July 28, 2011
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May 15, 2007

The Attempted Putsch at the World Bank

By Clarice Feldman
Late yesterday afternoon, without prior notice to Paul Wolfowitz, the World Bank's Executive Committee released the Final Report of the Ad Hoc Group on his handling of personnel issues affecting his companion Shaha Riza.

It is a highly damaging, utterly biased account of the events and the nature of  the release suggests it was designed to give his detractors first crack at the news while handicapping him in his capacity to respond. Yet it is par for the course in a matter which has been characterized by false accusations, unfair treatment and selective manipulation of the press by those members of the Bank and the staff who oppose him. (See Christopher Hitchens' account of this sliming.)

Today, Paul Wolfowitz will appear before the Board of the World Bank to defend himself against the charges of wrongdoing contained in the Ad Hoc Group's Report. The preparation of this report was done with only the thinnest pretext of due process and its conclusions reflect this. For example, compare the recent statements of Xavier Coll, the bank's vice president of human resources, with his statements on the written record:

According to the Ad Hoc Group Report, at paragraph 44, Mr. Coll in his recent interview stated as follows:
"According to Mr. Coll, he told Mr. Wolfowitz and Ms. Cleveland that the terms proposed by Ms. Riza, regarding her promotion increase, her annual increase and guaranteed promotion to Levels I and J were ‘outside the Staff Rules' and that moving forward with them was a reputational risk to the Bank. In Mr. Coll's view, there is ‘no doubt that the President knew or had been made aware of by me that this was outside the rules."
Memos and notes prepared by Mr. Coll at the time show that his views were quite opposite-Mr. Coll affirmed that there were no personnel policies that clearly applied to this situation:

For example, in handwritten edits he wrote on a draft of the Riza agreement, Mr. Coll wrote:
"There is no precedent to his kind of situation and no policy that would clearly apply to resolve it."  (Handwritten annotations of X. Coll on draft agreement dated 08/26/05  (emphasis added). The final agreement with Ms. Riza, which was signed by Mr. Coll, similarly states: "There is no precedent of this kind and no personnel policy that clearly applies to resolve it."   (September 1, 2005 Letter Agreement signed by X. Coll and S. Riza) (Emphasis added).

  • He wrote, in a memo to himself dated August 22, 2005, that he told Mr. Wolfowitz "we were in a very difficult situation - with no precedents at the Bank - and that it had enormous potential to damage the bank's reputation.In balance, I thought the situation required more flexibility than in other past cases and that there was great risk to the Bank if we could not come to a workable agreement in a few days." (August 22, 2005 email from X. Coll to himself)
  • He added: "I felt comfortable that I had raised points of concern with the President and that he had taken these seriously and given due consideration."(Id.)
  • Mr. Coll also wrote at the time that the decision, with which Mr. Wolfowitz concurred, to make any promotions contingent on evaluation and peer review "was a workable solution that was more within bounds of acceptable policy.This addition brought the process for potential promotions more in line with current practice at the Bank.I felt that, on balance this was a reasonable way to move forward and find a solution given the very complex and difficult set of circumstances." (Id.)
Aside from the conflict between Coll's testimony and the documents, the resolution of this important issue, relying on Coll's testimony, is  reflective of bias and bureaucratic legerdemain by the Committee, which said (para 71) 
"Because of the strong and largely undisputed documentary record, the Ad Hoc Group has decided to base its conclusions primarily on the documents it has before it as they reflect a contemporaneous record and provide a comprehensive picture of the events supplemented where needed by evidence from the meetings and interviews."
So, when the documents utterly contradict the critical witness testimony, they rely on the testimony, not the documents, and as I show below when the testimony they choose to credit is weak or contradictory they choose to rely on the documents. (I do not see how a fair fact finder can resolve these matters without considering ALL the evidence, and, where necessary, making on the record credibility resolutions, something the Group in its bureaucratic fiddling eschewed.)

Amid a series of findings reflective more of bureaucratic haggling, the Committee does concede this: 
"The Ad Hoc Group acknowledges that the informal advice as provided by the Ethics Committee was not a model of clarity. It should have been drafted in language that would not open a possibility of misinterpretation."(Para 81). 
Although it concedes that Wolfowitz was consistent that he was misled by the statements of the Ethics Committee and that the language was unclear, the Committee said it was his obligation to seek clarification from the Board. But in this case, the Committee ignores his testimony that he "protested vehemently" to the Ethics Committee. Thus, in contrast to its treatment of the Coll discrepancies, where it relied on testimony which was inconsistent with the documentary evidence, the Committee discounts  this proof of non-culpability  because it "did not find any convincing documentary evidence of such a protest.(Para 83)

Elsewhere the Committee finds
"As for Mr. Wolfowitz' involvement in deciding the details of the arrangement with Ms Riza, the August 8, 2005, letter from the Chairman of the Ethics Committee contains a sentence that reads: ‘The EC cannot interact directly with staff member situations, hence Xavier [Coll] should act upon your instruction.' Read in isolation, the above-mentioned sentence could be interpreted as the Ethics Committee advising that Mr. Wolfowitz should take an active role in the negotiation with Ms Riza."
Indeed, that is how he read it, but the Committee, instead of acknowledging that the letter was misleading (deliberately so, I think), it simply dismisses this reading as "unreasonable". In so doing, it is not merely presenting the facts to the Board, but exceeding its authority, I believe, by prejudging the matter. It seems uniquely a function of the Board to decide on all the facts whether this was unreasonable or not for a new President unfamiliar with the Byzantine workings of the institution and clearly trying to comply with the rules.

