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Published on Friday, April 6, 2007 by Inter Press Service

Wolfowitz Accused of Nepotism at World Bank

by Emad Mekay

WASHINGTON - A controversial raise for a World Bank employee who has been romantically involved with the Bank's President Paul Wolfowitz was not the work of the Bank's Ethics Committee, as originally alleged by Wolfowitz's office, according to the watchdog group that leaked the information.Members of the Ethics Committee of the Board, the relevant body that would have approved the raise, which has triggered allegations of nepotism at the Bank's highest levels, say that they knew nothing of the salary hike, according to the Washington-based Government Accountability Project, a whistleblower protection organisation.

The new revelation appears to be at odds with the line maintained by officials in Wolfowitz's office, who have in interviews with the Washington Post and the Financial Times, two newspapers that reported on the issue, claimed that the raise was approved by the board.

"Inside sources from the Bank have stated unequivocally that this was not the case, that board members only learned of the raise from news reports, and that the members are furious," said GAP.

"There's a question of fact here," Beatrice Edwards of GAP told IPS. "It was a personnel action that was taken without a consultation with the board."

So far, the Bank's management has been unable to clarify who proposed and approved the irregular promotion and subsequent raise for Shaha Riza, a Bank employee in the external relations department, and Wolfowitz's long-time girlfriend.

Wolfowitz's office referred IPS queries to the Bank's media department, which did not return phone calls for comment on Thursday.

The controversy has sent ripples through the institution's Washington headquarters, where some staff have long been discontented with how Wolfowitz, a former U.S. deputy secretary of defence and a central advocate of the U.S. occupation of Iraq, has managed the Bank since he came to office in July 2005.

News of the pay raise was first broken last year by Ward Harkavy, who blogs for the Village Voice newspaper in New York, but the story only gained traction last week after the Washington Post used information from GAP to report on the raise.

Payroll data obtained from the World Bank and made public Thursday by GAP show that Riza, a communications officer in the Bank's Middle East Office, who is currently working in an external assignment at the U.S. State Department, received a 47,300 dollar, or 35.5 percent, raise to 180,000 dollars after Wolfowitz arrived.

This raise was followed last year by another 13,590 dollar raise, or about 7.5 percent, to a total salary of 193,590 dollars.

"If World Bank staff rules had been respected, she was not to receive percentage increases greater than 12 percent and 3.7 percent, respectively. Her current salary of 193,590 dollars is about seven thousand dollars more than what [U.S.] Secretary of State Condoleezza Rice earns," GAP said in the statement Thursday.

An email obtained by GAP and seen by IPS indicates that the Bank's staff is not pleased with the news.

"This case sends the message to staff that the rules apply to everyone except those associated with the most senior levels of management," said the email, sent from the Staff Association to all employees on Tuesday. It went on to appeal to senior management and the Board to probe the controversy and "clarify what appear to be violations of staff rules in favour of a staff member closely associated with the president."

The Staff Association says it has not been able to determine who drew up and approved the terms of the external assignment but has established that "they are grossly out of line with the staff rules."

"We call upon senior management and the Board to address this issue: explain how/why the staff rules were bent in this case, take steps to ensure compliance with the staff rules with regard to Ms. Riza and set in place a system that will ensure (and allow verification) that staff rules are consistently applied," it said.

The episode is particularly embarrassing because Wolfowitz has championed the cause of fighting corruption at the Bank and within its projects.

"It's ironic that Mr. Wolfowitz lectures developing countries about good governance and fighting corruption, while winking at an irregular promotion and overly generous pay increases to a partner," said Edwards, who is GAP's international director.

A source at the Bank says that many staff members are also doubly upset by how Wolfowitz has reacted to the situation.

"Wolfowitz is much, much more concerned about who leaked the information than about how to rectify the situation. He's just furious," said the source inside the Bank who wished to remain unidentified.

Copyright © 2007 IPS-Inter Press Service.

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