g., giving family members lucrative jobs or business contracts). Many envisioned meetings in which a Wolfowitz harangue would be met with "And what about your girlfriend?" from across the table. In short, the integrity of the institution was compromised.
For the past couple of weeks the President has denied any knowledge of the details of the settlement with his girlfriend. ("Paul, you'll never guess what they're offereing!" "Sorry dear, I can't listen to any of this. I'm recused. Now come to bed.") Naturally, he initiated a search for the leakers. Afficiandos of the Bush Administration will recognize the drill. He also assured everyone that the chairman of the Bank Board's Ethics Committee had reviewed and approved the deal, and that the General Counsel also had done so. Both of these guys no longer work at the Bank. But apparently they still can be found by reporters. Turns out that the former Ethics chairman says he never saw the contract, and the ex-GC says he was barred from the negotiation, but the girlfriend's lawyer took part. Ooops!
All this bubbled over today. This morning the Staff Association held a protest coffee in the atrium of the Bank's main building. Wolfowitz showed up to plead that this had been a difficult, unprecedented situation, that had been trying to negotiate a new (for him) institutional environment, and that he had made a mistake. He apologized, both at the meeting and on the Bank's internal website. The head of the staff association thanked him for the apology...then told him do do the "honourable thing" (she's British) and resign. Extraordinary!
The Financial Times (virtually must reading each day for Bank Staff and Board members) put out a hard-hitting editorial saying the same thing (see link below). As of this evening, the Board and President were in a locked-door meeting to decide his future. And, coincidentally (?), today was the start of the Spring Meetings of the Bank/IMF Board of Governors (the Governors are the finance ministers of member countries).
The Greek tragedians understood the corrosive power of hubris.
Article
Editorial
When Wolfowitz became President of the Bank in 2005, he discovered that he had a problem with the personnel rules prohibiting Bank staff from supervising relatives, spouses, or spouse-equivalents. That's because his girlfriend was already on staff. So, a deal was arranged under which she would take a secondment to the US State Department for the duration of his term. So far, so good. Oh, but of course this could hurt her career. So to compensate her for this (potential) loss the Bank gave her a promotion, a pay raise well beyond that which normally would accompany that promotion, and a promise to give her the maximum pay raises during the years she was gone, and after her return. The result: She now has a salary of $193,000 tax free, about $10,000 more than her boss, Secretary of State Condoleeza Rice makes--and Rice still has to pay taxes on hers.
There had been rumors from some months about this cushy deal, and people in the know began leaking documents to the Bank's Staff Association. The Association leadership was understandably unhappy on several fronts. First, many long-time Bank staffers (the girlfriend has only been at the Bank for a few years) were offended at the promotion and pay raises without the usual competitive process that they go through. Second, most of the staff were around a few years ago when a popular Bank VP was forced to leave because his brother was hired as Chief Economist. Third, and perhaps most important, since his arrival at the Bank Wolfowitz has been traveling to poor countries to lecture their presidents on "corruption" including precisely these kinds of sweetheart deals (e.g., giving family members lucrative jobs or business contracts). Many envisioned meetings in which a Wolfowitz harangue would be met with "And what about your girlfriend?" from across the table. In short, the integrity of the institution was compromised.
For the past couple of weeks the President has denied any knowledge of the details of the settlement with his girlfriend. ("Paul, you'll never guess what they're offereing!" "Sorry dear, I can't listen to any of this. I'm recused. Now come to bed.") Naturally, he initiated a search for the leakers. Afficiandos of the Bush Administration will recognize the drill. He also assured everyone that the chairman of the Bank Board's Ethics Committee had reviewed and approved the deal, and that the General Counsel also had done so. Both of these guys no longer work at the Bank. But apparently they still can be found by reporters. Turns out that the former Ethics chairman says he never saw the contract, and the ex-GC says he was barred from the negotiation, but the girlfriend's lawyer took part. Ooops!
All this bubbled over today. This morning the Staff Association held a protest coffee in the atrium of the Bank's main building. Wolfowitz showed up to plead that this had been a difficult, unprecedented situation, that had been trying to negotiate a new (for him) institutional environment, and that he had made a mistake. He apologized, both at the meeting and on the Bank's internal website. The head of the staff association thanked him for the apology...then told him do do the "honourable thing" (she's British) and resign. Extraordinary!
The Financial Times (virtually must reading each day for Bank Staff and Board members) put out a hard-hitting editorial saying the same thing (see link below). As of this evening, the Board and President were in a locked-door meeting to decide his future. And, coincidentally (?), today was the start of the Spring Meetings of the Bank/IMF Board of Governors (the Governors are the finance ministers of member countries).
The Greek tragedians understood the corrosive power of hubris.
Article
Editorial
These ARE the good old days!
