News Round Up, May 8, 2007
New York Times – Deal Is Offered for Chief's Exit at World Bank
Financial Times - Wolfowitz top aide in fresh controversy
Wall Street Journal - Wolfowitz's Fate Grows Dimmer --- Panel Finds Chief Ran Afoul of Ethics Rules; Senior Adviser Will Leave
Washington Post - Scandal May Jeopardize World Bank Funds
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The Wall Street Journal
Politics & Economics: Wolfowitz's Fate Grows Dimmer --- Bank Panel Finds Chief Ran Afoul of Ethics Rules; Senior Adviser Will Leave
Greg Hitt
8 May 2007
WASHINGTON -- Wrapping up a month-long inquiry, a special World Bank panel found that Paul Wolfowitz ran afoul of ethics rules when he used his position as president to secure a generous compensation package for his girlfriend, increasing chances that the bank's board might reprimand Mr. Wolfowitz or even call for his ouster.
The determination, to be put before the bank's full board as early as today, is part of a larger, confidential report on the pay-and-promotion package that Mr. Wolfowitz helped arrange for Shaha Riza, a longtime bank employee, shortly after he assumed the title of president in June 2005. U.S. officials said they believe the report could also cast some blame on the board's ethics committee and other bank managers over how they handled the Riza matter. How the report balances that blame, they said, could go a long way toward determining Mr. Wolfowitz's fate.
The report came as a senior adviser to Mr. Wolfowitz, Kevin Kellems, announced he will step down, in a move that underscored Mr. Wolfowitz's increasingly tenuous hold on the top job of the global poverty-fighting institution. Mr. Kellems suggested that the controversy, which has grown into a broader debate about Mr. Wolfowitz's leadership, has become a major distraction and compromised his ability to do his job.
"Given the current environment surrounding the leadership of the World Bank Group, it is very difficult to be effective in helping to advance the mission of the institution," Mr. Kellems said after he notified senior management of his resignation. "Therefore, I have decided to leave for other opportunities."
Mr. Kellems joined the bank in June 2005, when Mr. Wolfowitz, a former deputy U.S. secretary of defense, took over as president. A onetime adviser to Vice President Dick Cheney, Mr. Kellems was among a cluster of aides with ties to the Bush political establishment who were brought into the bank by Mr. Wolfowitz. From his earliest days in office, Mr. Wolfowitz rankled the bank's professional staff, often shunning its advice in favor of that offered by his confidants. Mr. Kellems became symbolic of the cultural divide between Mr. Wolfowitz and the broader institution he was trying to lead.
Mr. Kellems said he has "tremendous respect and admiration for the bank staff and management," and will "treasure the many friendships" he is leaving behind. His resignation is effective next week. The tenor of his parting words belied the broader tensions roiling the bank, as Mr. Wolfowitz fights to keep his job, which was put in jeopardy this spring with public disclosures that Mr. Wolfowitz had intervened on behalf of Ms. Riza.
The revelations prompted the board to launch an inquiry into Mr. Wolfowitz's actions, and provoked a cascade of calls -- from the bank's Staff Association, from several current and former bank executives, and the European Parliament -- for him to step down and avoid any further erosion of the bank's global credibility.
The special World Bank panel investigating Mr. Wolfowitz is made up of seven board members and is led by Herman Wijffels, the board's representative from the Netherlands. Several bank officials said the panel delivered a strongly worded report to Mr. Wolfowitz yesterday.
The intention was to give Mr. Wolfowitz a chance to comment on its findings before the full board meets as early as today to debate what action to take on the case. Mr. Wolfowitz's attorney, Robert Bennett, didn't return calls for comment.
At issue is Mr. Wolfowitz's personal relationship with Ms. Riza. To avoid any conflict of interest, Mr. Wolfowitz initially proposed to recuse himself from personnel matters regarding her. The board's Ethics Committee rejected that proposal in favor of an arrangement under which Ms. Riza was detailed to work at the State Department. As part of the bureaucratic give-and-take over the transfer, Mr. Wolfowitz dictated the terms of her compensation, including pay increases and promotions.
Mr. Wolfowitz has said he acted in good faith, after the board's Ethics Committee had asked him to deal with Ms. Riza's job situation. Critics say Mr. Wolfowitz should have left the final details of the transfer to others.
Late yesterday, the special panel continued to wrestle with details of the case. Bank officials said there were several considerations at issue, including whether any effort to discipline Mr. Wolfowitz should prompt a reopening of Ms. Riza's employment contract and whether the hiring of other Wolfowitz aides -- such as former Bush White House analyst Robin Cleveland -- should be examined by the board.
Even before the panel's recommendations, there was wide concern on the board over Mr. Wolfowitz's conduct and its impact on the bank's credibility. In recent weeks, as the investigation has played out, the full board has debated a range of potential penalties, including placing him on administrative leave.
President Bush has voiced support for Mr. Wolfowitz, and Bush administration officials said they haven't begun to draw up lists for potential replacements for Mr. Wolfowitz should he be ousted.
In an effort to save his job, Mr. Wolfowitz has vowed to shake up his management team and to better connect with the bank's career staffers. Mr. Kellems's departure has been in the works for more than a week, and represents a step in that direction.
In another sign of Mr. Wolfowitz's intention to make changes, another top aide, Ms. Cleveland, was moved out of her office on the 12th-floor executive suite and into a smaller room down the hall, bank officials said. Ms. Cleveland has been a lightning rod for criticism of Mr. Wolfowitz, who gave her free rein to roam across issues in the bank.
"It sends a big message to staff," said a senior bank official, who suggested that Ms. Cleveland's portfolio could be cut back if Mr. Wolfowitz survives. "She's no longer allowed to ride into every meeting in the bank."
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