Paul Wolfowitz and Girlfriend Infuriate World Bank Officers

Posted on April 16, 2007

Paul Wolfowitz is in big trouble at the World Bank for hiring his girlfriend, then giving her a big raise. The rest of the bank directors are not happy and want him to resign. But Wolfie is digging in his heels and refusing to budge.

Paul D. Wolfowitz's struggle to remain as president of the World Bank was dealt a crippling setback on Sunday when its most powerful oversight committee delivered an unusually public rebuke of his leadership, expressing "great concern" about the institution's future and the need to preserve its credibility and staff morale.
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The extraordinary exchange between Mr. Wolfowitz and the oversight committee, which consists of 47 of the world's finance ministers and leaders of other international organizations, deepened the uncertainty over Mr. Wolfowitz. His future had earlier been thrown into doubt by the disclosure that he played a direct role in granting a pay raise and promotion to a female companion when she was transferred in 2005.
Bank and finance officials said they could not recall any time in the history of the bank when there was such an open and rancorous rift between its president and the people who are supposed to run the institution in cooperation with him. The events of the day, in which top officials took time out from discussing issues like poverty and development strategies, set up a clear impasse between Mr. Wolfowitz and the leadership of the bank, as represented by what seemed to be most of the world�s finance ministers and most of the members of a separate 24-member executive board that governs its day-to-day affairs.
The rebuke of Mr. Wolfowitz came in the form of bureaucratic language in a series of sentences in the board's communiqu� that asserted "the current situation is of great concern to all of us," an unusually blunt statement for a circumspect institution. "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," the committee said. "We expect the bank to adhere to a high standard of internal governance." Though the language was indirect, the message it sent was unmistakable, according to officials who have been meeting in Washington the last few days. "Words like 'concerned,' 'credibility' and 'reputation' are pretty unprecedented for a communiqu� from a place like the World Bank," said an official involved in the drafting of the statement.
At issue in these statements was a crisis arising from Mr. Wolfowitz's involvement in decisions to transfer his companion, Shaha Ali Riza, to a new job and give her a raise. Officially, Mr. Wolfowitz and the bank are now to wait for a full report by the bank's board on his leadership and charges of favoritism in dealing with Ms. Riza, who was employed at the bank until 2005. But bank officials said that in delaying a finding, the board seemed to be buying time for Mr. Wolfowitz to consider resigning.

In a stuffy instituion like the World Bank, such a communique is the equivalent of a major smackdown. They want Wolfowitz out and think he's sleazy. But Wolfowitz is so far refusing to resign, which puts the ball back in the other directors' court. Will he be fired? It's looking more and more likely.