Friday, May 18, 2007

Wolfowitz to quit

Rediff reports:

World Bank President Paul Wolfowitz announced on Thursday night he would resign on June 30, ending a controversy over his stewardship sparked by a promotion he arranged for his girlfriend, according to a report in Telegraph. His departure was announced late Thursday by the World Bank board. Wolfowitz departed under duress after a special bank panel found out that he violated conflict-of-interest rules in his handling of the 2005 pay package of bank employee and his girlfriend Shaha Riza. The Bank board said it was clear that a number of people had erred in reviewing the pay package.

Wolfowitz's fate was sealed earlier in the week when the White House indicated that it would not be averse to his departure. The UK was instrumental in negotiating a deal with the Bank's board under which the Board accepted that Wolfowitz had “ethically and in good faith in what he thought were the best interests of the institution.”

But it doesn't look as though as the man's departure signals any change in governance processes at the Bank. Many have argued that the Bank should hereafter look for the best candidate, the president of the Bank should not be a White House nominee.

Some hope ! A statement from the White House yesterday said that Bush would nominate a successor soon.


Krishnan said...

What a mess, I'd say close the world bank down so the corruption will not persist. The Wall Street Journal reports in it's Editorial Page today (May 18, 2007) about how After leaks and media smears, the World Bank's board of executive directors yesterday cleared President Paul Wolfowitz of ethical misconduct for following the board's own advice on how to handle a conflict of interest involving his girlfriend. And Mr. Wolfowitz in turn will resign from the bank at the end of June Sickening behavior and the US contributes 16 Billion dollars?

I agree with the WSJ - appoint Paul Volcker, former head of the US Fed and one that investigated the UN Food for Oil Corruption as head of the World Bank OR Shut it down altogether.

T T Ram Mohan said...

Krishnan, I don't believe that corruption is such a big issue at the World Bank that the place needs to be closed down. America contributes less than its fair share (unlike at the UN.

There's another argument that people make, namely, that private capital flows to developing countries today are much larger than anything the Bank and the IMF can provide.So why have these? Well, there are still some countries that cannot attract large enough capital flows.

Besides, the Bank plays a useful role in researching and documenting growth-related issues. Its role as a think tank on these matters remains, no matter that its positions may be bitterly disputed.


Krishnan said...

Mohan - yes, I am not coming at this issue with an understanding of the precise role of the World Bank - but given what they can really do with what they actually do, it is a tragedy ... What was interesting to me is that many small countries (mainly in Africa) tried to go to the defense of Mr. Wolfowitz since they were appreciative of what he had been trying to do - while European Nations remain condescending in their approach to solving poverty (again, news reports and historical information that I read) ...

I heard a spirited defense of Wolfowitz by Andrew Young (A former UN Ambassador from the US) since he knew of the role Wolfowitz played in alleviating poverty/etc.

The US may very well not paying it's fair share anywhere (heck, the US has alwsys done whatever they felt was right anyway!) ... but sending in Paul Volcker may be the right thing to do (IF the Bank remains open!)