Inside Wolfowitz’s Second War


Sweetheart deal: Wolfie’s lawyer made this demand back in 2005 when he was negotiating terms of his presidency. Note that Wolfie’s refusing (in all caps, like a madman) the notion that he won’t have any contact with his gal, Shaha Ali Riza). As it turned out, of course, he sent her to the State Department to work with Dick Cheney’s daughter.

World Bank President Paul Wolfowitz spent the weekend desperately trying to keep his job, but e-mails flying around the bank’s internal bulletin board show that he’ll never quell the internal revolt.

Built into the bank’s massive bureaucracy is a Staff Association — not a union, but an officially recognized organization of the bank’s 10,000 employees that has a formal say, of sorts, in the operations of the bank. And it’s the Staff Association that is leading the revolt. Its pressure, led by chair Alison Cave, forced an unprecedented release of the bank’s investigation of Wolfie’s sweetheart deal for his gal, Shaha Ali Riza.

He’s having as much success with the 10,000 World Bank staffers as he had with the 25 million Iraqis.

On April 12, Cave, speaking on behalf of the Staff Association, called on Wolfie to resign.

Cave’s actions earned her praise from at least hundreds, if not thousands, of bank employees, according to a flood of internal e-mails obtained by the Voice.

And the e-mails raise new questions — new to the public, at least — about other issues.

For instance, Suzanne Rich Folsom, head of the bank’s Institutional Integrity department, is rumored in the e-mails to have hosted a Republican fundraiser.

That wouldn’t be surprising. Folsom is the wife of George Folsom, former president of the International Republican Institute. She was already at the bank when Wolfie arrived in 2005. But now she’s the chief corruption fighter.

As I reported in January 2006, she hired Allison Brigati, the daughter of America’s leading lobbyist for the gambling industry, Frank Fahrenkopf, to help her probe corruption within the bank.

Did I mention that Fahrenkopf is a former national chairman of the GOP?

I used the bank’s corruption hotline to ask whether Folsom hosted a GOP fundraiser. (I also put in a message to Folsom’s flack). Haven’t heard back yet.

[Update, 5 p.m. April 16: Folsom’s flack, David Theis, responded via e-mail, “Suzanne has NEVER hosted a Republican fundraiser. Never happened. She has engaged in no GOP fundraising or other activities since she joined the bank in 2003 under Jim Wolfensohn.” He later added that neither she nor her husband have hosted fundraisers, “nor has she engaged in any other political activity since she joined the bank, beyond voting.” Theis responded promptly to me. I apologize for the delay in adding this clarification.]

Meanwhile, as the New York Times reports this morning, Wolfowitz “spent the weekend churning through meetings with a determination to project confidence that he could weather the crisis.”:

“I think he has just wanted to tough it out,” said a bank official who watched him. “He’s clearly hoping that once everyone leaves town, he can go on and that all this will fade away. That has not happened and it is not going to happen.”

Especially inside the bank. Most bank staffers were unhappy when the Bush regime installed Wolfie. Now they’re really unhappy. Here’s a sampling of the e-mails last week to the internal bulletin board after Cave’s call for Wolfie’s resignation:

Evidently INT [Folsom’s department] was asked to investigate the Riza-Kellems-Cleveland appointments and salary increases and the associated breaking of Staff Rules in May 2006. Yet, INT refused to investigate. Could this be because Ms. Folsom is a close associate and ally of Mr. Wolfowitz? There is clearly a conflict of interest here. What kind of governance structure is it when the head of the internal investigation unit will not investigate any allegations linked to the President? Ms. Folsom should be held accountable. Moreover, what was the role of HR and especially the VP of HR in all this? He needs to answer a few questions.

By the way your comment about this not being the first time they have flouted the Staff Rules — are you indicating the appointment of Robin Cleveland and Kevin Kellems? I can understand Term Appointments to match the President’s term — but on Open Ended appointments which I believe they were given? Who approved such appointments without competition?

Regarding the latest news on “bending the rules”, I am wondering if Mr. Wolfowitz has given a second thought to what he is requiring of WB borrowers in terms of his slogan on “anti-corruption and governance.” Sir, practice what you preach — or in your case, try less threats and force on borrowing governments when you are flagrantly crushing all moral/ethical values yourself. . This is not the Pentagon, just in case you were wondering. I’ve included an “amusing” excerpt from the Bank’s Anti-corruption website — talk about serious double standards: “The Bank has identified corruption as among the greatest obstacles to economic and social development. It undermines development by distorting the rule of law and weakening the institutional foundation on which economic growth depends.”

Besides the issue of excessive pay raises, I have not seen any questions raised why the World Bank should pay a staff member to work in the US State Department in an office that many would consider a propaganda machine for an unpopular US administration. If the Bank does indeed need to send her on external assignment, wouldn’t Bank resources be better spent, if Ms. Riza worked at an NGO or charity organization? It would be good if the Staff Association could raise this issue with management as well.

How could Ms. Riza be sent on External Service in the US? It does not comply with the definition in the Staff Rules. “External Service With Pay means assignment to perform services for member governments, international organizations, or other entities providing technical assistance to the Bank Group clientele for which the staff member continues to be paid by the Bank Group.” I hope the Board will investigate this thoroughly – including the entire chain of command in HR and MNA Line Management who permitted this to be processed!

The President’s own salary has undergone an unusual course. [Wolfie’s predecessor James] Wolfensohn received a salary of $302,470, set on July 1, 2004. Mr. Wolfowitz received a salary of $391,440, effective July 1, 2005. How was this 29.4 percent pay raise achieved? 4 percent ($12,099) was due to the Wash. area CPI adjustment. The rest ($76,871) was because when Mr. Wolfowitz was appointed he negotiated with the Board about his salary. Presumably $314,569 net of tax (Mr. Wolfensohn’s salary plus 4 percent CPI) was not enough. The massive Salary raise was attained by reducing the “Allowance for Expenses” (presumably entertainment, travel etc.) that is allocated to the President from $141,290 (as allocated to Mr. Wolfensohn in 2004) to $70,700 (allocated to Mr. Wolfowitz in 2005). If Mr. Wolfensohn’s $141,290 was adjusted for the 4 percent CPI it would have been $146,942. Mr. Wolfowitz requested that of this amount, $76,871 be added to his salary, leaving only $70,070 as allowance for expenses. All this is documented in the Bank’s Annual Reports (see under “Remuneration of the President” online). Why did Mr. Wolfowitz request this change? The main justification was that the new higher salary was the same as that of the Managing Director [of the International Monetary Fund, the bank’s sister organization]. Why this equivalence should suddenly apply to Mr. Wolfowitz, when it was established otherwise for all his predecessors, is not clear. Of course it could be that being a modest man, Mr. Wolfowitz felt that he could not justify the level of expenses paid to Mr. Wolfensohn. But then he should have just asked for the allowance to be reduced. If he was not going to incur expenses of $146,942 it did not follow that he deserved a higher salary. As any staff member knows, there is a big difference between Expenses and Salary. It could also be that Salary is pensionable and the basis for other benefits, and Allowances are not. We should be told.

Ms. Cave: Thank you for your well-written representation of World Bank Group staff’s outrage about Ms. Riza’s special treatment. This situation makes a joke of the ethics office and the institutional integrity people. I am so embarrassed and outraged!

Can someone tell Kevin Kellems and Robin Cleveland to stop writing in to defend their boss?