Exclusive: Pissed-Off World Bank Employees Write Letters

World Bank employees -- who hate their President, Paul Wolfowitz, made their complaints known internally to the Office of Institutional Integrity (or INT) some time ago. They demanded an investigation into three issues:

* Paul's girlfriend Shaha Riza received a huge pay increase, in violation of World Bank HR policies, and despite her moving to State.

* Paul hired two old cronies to work with him at the Bank. Despite clearly being political appointees, they received huge salaries and open-ended contracts.

* One more Bush crony was given a cushy World Bank gig and huge salary, despite being a full-time instructor at the School of Advanced International Studies, making him able to work, at most, three days/week at the bank.

Of course, they received no response from anyone. After the jump, their full letter, and their follow-up letter to the bank's executive directors. Internal documents brighten up any Thursday afternoon!

As required by Staff Rule 08 (Disciplinary Proceedings), we report to you events that we believe to be important ethical lapses of a corrupt nature by the President of the World Bank. We have ascertained as much as possible the authenticity of the information, and believe that it is factually correct. Since INT is set up to report directly to the President, it faces a de facto conflict of interest in investigating claims that involve him. We therefore ask that on an exceptional basis, you report to the only body to which the President must answer, namely the Board. To ensure that this happens, while keeping as much confidentiality as possible, we have copied the Executive Directors. We have decided to come forward with these issues for two reasons: - as a matter of principle, we believe that the alleged actions (or lack thereof) are extremely serious ethical lapses; - the alleged events are widely known throughout the World Bank and beyond. These rumors cause great harm to staff morale, and immense damage to the World Bank's credibility both as a development institution and as a bank. We understand that formalizing this complaint may cause extreme difficulties for the World Bank to operate in the near term, and to Paul Wolfowitz personally. We regret this, but we believe that a formal review of the allegations, and appropriate sanctions if justified, are the only way to safeguard the World Bank's reputation, and its potential for promoting development.

First Issue: the Salary Increase of Shaha Riza When Paul Wolfowitz became President of the World Bank, he acknowledged to the Board an ongoing romantic liaison with a World Bank employee, and gave assurances that he would resolve it in accordance with World Bank policy in such a way that she would not report directly or indirectly to him. She promptly left the World Bank on an external assignment with pay to the US State Department. However, concurrently with her new assignment, Shaha Riza received a promotion and a permanent salary increase of around US$50,000 (net of income tax), with a commensurate increase in pension entitlements. Her salary went from around US$130,000 (net) to US$180,000 (net). Over a 10 year period, a salary increase of US$40,000 would cost the Bank around half a million dollars in real terms. This salary increase is of no benefit to the World Bank, is not rooted in the Bank's HR policies, and is therefore egregious. Importantly as well, Paul Wolfowitz did not submit the salary increase to the Board, which, under the circumstances, is the only body capable of passing a fully independent judgement on this extraordinary decision.

Second Issue: the Contracts of Robin Cleveland and Kevin Kellems Shortly after becoming President, Paul Wolfowitz hired Robin Cleveland and Kevin Kellems. He represented that he had long-standing profesional relationships with them, and that they would owe their effectiveness in the Bank to their close association with him. They are clearly political appointees - a characteristic that justifies their hire without following normal HR procedures. However, both were hired on terms that show wanton disregard for the World Bank's fiduciary duties, and HR policies more generally. Both received open-ended contracts from the outset, in contradiction with the political nature of their appointment. Both contracts should be co-terminous with the contract of their political master. Both were given grades GJ, a super-senior grade level that is only exceeded by the Managing Director, the EVPs of the IFC and MIGA, and the President himself. This grade level does not correspond to the duties and abilities of either Robin Cleveland or Kevin Kellems. Both were given outlandish salaries. Robin Cleveland was given a salary of around US$250,000 (net of income tax equivalent). Kevin Kellems was given a salary of around US$240,000 (net of income tax equivalent). These salaries are not justified by the level of their previous salaries, or the nature and responsibilities of their work. Many staff members at much more junior grade levels have comparable responsibilities. The outrageous terms of these appointments are an insult to the concept of merit-based HR management, and a breach of the World Bank's fiduciray duties.

Third Issue: the Appointment of Karl Jackson Karl Jackson was given an Extended Term Consultant contract to provide policy advice to the President. Under ETC rules, an ETC must work full-time for the Bank. However, it appears that Karl Jackson has maintained (and plans to maintain) a fairly busy schedule as course instructor and program director at the School of Advanced International Studies. He taught two courses in the fall of 2005, and teaches 2 courses in the spring of 2006. Although it is not unusual for World Bank staff to teach (albeit with an explicit authorization from their manager), Karl Jackson can at best put three full day equivalents during the week. This would not be much of a problem as such, assuming that there is an explicit authorization. The problem is that Karl Jackson is paid US$210,000 (gross) on a yearly basis. If one prorates this fee level for the effective amount of time he can reasonably be expected to work (3 out of 5 days), his fees are the equivalent of US$350,000 (gross) per year. This is far beyond the upper range of the World Bank's highest ETC fee scale (US$293,000 gross). Again, this shows a callous disregard for Bank rules and principles. HR rules are explicit.

