Transcripts

World Bank President Paul Wolfowitz Falls Victim to the Watchdogs

PAUL KANGAS: World Bank President Paul Wolfowitz is fighting to keep his job. He is set to address the bank board on Monday about his handling of a promotion and pay package for his girlfriend. Sources tell NIGHTLY BUSINESS REPORT the bank's ad hoc committee has already written its opinion that he should leave the bank. World Bank staff, the European parliament and others have called for his resignation. Stephanie Dhue reports.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: One of Paul Wolfowitz's top priorities at the World Bank is to root out corruption in aid dollars for poor nations. But his involvement in the promotion and pay raise of his long-time girlfriend Shaha Riza has called into question his leadership at the international aid agency. Bea Edwards of the watchdog group, the Government Accountability Project, says the controversy has already compromised the bank's mission.

BEA EDWARDS, INTERNATIONAL DIR., GOVERNMENT ACCOUNTABILITY PROJECT: We saw it during the spring meetings, where there was a very complicated agenda regarding changes and adaptations of international financial architecture and questions how to address questions of corruption and governance in borrowing countries. None of those issues could really be addressed. The bank is paralyzed.

DHUE: Wolfowitz has apologized for mistakes and promised to change his management style, but insists he will stay at the bank. His defenders say the controversy was manufactured by critics of Wolfowitz's role in launching the Iraq war while at the Defense Department and his anti- corruption campaign at the World Bank. Former Federal prosecutor Ruth Wedgwood says Wolfowitz is getting a bum rap, since the ethics committee first dismissed a complaint about Riza's pay in 2006.

RUTH WEDGWOOD, FORMER FEDERAL PROSECUTOR: If there's controversy over your anti-corruption policy, if there's controversy on who you hired for your front office, if people don't like personalities. All those figure in. But still I think the standard has to be consistent for whether people you like and people you don't like.

DHUE: Nancy Birdsall heads the Center for Global Development, an influential advisory group on world poverty. She called on Wolfowitz to resign over a week ago. She says, fair or not, Wolfowitz has lost the credibility he needs to be an effective leader.

NANCY BIRDSALL, PRESIDENT, CENTER FOR GLOBAL DEVELOPMENT: The bank is weakened right now to deal effectively with the issues around governance, transparency, clarity, on these complex problems of what governance is about, what the rules of the game are, what is permissible on the part of any leader of any government or any major global institution.

DHUE: Traditionally, the World Bank president is nominated by the U.S. president and voted on by European members of the bank. EU leaders are scheduled to meet with President Bush on Monday. So far, the president hasn't shown anything but full support for Wolfowitz. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.