April 12, 2007

Sebastian Mallaby on the World's Hypocrite?

Link: Sebastian Mallaby - The World Bank, Stuck In the Mud - washingtonpost.com.

The scandal centers on the pay of people around Paul Wolfowitz, the World Bank president. Kevin Kellems, an unremarkable press-officer-cum-aide who had previously worked for Wolfowitz at the Pentagon, pulls down $240,000 tax-free -- the low end of the salary scale for World Bank vice presidents, who typically have PhDs and 25 years of development experience. Robin Cleveland, who also parachuted in with Wolfowitz, gets $250,000 and a free pass from the IRS, far more than her rank justifies. Kellems and Cleveland have contracts that don't expire when Wolfowitz's term is up. They have been granted quasi-tenure.

Then there is the matter of Shaha Riza, a long-standing bank official who is Wolfowitz's romantic partner. She went on paid leave (seconded to the State Department) after Wolfowitz arrived; her salary has since jumped from $133,000 to $194,000. When questions were first asked about Riza's rewards, a spokesman declared that the matter had been handled by the bank's board and general counsel, implying that the bank president himself had not been responsible. But the truth was that Wolfowitz had been closely involved, as a contrite Wolfowitz admitted yesterday.

Treating an anti-poverty institution this way would look bad under any circumstances. But the scandal is especially damaging to Wolfowitz because his leadership had generated questions already. He has alienated the staff by concentrating too much power in the hands of Kellems and the abrasive Cleveland; he has alienated shareholders by presenting half-baked strategy ideas; he has alienated borrowers by blocking loans, sometimes capriciously. Moreover, Wolfowitz has made the battle against corruption his signature issue. He of all people should have thought twice before sanctioning exorbitant pay for his entourage.

After Sept. 11, Wolfowitz's predecessor, James Wolfensohn, seized on the attacks to drive home the point that the fortunes of the world's rich depend on the fortunes of the world's poorest. In good times an invisible wall seems to divide the two, but the terrorist attacks demonstrated how this divide could be spectacularly breached. "There is no wall," Wolfensohn insisted.

Now, five years later, the United States is walling off its southern border and the aid boom is over. And where is the current World Bank president? Fending off calls for resignation.

Corruption involves the enrichment of oneself or one's friends at the expense of the public. The allegations against Wolfowitz--some of which he has now admitted as being accurate--revolve around exactly such situations.

Paul Wolfowitz came in significantly on the implicit promise of being able to deliver significant increases in American aid for development. The executive board should examine not only whether he has squandered his moral capacity to lead, but also whether he has fulfilled that promise.

Posted by Anupam Chander on April 12, 2007 at 11:18 PM in Globalization | Permalink