Wol­fowitz Clashed Re­peat­edly With World Bank Staff

Ten­ure as Pres­i­dent Has Been Rocky

The Washington Post Sunday - - National News - By Karen DeYoung

As he pre­pared to sign a fiveyear con­tract as World Bank pres­i­dent in the spring of 2005, Paul Wol­fowitz sent his per­sonal lawyer, Robert Bar­nett, to ne­go­ti­ate the terms. Bar­nett, whose high-profile clients have in­cluded some of Wash­ing­ton’s big­gest po­lit­i­cal and me­dia fig­ures, did not mince words in his meet­ings with the bank’s le­gal team.

Wol­fowitz wanted more than a dozen amend­ments to the stan­dard con­tract that had served the in­sti­tu­tion for decades, Bar­nett told them, in­clud­ing spe­cial dis­pen­sa­tion for the books he would write and the paid speeches he planned to de­liver, and a salary on par with that of the man­ag­ing di­rec­tor of the In­ter­na­tional Mone­tary Fund, who was tra­di­tion­ally more highly paid.

A fi­nal stick­ing point, con­veyed in all cap­i­tal let­ters in an e-mail to then-gen­eral coun­sel Roberto Dañino, was Wol­fowitz’s in­sis­tence that, while he had ear­lier of­fered to re­cuse him­self from all of­fice mat­ters in­volv­ing bank em­ployee and his girl­friend Shaha Riza, he in­sisted on re­tain­ing re­tain “pro­fes­sional con­tact” with her — some­thing that the ex­ec­u­tive board later de­ter­mined was a clear con­flict of in­ter­est un­der per­son­nel rules.

The Riza is­sue has come back to haunt Wol­fowitz, as the bank’s ex­ec­u­tive board is now con­sid­er­ing what to do about rev­e­la­tions — con­tained in doc­u­ments it re­leased Fri­day — that Wol­fowitz re­solved the is­sue by per­son­ally ar­rang­ing a bank salary and pro­mo­tions for her in a tem­po­rary State De­part­ment post.

Testy ex­changes and peremp­tory de­mands, sim­i­lar to those made on his be­half by Bar­nett early in his ten­ure, quickly came to char­ac­ter­ize Wol­fowitz’s deal­ings with the in­sti­tu­tion’s staff and gov­er­nors on a range of is­sues dur­ing his pres­i­dency, ac­cord­ing to cur­rent and for­mer se­nior bank of­fi­cials and rep­re­sen­ta­tives of the bank’s mem­ber gov­ern­ments in­ter­viewed for this ar­ti­cle, sev­eral of whom have worked closely with Wol­fowitz. None would speak on the record, out of ei­ther fear of ret­ri­bu­tion or re­luc­tance to be­come in­volved in the in­creas­ingly pub­lic con­tro­versy.

Wol­fowitz has clashed with the staff over pay pack­ages and author­ity he gave to aides Robin Cleve­land and Kevin Kellems, whom he brought to the bank from the White House, in­stalled in se­nior po­si­tions and re­warded with open-ended con­tracts and quar­ter­mil­lion-dol­lar, tax-free salaries, de­spite their lack of de­vel­op­ment ex­pe­ri­ence.

Both staff and man­age­ment also have raised con­cerns over what sev­eral de­scribed as Wol­fowitz’s in­sis­tence that the bank ac­cel­er­ate its lend­ing to Iraq and open an of­fice there.

A prin­ci­pal ar­chi­tect of the Iraq war as deputy de­fense sec­re­tary dur­ing Pres­i­dent Bush’s first term, Wol­fowitz has pressed the is­sue in the bank against strong con­cerns about se­cu­rity and poor gov­er­nance in Iraq. “He was pretty ag­gres­sive about it, given that he’s gen­er­ally a mild-man­nered per­son. He was re­ally quite hard,” said one source with first-hand knowl­edge of in­ter­nal bank dis­cus­sions on Iraq. “I don’t know how much of it was flog­ging for the [Bush] ad­min­is­tra­tion rather than his own ghosts and con­vic­tions.”