While charging Wolfowitz with ethical violations the Ad Hoc Committee by its very unethical conduct makesclear that they are operating as the arm of a political putsch, not a quasi-judicial body.

For example, Last Monday when Wolfowitz testified Herman Wijffels [Dutch World Bank Executive Director ] said:
"We will have a meeting with Ms Cleveland later today. We also will be seeing Ms. Riza later today. We will be seeing Mr. Danino,[ Roberto Dañino , former general counsel for the bank] and probably tomorrow Mr. Melkert[former chairman of the World Bank's Ethics committee]. They will all be interviewed on the record. And you will have these transcripts available as soon as possible." (p. 65 Wijffels transcript).
This suggested, of course, that Wolfowitz would be allowed to directly comment to the Board on their testimony before the Ad Hoc Committee issued its final report but apparently he will not be, the Board having received an updated version of the Ad Hoc Report without Wolfowitz having been given an opportunity to address his rebuttal directly to the Board ahead of that transmittal. Certainly, he was given no opportunity to cross examine these witnesses himself, and as the discrepancy on the record of outgoing vice president for human resources Xavier Coll shows, there is plenty of reason to question the veracity of the chief witnesses against him.

Confidential proceedings of this group and the Board are regularly being leaked to friends in the press and to outside organizations critical of Wolfowitz, while he and Riza have been gagged and precluded from responding quickly by releasing internal documents supportive of their defense. In this way, it seems clear the Ad Hoc Committee is trying to force recalcitrant Board members to cede to their recommendations, thereby precluding independent judgment by the larger 24 board of Executive Directors. Indeed, although the media has been rushing to print every word of Board members and staffers opposed to Wolfowitz, the report takes issue with his deigning to defend himself against these baseless and overblown charges of improper dealing.
"The Ad Hoc Group views with profound regret the public pronouncements by some current an d former Bank officials and staff  members on this matter, and the disclosure of information, otherwise confidential in manners inconsistent with the applicable staff rules and policies of the Bank. The Ad Hoc group is strongly of the view that all officials and staff of the World Bank Group must adhere to the highest standards of conduct."(Para 103)
Yet acknowledging these leaks and coordination with media friends opposed to Wolfowitz and Riza, the Group takes particular aim at Wolfowitz for daring to respond to these charges: 
"The Group is troubled by Mr. Wolfowitz's own public statements as well of his lawyer made on his behalf...."
(Para 105) is a particularly rich piece of work: 
"But of greater concern to the Group is the attitude it reveals about the nature of the process currently underway. It has turned an internal governance matter into an ugly public relations campaign in which he believes he is being publicly attacked and therefore has resorted to public attacks of his own which denigrates the very institution he was selected to lead..."
Leaks have indicated that the Dutch government opposes the retention of Wolfowitz. One wonders if in this politically charged proceeding whether one member of Dutch political coalitions (Wijffels) can fairly judge the credibility of another member, his predecessor at the Bank (Melkert, the head of the Ethics Committee whose guidance the Committee concedes was  unclear, and whose later dismissal of an Ethics Complaint seemed to confirm the appropriateness of Wolfowitz' handling of the issue).

The process and the work of the Ad Hoc Committee both in and out of the spotlight do not inspire confidence in the World Bank's respect for fair play.

It is not clear that his detractors have the votes or will to remove him or even issue a vote of no confidence. Wolfowitz will not resign and is planning to travel to Europe this week on Bank business.

Vice President Cheney has reiterated his support for the embattled World Bank President and it has been reported that the Administration is trying to arrange a meeting of the G7 to deal with this issue in the belief that they can go over the heads of the countries' Directors on the Board. If the Bank's Directors want to play politics so should the Administration. There is no more sense in pretending this is a legitimate quasi-judicial inquiry.

In any event, I agree wholeheartedly with the observations of Chris Hitchens  :
Anyone who knows anything about this also knows that it is part of a power play by certain European and Asian interests at the bank to challenge American dominance of the institution. Two previous managing directors, Shengman Zhang and Caio Koch-Weser, were allowed to have their spouses working there without any demur. Riza's job did not require her to report to the office of the president in any case. Wolfowitz nonetheless offered to sign a statement, as soon as he was appointed, recusing himself from any involvement in her work. It was certain bank high-ups who laid the trap for him by insisting that she lose her post and who have now sprung the trap by blaming him for following their well-documented recommendation that she be compensated for this unfairness. In the intervals, they have disgraced themselves by feeding a gullible or biased press and destroying the privacy of a woman who is worth more than all of them put together. Her "confidentiality agreement" with these characters was torn up without even a hint of scruple.

I have been living in Washington for a quarter of a century and have said some mean things about people and had some mean things said about me. Fair enough. I sat and thought for quite a while today and decided that this is the nastiest and dirtiest and cheapest campaign of character assassination I have ever seen. Yet almost everyone in my so-called profession seems to regard it with a smirk or as a feather in the cap. Good grief. If it succeeds in ruining two careers and poisoning two lives, I do so much hope that it makes the perpetrators-bankers and reporters working as a team-deliriously  
happy.
As the Wall Street Journal editorializes today:
All of this is further evidence that what Mr. Wolfowitz is facing here is a kangaroo court. The Europeans and bank staff thought they could get him to leave quietly if they smeared him and Ms. Riza enough in the press.

Paul Wolfowitz is made of different stuff than those who seek to remove him.

Clarice Feldman is an Attorney in Washington, DC and  frequent contributor to American Thinker.
on "The Attempted Putsch at the World Bank"
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