News Round Up, May 15, 2007
New York Times- Bank's Report Says Wolfowitz Violated Ethics
WSJ- Report Elevates Wolfowitz Fight --- Bank Board's Panel Cites A 'Crisis of Leadership'
Washington Post - Bank Rebukes Wolfowitz On Ethics; Rules Were Broken, Committee Says
LA Times- Wolfowitz faulted for `damage done' to the Bank
FT- Report concludes Wolfowitz broke rules at World Bank
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The Wall Street Journal
Report Elevates Wolfowitz Fight --- Bank Board's Panel Cites A 'Crisis of Leadership'; White House Makes Stand
Greg Hitt and Neil King Jr.
15 May 2007
WASHINGTON - Upping the ante in the bitter fight over Paul Wolfowitz's leadership of the World Bank, the board of the poverty-fighting institution released a report that warns of a "crisis of leadership" and raises strong doubts about whether he should continue as the bank's president.
The report, prepared by a seven-member committee of the full board, found that Mr. Wolfowitz placed himself in a "conflict of interest" when he dictated the terms of compensation for his girlfriend, Shaha Riza, a longtime bank employee. The findings were presented to the full board yesterday.
The report insists Mr. Wolfowitz should have withdrawn from decision-making related to Ms. Riza's promotion and pay package, and warns the bank's "reputation and credibility" with donors and borrowers has been "called into question" by the ensuing controversy. Because of the "damage done to the reputation of the bank," the report urges the full board to open debate on "whether Mr. Wolfowitz will be able to provide the leadership needed to ensure that the bank" can carry out its mandate.
In a statement submitted to the board, Mr. Wolfowitz argued the report is "unbalanced and flawed."
Release of the 52-page report came as Mr. Wolfowitz prepared to appear today before the full board to offer a personal account of his actions, and seemed certain to raise pressure on him to resign the job he began in June 2005. After Mr. Wolfowitz's planned appearance, the board is expected to consider his fate. Since the bank's founding after World War II, no board has ever dismissed a president.
With Mr. Wolfowitz's job in the balance, the White House launched a last-ditch round of diplomacy aimed at convincing European critics to separate the issues involving Mr. Wolfowitz's conduct.
Involved in the effort were Treasury Secretary Henry Paulson, Secretary of State Condoleezza Rice and President Bush's national security adviser, Stephen Hadley.
The officials argued the World Bank's board should first deal with the narrow question of whether Mr. Wolfowitz violated bank ethics rules by setting terms of a pay-and-promotion package for Ms. Riza. After that is resolved, the U.S. strategy put forward yesterday urges that the bank's board then turn to the broader issue of Mr. Wolfowitz's "ability to continue to lead the institution," a senior White House official said.
This approach aims to limit the political fallout of the investigative report and put off, at least briefly, the broader debate ignited by Mr. Wolfowitz's management style, which included a reliance on a small cadre of aides drawn from the Bush political establishment, and his priorities as president, which include a controversial campaign to curb corruption in and out of the bank.
"We want people to look at this issue in context," the White House official said. The official stressed that the U.S., the bank's largest shareholder, doesn't want to block debate on Mr. Wolfowitz's leadership, but does want the conflict-of-interest question to be considered as a discrete issue. "We don't think, from what we know of the facts, that it should result for him in leaving the institution. We want him to continue to lead the institution."
A spokeswoman for Mr. Paulson said the secretary, who spoke with finance ministers yesterday from the Group of Seven major industrial powers, "does not think the facts of the matter warrant dismissal."
The administration's stiffened defense of Mr. Wolfowitz, who was deputy U.S. secretary of defense and an architect of the Iraq war, came as Vice President Dick Cheney publicly insisted Mr. Wolfowitz should keep his job. "I think Paul is one of the most able public servants I've ever known, and I've worked with him a lot over the years," said Mr. Cheney, who met privately with Mr. Wolfowitz a week ago and offered his full support, according to an individual familiar with the meeting.
In its report, the board committee raised concerns that the bank's basic operations are being hampered now under Mr. Wolfowitz's leadership. The report also warns the current crisis threatens to have a "highly negative impact" on fund-raising for the bank, especially a new effort to raise billions of dollars replenish the bank's soft-loan window.
In two lengthy legal responses to the report, Mr. Wolfowitz argues that he "acted in good faith in an effort to resolve an unprecedented situation." He complains the report gives no weight to the "critical fact" that the bank's Ethics Committee set aside Mr. Wolfowitz's offer to recuse himself from involvement in Ms. Riza's work status. To avoid any potential conflict of interest, Ms. Riza was later detailed to work at the State Department. It was as part of that transfer that Mr. Wolfowitz dictated the terms of pay, which included guaranteed promotions and a big pay hike.
Mr. Wolfowitz contends he was instructed by the board's Ethics Committee to deal with the situation, and he cites a memo from the bank's human resources chief that suggests there is "no precedent" for dealing with the kind of personal relationship at issue.
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http://abcnews.go.com/International/story?id=3176174
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