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Wolfowitz Scandal May Spark Wider Changes

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Wolfowitz Scandal May Spark Wider Changes

Economy

Wolfowitz Scandal May Spark Wider Changes

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MICHELE NORRIS, host:

Paul Wolfowitz is still fighting to hold on to his job as World Bank president. He's poring over a new report by the bank committee that investigated his role in arranging a pay raise for his girlfriend. World Bank sources tell NPR, the report found that Wolfowitz bent bank rules in his handling of the case. He's reportedly been asked to respond to the allegations by tomorrow. Wolfowitz is already under heavy pressure to resign.

And as NPR's Tom Gjelten reports, the World Bank controversy is now growing to include issues beyond Wolfowitz and his management.

TOM GJELTEN: The report by an ad hoc committee of the bank executive board has not been made public. But a source familiar with its findings says it concludes not only that Wolfowitz bent bank rules, but also that he was less than candid in what he told the committee about his arrangement of a pay raise for his friend and colleague.

According to Wolfowitz's lawyer, Robert Bennett, the entire committee report including related transcripts and documents runs to 600 pages. It was delivered to Wolfowitz Sunday night, and according to Bennett, he was given no more than three days to respond. In a statement released today, Bennett said that's terribly unfair. Bank sources say the next move is up to the full 24-member executive board, which may meet later this week to consider whether to ask for Wolfowitz's resignation.

For the moment, the Bush administration is still sticking solidly by Wolfowitz. But administration officials are also deferring to the bank executive board. Here's State Department spokesman Sean McCormack.

Mr. SEAN McCORMACK (Spokesman, U.S. State Department): We're not trying to interfere in an administrative matter within the World Bank. And I think everybody would agree that is appropriate. Now, on the separate question of whether or not Mr. Wolfowitz should continue as head of the World Bank, absolutely.

GJELTEN: European countries, however, are increasing the pressure on the United States to let Wolfowitz go and they have some leverage. Since the bank's founding over 60 years ago, European governments have informally allowed the U.S. administration to select the bank president, while the Europeans have chosen the head of the International Monetary Fund.

But bank sources say that if the Bush administration insists on Wolfowitz remaining as president, the Europeans may end that arrangement and insist on open competitions. A board source says there was already an informal board vote on this question two years ago, and the United States was on the losing side.

Manish Bapna, executive director of the Bank Information Center, a World Bank watchdog group, says it's about time the bank presidency is decided in a more democratic manner. He would go further and democratize bank decision making in general.

Mr. MANISH BAPNA (Executive Director, Bank Information Center): At the end of the day, board deliberations need to be made more open. Part of the problem that we've seen has been that the secrecy behind which decisions are being taken has been precisely the source of the problem.

GJELTEN: Some bank critics say the executive board's ethics committee has questions to answer over its monitoring of bank management. The Wolfowitz controversy, in fact, has prompted calls for a variety of reforms at the bank. In the words of a bank source, quote, "all sorts of pressure groups are eager to use the current state of the World Bank to push through whatever is on their agenda," unquote.

Among the other issues being considered are whether the bank's effectiveness in fighting poverty should be measured simply by how much money it lends. And it's hard to say how far the questions will go. The scandal over the pay raise Wolfowitz arranged for his girlfriend has also focused attention on the high pay of some of the very World Bank staffers who have pushed the hardest for Wolfowitz to be fired.

Tom Gjelten, NPR News, Washington.

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