The Catholic University of America

Stephen Schneck, chair and associate professor, politics, and director of the Life Cycle Institute, was quoted in a Bloomberg News article about the improprieties committed by World Bank president Paul Wolfowitz. See the story below.


Wolfowitz Broke Bank Rules With Pay Raise, Panel Says

From: Bloomberg News
Date: May 7, 2007
Authors: Christopher Swann and William McQuillen

May 7 (Bloomberg) -- World Bank President Paul Wolfowitz violated the agency's ethics rules when he arranged a pay increase and a promotion for his companion, a panel of directors has concluded, according to a bank official.

Wolfowitz has been given the report and will have a chance to respond, said the official, who declined to be identified because the report hasn't been made public. The document will later be presented to the bank's full 24-member board, which has the authority to dismiss or reprimand him. Wolfowitz's attorney, Robert Bennett, argued against a "rush to judgment."

The finding raises the odds that the former U.S. deputy defense secretary will be the first World Bank chief to leave under fire. Kevin Kellems, Wolfowitz's senior strategist and a focus for complaints he used his office to further U.S. foreign policy objectives, resigned today.

"I believe the bank can only do good work if it has a good and sound reputation," Dutch Finance Minister Wouter Bos told reporters in Brussels today. "I am concerned about its reputation."

Policy makers in France, the U.K., Germany and Switzerland have also been critical of Wolfowitz, saying the controversy had hobbled his credibility. President George W. Bush, who appointed him in 2005, has stood by Wolfowitz, 63.

"We have not seen the report," said White House spokesman Tony Fratto. "The President continues to support Paul Wolfowitz and believes that he should continue to lead the World Bank."

Communications Officer

The panel investigated Wolfowitz's role in arranging the deal under which Shaha Riza, 52, was transferred to the State Department in 2005 to avoid a potential conflict of interest. Riza, a communications officer in the Middle East and North Africa department, stayed on the World Bank payroll.

Wolfowitz, who is divorced, told the panel that he was merely carrying out the orders of the agency's ethics committee when he arranged a 36 percent pay raise for Riza, to $180,000, with guarantees of future increases of 8 percent a year. The deal also stipulated she would be offered a promotion to the level of director after Wolfowitz's five-year term expired.

The generous terms of the deal, Wolfowitz said, were intended as a "settlement of potential claims" by Riza, who was being transferred against her will and whose career at the World Bank was "effectively ended."

Bennett said in an interview that the bank has given his client 72 hours to respond to the committee's finding, which he criticized as "grossly unfair and frankly outrageous."

Account Disputed

Ad Melkert, the chairman of the ethics committee at the time, disputed Wolfowitz's account. He said that while the committee told Wolfowitz to arrange a transfer beyond his "supervisory influence" and recommended a raise for Riza, it never reviewed or approved the details of the deal.

Wolfowitz, who initially apologized for the controversy, last week lashed out at the panel, saying he wouldn't quit in the face of a "bogus charge" and that he had been the victim of a "smear campaign."

Detractors said Wolfowitz presided over an exodus of experienced World Bank managers while relying on a coterie of advisors recruited from the Bush administration with scant experience in economic development.

Kellems, 42, the director of communications strategy since January 2006, had worked as an adviser to Wolfowitz in the Defense Department and also served as a spokesman for Vice President Dick Cheney.

"Given the current environment surrounding the leadership of the World Bank group, it is very difficult to be effective," Kellems said today, reading from a statement.

Jumping Ship

Wolfowitz's advisers are "jumping off the ship at this point," said Steven Schneck, head of the politics department at Catholic University in Washington. "When the inner circle is starting to quit, it is a sign they think it is starting to go down."

Another senior adviser, Robin Cleveland, who is counselor to the president, had been an associate director of the White House Office of Management and Budget.

Wolfowitz last month promised to reorganize his office in a bid to mollify employees who said the appointments were political. The Staff Association, representing 13,000 workers, has demanded Wolfowitz quit.

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