World Bank President Paul D. Wolfowitz personally dictated the terms under which the bank gave what it called his "domestic partner" substantial pay raises and promotions in exchange for temporarily leaving her job there during his tenure, according to documents released by the bank's executive board yesterday.
The board issued a statement saying it will "move expeditiously to reach a conclusion on possible actions to take," amid rising speculation over whether the embattled Wolfowitz will resign or be asked to step down. Board deliberations over his future were suspended yesterday morning as the bank began its spring meeting, an annual rite attended by finance ministers and central bank presidents, and one now being overtaken by the controversy surrounding Wolfowitz.
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But while few knowledgeable observers were prepared to predict Wolfowitz's departure, many expressed concern that the turmoil is threatening to undermine the work and credibility of the bank.
"The issue now, as far as many of us are concerned, is a matter of corporate governance," said a senior bank staffer who spoke on the condition of anonymity for fear of reprisal. "The Europeans want him out. The U.S. remains silent, and the board is divided."
This senior bank staffer makes an interesting comment regarding the turmoil that is going on inside of the bank's executive board as they are deliberating the future of Wolfowitz as president of the World Bank. We've got a divided stalemate within the board, where the European members want to fire Wolfowitz, while the U.S. members are keeping quiet and hoping that this scandal will die down. And since the board is divided, the members are going to talk to their nations' finance ministers, at the spring conference, to determine what the next course of action should be. As I've stated in this post on the Wolfowitz scandal, the Bush administration has painted themselves into a corner on their extreme unilateral approach to U.S. foreign policy, where the United States was the sole superpower, and the rest of the world should follow the U.S. dictation. Well, the rest of the world has gotten pissed off at seven years of Bush unilateralism--and this Wolfowitz scandal gives the world a chance to bloody the Bush administration's nose here. If Wolfowitz does resign, President Bush may find it nearly impossible to select a replacement that the rest of the world will find acceptable. Consider this scenario: Wolfowitz resigns. President Bush selects another neoconservative to replace Wolfowitz. The World Bank's executive board rejects the nomination of Bush's neocon replacement. Now the Bush administration has a black eye, as well as a bloody nose.
So let's get into some more details on the Wolfowitz scandal. From the WaPost:
Among the more than 100 pages of internal letters, memorandums, and legal and ethics opinions released by the board yesterday was an angry letter from Riza to the board, written Monday, to authorize the release of the documents "in the interest of expediting and facilitating the resolution of this issue."
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Wolfowitz had also asked for the release of the documents, believing that they would show that the board's ethics committee had rejected his offer to recuse himself from consideration of Riza's employment and ordered him to find a solution.
But the documents also revealed that Wolfowitz's description of events has been less than candid. In a May 25, 2005, letter to Wolfowitz's personal lawyer negotiating his contract, Roberto Dañino, then the bank's general counsel, acknowledged that Wolfowitz had disclosed "a pre-existing relationship with a Bank staffer" and had proposed to resolve it "by recusing himself from all personnel matters and professional contact related to the staff member."
Wolfowitz lawyer Robert Barnett responded two days later with an e-mail stating that the proposal "WOULD NOT -- I REPEAT, NOT -- INVOLVE RECUSAL FROM PROFESSIONAL CONTACT" with Riza. "THIS MATTER," Barnett wrote, "MUST BE RESOLVED" before Wolfowitz would sign his contract.
WOW! First, Wolfowitz sends a letter to Danino, claiming that he had a relationship with "a Bank staffer," and proposed to recuse himself from "all personnel matters and professional contact" relating to "a Bank staffer." But then two days later, Wolfowitz's lawyer responded to Danino saying that Wolfowitz will not recuse himself from professional contact with Riza at the bank, and that the board must approve of Wolfowitz's demands before Wolfowitz signs his contract to become the bank's president. Wolfowitz has just flip-flopped on this issue. And it is not just a flip-flop here. If I'm reading this WaPost story correctly, Wolfowitz disclosed that he has a "a pre-existing relationship with a Bank staffer," and promised to recuse himself "from all personnel matters and professional contact related to the staff member." But Wolfowitz did not tell the board who that staff member is, if the WaPost story is correct here. Barnett's email specifically stated that Wolfowitz will not recuse himself "FROM PROFESSIONAL CONTACT" specifically with Riza. If I'm reading this correctly, Wolfowitz wanted professional contact with Riza at the World Bank, and practically demanded that the bank agree to this demand before Wolfowitz signed his contract to become president of the bank. According to the WaPost:
The board eventually ruled that "professional contact" between the two violated bank policy and instructed Wolfowitz to order the personnel department to arrange her departure and compensation.
But the board insisted yesterday that it neither "commented on" nor "reviewed or approved" the agreement that Wolfowitz ordered his human resources department to make with her.
This gives Wolfowitz a chance to give a sweet deal to his sweetheart:
In a memo to the bank's vice president for human resources dated Aug. 11, 2005, Wolfowitz wrote, "I now direct you to agree to a proposal which includes the following terms and conditions." Riza was to be "detailed to an outside institution of her choosing while retaining Bank salary and benefits." She was to receive an immediate raise with approximate annual increases of 8 percent.
By 2010, when Wolfowitz's five-year term expired, she would reach a salary of $244,960, significantly above the maximum of $226,650 allowable for her pay grade. On her return to the bank, she would be automatically promoted to the level of senior country director; if her return were delayed another five years by a second Wolfowitz term, she would be elevated to the level of bank vice president.
Talk about Wolfowitz playing sugar daddy to his girlfriend. Not only does Riza get annual raises that takes her salary approximately $18,000 above her pay grade, but her return to the bank gives her automatic promotions to higher management positions which depends on how long Wolfowitz stays on at president of the bank. And Riza receives annual raises of 8 percent--regardless of her performance at the bank.
And this isn't a conflict of interest by Paul Wolfowitz?
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