Trou­ble at the World Bank

Beware a rush to judg­ment over the Wol­fowitz pay flap.

The Washington Post Sunday - - Outlook -

THE EX­EC­U­TIVE direc­tors of the World Bank ini­ti­ated an “ur­gent” re­view Fri­day of the im­broglio sur­round­ing bank Pres­i­dent Paul D. Wol­fowitz and the salary in­creases he ar­ranged for his girl­friend, a bank em­ployee. Such a re­view is over­due. We hope it pro­vides a full as­sess­ment of the facts and puts some of the over­heated rhetoric about this con­tro­versy into a fairer and calmer con­text.

The al­le­ga­tions against Mr. Wol­fowitz, which have an­gered many bank em­ploy­ees, are by now familiar. Af­ter ar­riv­ing at the bank in the sum­mer of 2005, he ar­ranged a gen­er­ous em­ploy­ment pack­age for his com­pan­ion, Shaha Riza, then a se­nior com­mu­ni­ca­tions of­fi­cer at the bank with ex­per­tise in Mid­dle East af­fairs. Th­ese terms man­dated a salary in­crease from $132,660 to $193,590, as­signed her to a job out­side the bank and laid out a path to fur­ther pro­mo­tion and raises. This has been char­ac­ter­ized as an un­der­handed deal that un­der­mines Mr. Wol­fowitz’s cam­paign against cor­rup­tion in poor coun­tries ap­ply­ing for World Bank aid.

Un­for­tu­nately, that thumb­nail sketch omits some highly rel­e­vant facts. It was Mr. Wol­fowitz who, be­fore tak­ing over at the bank, called the po­ten­tial con­flict of in­ter­est to the at­ten­tion of the bank’s ethics com­mit­tee. He asked to be re­cused from any per­son­nel de­ci­sions in­volv­ing Ms. Riza. The com­mit­tee agreed that a con­flict ex­isted, but it said that could prob­a­bly be solved only by Ms. Riza leav­ing the bank, ei­ther per­ma­nently or on loan to an­other agency. The com­mit­tee also told Mr. Wol­fowitz that, if she chose to go else­where, Ms. Riza should be given a raise be­cause she al­ready had been short­listed for a pro­mo­tion. So when Mr. Wol­fowitz dic­tated her new terms of em­ploy­ment he was re­spond­ing in part to the com­mit­tee’s in- struc­tions. Fur­ther raises were in­tended to be equal to what she might have earned had she stayed at the bank, re­spond­ing to the com­mit­tee’s ad­vice that she re­ceive “com­pen­sa­tion to off­set neg­a­tive ca­reer im­pact” from her re­as­sign­ment.

Was the pack­age none­the­less too gen­er­ous, even by cushy World Bank stan­dards? The ex­ec­u­tive direc­tors should an­swer that ques­tion. But there’s a rel­e­vant fact here, too. The ethics panel re­viewed the sit­u­a­tion again a half-year later, in Fe­bru­ary 2006, af­ter re­ceiv­ing an anony­mous com­plaint from a bank em­ployee pre­cisely on the is­sue of ex­ces­sive pay. Once again it found, “on the ba­sis of a care­ful re­view,” that the al­le­ga­tions “do not ap­pear to pose eth­i­cal is­sues ap­pro­pri­ate for fur­ther con­sid­er­a­tion by the Com­mit­tee.”

What has changed in the in­ter­ven­ing 14 months? That would be an­other ques­tion that we hope the re­view will an­swer. It’s en­cour­ag­ing that the ex­ec­u­tive direc­tors called for a re­view of bank pro­ce­dures and stan­dards, which will pre­sum­ably range be­yond the ac­tions of the pres­i­dent.

Our view is that Mr. Wol­fowitz should have in­sisted on re­cus­ing him­self, the ethics com­mit­tee not­with­stand­ing, and should have taken no part in shap­ing the terms of Ms. Riza’s pack­age. He also showed poor judg­ment in award­ing a quar­ter-mil­lion-dol­lar salary to the press sec­re­tary he brought with him. He may con­clude that he can no longer be an ef­fec­tive leader of the bank — that a bank pres­i­dent in­tend­ing to make cor­rup­tion his sig­na­ture is­sue had to be above any re­proach. Be­fore any such de­ci­sions are made, though, we hope the ex­ec­u­tive direc­tors will lay out all the facts, and not just those that suit Mr. Wol­fowitz’s de­trac­tors.

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