The alleged events fall squarely under one or more definitions of misconduct, and establish a strong presumption of misconduct on the part of Paul Wolfowitz. While the existance of these allegations is in itself a lamentable shortfall for the President of the World Bank, Paul Wolfowitz may not be guilty of any or all alleged events of misconduct. We look to you to clarify the following questions, among others: - are the facts correct? - are there exceptional circumstances to justify these actions? - are the responses appropriate? - are there precedents that can be invoked? - who actually made the decisions? - did Paul Wolfowitz know of them? - if not, should he have known of them before they were taken? - should he have acted to correct these decisions? We do not accept the argument that the President is not bound by the World Bank's rules. He is given explicit and extensive discretion under these very rules. The alleged offenses go beyond any discretion he may have. The notion that he may not technically be a staff member does not hold. He has repeatedly stated that he is an "international civil servant", and has implicitly accepted these rules when he notified the Board of his romantic involvement with a Bank employee. As the public face of the World Bank, he needs to be held to the same ethical standards as all other staff members, if not higher. The World Bank cannot afford the reputation of a dysfunctional and unaccountable multilateral organization rife with cronyism. Paul Wolfowitz has a case to answer on all three points.


More than three weeks ago, we reported serious allegations of misconduct by the President of the World Bank to INT, with copy to Executive Directors. Since then, we have received no reply from either INT or Board members to assure us that our concerns would be looked into. We have behaved professionally and ethically in attempting to keep an open mind about the alleged events, and have not leaked our report. We believed that a trial by the media would not be fair to Paul Wolfowitz, and would be detrimental to the reputation of the World Bank. While INT and the Board remain silent, it appears that some or all allegations have been leaked to the press and senior management. Understandably, Paul Wolfowitz and senior management have come out and made a few general and limited statements about the allegations. They have essentially dodged the issues, and taken liberties with the truth. They tried to reformulate the issues as concerns about either strategy or organizational effectiveness. They are not; they are, at heart, ethical issues. The apparent absence of any attempt by INT or the Board to establish due process to resolve these issues in a rapid and fair manner does not speak highly of the corporate governance standards of the World Bank - and whistleblower management.

In the meantime, we find ourselves in the absurd situation of having to investigate and ascertain the statements of the World Bank's leadership, and provide rebuttals to their assertions. It should be clear that it is not senior management's call to make the final determination regarding the allegations, since it may be a party to the alleged misconduct. The termination of Karl Jackson's excessively generous contract on January 17 of this year is a case in point. Neither are we in a position to investigate the allegation further. An independent inquiry is needed, and it is the Board's responsibility to ensure that it happens. The public statement by senior management that "grade and salary levels of the advisory positions are within Bank policy and reflect their level of responsibility" is not adequate. While implicitly saying that Paul Wolfowitz takes responsibility for the appointments and the VP compensation packages, senior management fails to note that corrupt leaders have consistently paid lip service to this lopsided argument to appoint cronies to lucrative positions. It is not clear that the "responsibilities" were clearly defined in terms of references at the time of the hire, or that any effort was made to match the terms of references to the advisors' qualifications. The Bank's Articles of Agreement can also be invoked to say that the President has a duty to run the Bank efficiently. The assertion by senior management that the two advisors' appointments are in line with past practice in the President's office is false. No one has ever been appointed from outside the World Bank to an "advisory position" in the President's Office without a transparent selection process with a vice president-level, open-ended contract worth around US$250,000 a year, net of taxes. There simply is no precedent. And if there were a precedent, it would do no more than point to another event of unacceptable misconduct.

Paul Wolfowitz also claims that HR procedures have been followed at all times. This claim is obviously contradicted by recent HR actions that could be construed as admissions of wrongdoing. If Karl Jackson's ridiculously generous original contract had met the basic standards of HR rules, why has it been terminated and replaced by a more appropriate contract? Furthermore, if there have been ill-gotten gains, will they be returned to the Bank? If Kevin Kellems' VP compensation package was appropriate, why appoint him to a lower "director" position? Never mind that the position did not exist before he was appointed to it. Could it be that his qualifications are just not up to VP standards? Incidentally, HR rules provide for grade and salary level downgrades for lower level appointments. Has this happened?

Senior management has also fallen back on the blanket argument that the Articles of Agreement give the President vast discretion over HR matters, and therefore allow him to make exceptions to HR rules. According to this argument, the President may do pretty much what he wants in matters of HR, because he is the President. Such exceptions, if they ever were given and documented, may provide a legal cover to the President's actions. They nonetheless remain highly inappropriate. As Suharto's Indonesia illustrates, graft is actually in many cases perfectly legal, especially when perpetrated by the men at the top of the power pyramid. When a person is given the power to bend the rules, he should not just be held to account to the letter of the law, but to the spirit and principles that give the law its meaning. "Because I could" is not an acceptable justification.

We do not contest that the President must enjoy wide latitude to hire and fire as he pleases to be effective. We also agree that he must be able to bring with him trusted advisors. As he rightly notes, there is no reason to be "terrified" by "a few Americans". He is free to bring a few more if he finds that it would help him in his professional endeavors. But he misses the point: he is not free to provide them with preposterously generous compensation packages relative to both their qualifications and responsibilities. Principles of sound HR management must be adhered to. The compensation packages for "advisors" on term contracts are sufficiently generous, and offer ample discretion to the hiring manager (level GH, earning between US$129,000 and US$226,000 yearly net of taxes, with benefits). On the terms of Robin Cleveland and Kevin Kellems' contracts, on Shaha Riza's salary increase, and on the terms of Karl Jackson's original contract, we reiterate our contention that Paul Wolfowitz acted with reckless disregard for his fiduciary duties to the Bank, basic principles of HR management, and the reputation of the Bank, by providing outlandish compensation packages to the people closest to him.

Unless a thorough and independent investigation establishes the contrary, we consider that this is graft. We would like to know that INT or an independent team is reviewing the allegations with an open and professional approach, and that discussions with the Board have been initiated on a process that would allow it to make a judgment on these allegations. If we are not promptly made aware of decisions to set up a process to investigate the events behind the allegations, what was a professional obligation under Staff Rule 08 to report alleged corruption to INT will become an ethical duty to disclose the allegations to the public.


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