Al­though the bank even­tu­ally opened a $500 mil­lion loan pro­gram for Bagh­dad, the board took the un­usual step of ask­ing to be “reg­u­larly up­dated” on de­vel­op­ments, ac­cord­ing to in­ter­nal doc­u­ments ob­tained by the Gov­ern­ment Ac­count­abil­ity Project, a Wash­ing­ton-based whis­tle-blower group that tracks World Bank ac­tiv­i­ties. Bank in­ter­ests in Iraq have been man­aged from its re­gional head­quar­ters in Jor­dan.

In De­cem­ber, af­ter a bank of­fi­cial of­fered the Bagh­dad job turned it down, a com­mit­tee in­ter­view­ing other can­di­dates re­ported that the pool of those will­ing and qual­i­fied was “ex­tremely lim­ited and par­tic­u­larly weak,” ac­cord­ing to an in­ter­nal memo pro­vided to The Wash­ing­ton Post yes­ter­day by the ac­count­abil­ity group.

An­other sig­na­ture Wol­fowitz ini­tia­tive was a new anti-cor­rup­tion strat­egy for coun­tries re­ceiv­ing bank loans. But at a meet­ing last fall in Sin­ga­pore, bank gov­er­nors re­jected the pro­posal on the grounds that it would politi­cize the mul­ti­lat­eral in­sti­tu­tion. More re­cently, they at­tacked Wol­fowitz’s bud­get pro­posal, say­ing it lacked a co­her­ent strat­egy. Gov­er­nors have now ac­cepted a re­vised anti-cor­rup­tion plan, and a chas­tened Wol­fowitz has an­nounced the ap­point­ment of a re­spected bank econ­o­mist to launch a strate­gic re­view of bank op­er­a­tions.

“He ar­rived at the bank ex­pect­ing the board to be­have like the Repub­li­can Congress, and ran into a Demo­cratic ma­jor­ity,“ Nancy Bird­sall, pres­i­dent of the Wash­ing­ton­based Cen­ter for Global De­vel­op­ment, told the Fi­nan­cial Times last week. Bird­sall, a for­mer di­rec­tor of pol­icy re­search at the bank, on Fri­day called for Wol­fowitz to re­sign.

As the Riza con­tro­versy has es­ca­lated over the past week, Wol­fowitz has sud­denly been left fight­ing for his job amid un­even sup­port, at best, from many of the bank’s most pow­er­ful donor na­tions. The board has said it had no knowl­edge of the deal with Riza; Wol­fowitz has pub­licly ac­knowl­edged mak­ing a “mis­take” and has apol­o­gized.

The White House on Fri­day ex­pressed Pres­i­dent Bush’s “full con­fi­dence” in Wol­fowitz. Ja­panese Fi­nance Min­is­ter Koji Omi, here for the bank’s an­nual spring meet­ing of fi­nance and de­vel­op­ment min­is­ters this week­end, said, “I rate his work as World Bank pres­i­dent highly.”

But French Fi­nance Min­is­ter Thierry Bre­ton, whose gov­ern­ment has ques­tioned Wol­fowitz’s lead­er­ship in the past, noted omi­nously that the bank is “spe­cial” be­cause of its mis­sion of help­ing the world’s poor and that its “gov­er­nance and ethics must ob­vi­ously be im­pec­ca­ble.”

“I fully trust the gov­ern­ing board to draw the con­se­quences it must draw,” Bre­ton said.

Most min­is­ters, in­clud­ing Omi, U.S. Trea­sury Sec­re­tary Henry M. Paul­son Jr. and Canada’s Jim Fla­herty, de­clined to com­ment di­rectly on the Riza mat­ter. All spoke of let­ting the ex­ec­u­tive board’s “process” re­gard­ing Wol­fowitz run its course.

