World Bank Chief Paul Wolfowitz Resigns
Iraq War "architect" leaves World Bank amid controversy over girlfriend's raise.
By JENNIFER PARKER
10 February 2009, 09:01
• 7 min read
May 17, 2007 — -- World Bank President Paul Wolfowitz has resigned his post, effective June 30.
An
internal panel tasked with investigating the lucrative pay and
promotion package Wolfowitz arranged in 2005 for girlfriend Shaha Riza
found him guilty of breaking bank rules.
The
committee also found that he tried to hide the salary and promotion
package from top ethics and legal officials within the bank. The report
added that there is a "crisis in the leadership" at the World Bank.
Wolfowitz is the first World Bank president to ever leave the bank under a cloud of scandal.
Wolfowitz: Girlfriend 'Angry and Upset'
Wolfowitz
lost the fight to keep his job after months of controversy surrounding
his involvement with securing his girlfriend a pay raise and promotion.
The
controversy set off a media firestorm, with questions swirling about
the current status of Wolfowitz's relationship with girlfirend Shaha
Riza, and it's unclear whether they are still together.
Wolfowitz
has defended the pay package, telling the bank's investigative committee
he was trying to avoid a potential lawsuit from Riza.
"Ms.
Riza was extremely angry and upset about being required to take an
external placement," Wolfowitz wrote in a May 11 statement to the World
Bank investigative committee.
Riza had been a World Bank employee
for eight years, promoting women and democracy in the Middle East, when
Wolfowitz was named president of the institution in 2005.
The
Bank's ethics committee determined Riza needed to leave the bank when
Wolfowitz took control to avoid a conflict of interest.
"I was not
given a choice to stay, and against my personal and professional
interests, I agreed to accept an external assignment," said Riza in an
April 30 written statement to the bank panel investigating her raise and
promotion package.
"The irony of my working to ensure women's
participation and rights through the work of the World Bank and [was]
stripped of my own rights by this same institution," Riza wrote.
Under
a lucrative compensation package that Wolfowitz arranged with the vice
president of human resources at the World Bank, Riza was moved to the
State Department and given a promotion to communications specialist, but
the World Bank still retained her on its payroll.
Her income
jumped from $133,000 to $193,590 in just two years -- more money than
Secretary of State Condoleezza Rice makes before taxes.
"I was
ready to pursue legal remedies. … I only acquiesced to signing the
agreement so as not to cause turmoil at the bank," Riza wrote in the
April 30 statement to bank officials.
'Architect' of Iraq War
At several points in the scandal, the Bush administration insisted Wolfowitz stay on as bank president.
"Wolfowitz
has acknowledged mistakes and apologized for them," White House
spokesman Tony Fratto told ABC News Tuesday morning. "We don't believe
that actions warrant a change of leadership at the World Bank."
But
just hours later a senior White House official told ABC News that "all
options are on the table" regarding Paul Wolfowitz's future and that "it
is an open question" whether he should should remain as president of
the World Bank.
"If you don't have board support and you don't have staff support, it is hard to get anything done," the official told ABC News.
In
his daily briefing, White House spokesman Tony Snow, who had previously
called Wolfowitz's actions "not a firing offense, continued to publicly
proclaim White House support for Wolfowitz Wednesday but deflected
questions on whether the administration would object if the embattled
World Bank president resigned.
Secretary of State Condoleezza Rice
and Treasury Secretary Henry M. Paulson Jr. placed calls to their
counterparts in Europe to defend Wolfowitz.
Vice President Dick
Cheney also spoke highly of Wolfowitz this week in an interview on Fox
News from Jordan, calling him "one of the most able public servants I've
ever known."
Wolfowitz worked in former President George H.W.
Bush's administration as undersecretary for defense policy from 1989 to
1993 under then Secretary of Defense Dick Cheney.
He played a key
role in reshaping U.S. military strategy after the end of the Cold War
and reviewing strategy for the Gulf War in Iraq.
Dubbed the "architect" of the Iraq War, Wolfowitz was deputy secretary of defense from 2001 to 2005.
Responsible
for Iraq War planning, he, along with a group of fellow
neo-conservatives, advocated the U.S.-led invasion of Iraq following the
Sept. 11 attacks.
World Bank Turmoil
The scandal has
topped a long list of complaints within the World Bank about Wolfowitz's
managerial style. Some of the institution's top managers have openly
called for Wolfowitz to resign in recent weeks.
Highlighting
the souring relationship between Wolfowitz and the World Bank board of
directors, his top aide, Kevin Kellems, resigned May 7.
Kellems
moved with Wolfowitz from the Pentagon to the World Bank, serving as a
senior adviser and director of external relations strategy at the bank.
Critics
said Kellems and another top Wolfowitz aide, Robin Cleveland, were
considered by bank staff to be more loyal to Bush administration policy
than to the international development mission of the bank.
In a statement to the press, Kellems cited poor working conditions inside the bank for his departure.
"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," Kellems' statement read.
Taking on
the job in 2005, Wolfowitz vowed to rid developing countries receiving
World Bank aid of government corruption by bypassing their
administrations.
But when the scandal broke, critics said Wolfowitz's anti-corruption message was hypocritical and called for his resignation.
"The
orchestrated leaks of false, misleading, incomplete and personal
information about me and Ms. Riza are all part of a conscious campaign
to undermine my effectiveness as president and derail important programs
of the bank to aid the poor, especially in Africa," read an April 30
statement by Wolfowitz.
European Countries Pressured for the Removal of Wolfowitz
Before
Wolfowitz's run as World Bank chief, a coalition of leading European
countries mounted a campaign to stop the practice of allowing the United
States to select the World Bank president.
The U.S. government is
given control over who serves as president to the World Bank, because
it gives the bank the most money for its financing.
However,
European officials indicated to the Bush administration in early May
that they would allow the United States to choose the bank's next chief
if Wolfowitz would step down.
The selection of Wolfowitz in
2005 as president drew criticism from European officials, however
France and Germany went along, hoping to heal the rifts left from their
opposition to the Iraq War.
However in April, Germany's Chancellor
Angela Merkel, as European Union chief, called for Wolfowitz to resign,
saying she needed to reflect the majority view of European countries.
Many
of Wolfowitz's early critics were dismayed that an official so closely
tied to the Iraq War would lead the world's anti-poverty institution.
Activists Urged World Bank to Fire Wolfowitz
An
international activist group staged a rally outside the World Bank on
May 9, demanding the development institution let Wolfowitz go.
Unfurling
a banner that read "World to Bank: Fire Wolfowitz," about two dozen
activists from Avaaz.org chanted "Unless he quits, fire Wolfowitz!"
At a nearby park, World Bank employees on their lunch break watched the rally and voiced their feelings about the controversy.
Everybody is demoralized, we all want a swift resolution," said Mark, a World Bank employee who refused to give his last name.
"He's been standing on this pillar about anti-corruption and governance and it's kind of hypocritical," said another employee.
Some
employees pinned blue ribbons to their briefcases and purses; the
ribbons were given to them by their staff association to signify that
"good governance" was still a key principle at the bank.