Among African lead­ers, the em­pha­sis Wol­fowitz has placed on their con­ti­nent’s de­vel­op­ment has won him sup­port. “He has been a vi­sion­ary, ab­so­lutely sup­port­ive and re­spon­sive,” said An­toinette M. Sayeh, fi­nance min­is­ter of Liberia. “We have vi­sion­ary lead­er­ship and stead­fast progress un­der Mr. Wol­fowitz, and we look for­ward to it con­tin­u­ing.”

Zam­bian Fi­nance Min­is­ter N’gandu Peter Ma­gande cau­tioned against a rush to judg­ment. “We don’t want to go back to old days in our jun­gles,” he said. “We want to be sure that is­sues are dealt with cor­rectly. It is not that we are be­ing soft; we didn’t come here to make a judg­ment on this is­sue.”

Of­fi­cials from sev­eral gov­ern­ments said any de­sire for Wol­fowitz’s de­par­ture would be care­fully bal­anced against the need to pre­serve smooth bi­lat­eral ties with the United States and to avoid ex­ac­er­bat­ing a bad sit­u­a­tion at the bank.

The board is un­likely to take the un­prece­dented step of fir­ing Wol­fowitz, a knowl­edge­able source said. “They could try to get the same re­sult by mak­ing some state­ment to the ef­fect that they’re deeply dis­ap­pointed that he mis­led them as to his role” in di­rect­ing Riza’s com­pen­sa­tion.

In an e-mail to bank staff last night, Wol­fowitz wrote: “Out of re­spect for the Board re­view process that has been un­der­way, I have said lit­tle. I feel, how­ever, that this has left a vac­uum which has been largely filled by mis­lead­ing in­forma- tion.” The 109 pages of doc­u­ments re­leased by the board, he said, are “a lot to wade through look­ing for sig­nif­i­cant facts so I’d like to call your at­ten­tion to a num­ber of them.”

He at­tached a se­lec­tion of excerpts, most of them re­fer­ring to his ini­tial of­fer be­fore as­sum­ing the pres­i­dency to re­cuse him­self from deal­ings with Riza, and all of them fa­vor­able to him­self. They did not in­clude Bar­nett’s sub­se­quent clar­i­fi­ca­tion that the re­cusal of­fi­cer did not in­clude a ban on “pro­fes­sional con­tact.”

He in­cluded a link to the com­plete pack­age of doc­u­ments, as did a post­ing on the bank’s Web site yes­ter­day.

Wol­fowitz’s ini­tial ap­point­ment, made by tra­di­tion by the U.S. presi- dent, was con­tro­ver­sial, largely be­cause of his role in the ad­min­is­tra­tion’s Iraq pol­icy, which was op­posed by most of the bank’s con­tribut­ing gov­ern­ments.

Some have said Wol­fowitz is now be­ing vil­i­fied as a proxy for Bush, and be­cause his pro­posed re­forms chal­lenged the bank’s en­trenched sta­tus quo. But there is con­sen­sus, even among many of his sup­port­ers, that his ac­tions over the past two years have given am­mu­ni­tion to those ea­ger to find more rea­sons to dis­like him.

“They were wait­ing for him to screw up, and he did,” said a re­cently de­parted se­nior bank of­fi­cial. Staff writer Kris­sah Wil­liams con­trib­uted to this re­port.

BY MARVIN JOSEPH — THE WASH­ING­TON POST

Pro­test­ers out­side the World Bank in Wash­ing­ton call for Wol­fowitz to re­sign. He has apol­o­gized for his de­ci­sions in­volv­ing his girl­friend’s com­pen­sa­tion.

BY J. SCOTT APPLEWHITE — AS­SO­CI­ATED PRESS

Be­gin­ning with his 2005 ap­point­ment as World Bank pres­i­dent, Paul D. Wol­fowitz has stirred crit­i­cism and con­tro­versy at the in­sti­tu­tion.

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