The independent agency charged with assessing the effectiveness of the World Bank has issued a searing indictment of Paul Wolfowitz’s leadership, warning that the situation at the bank risks causing “irreparable harm to worldwide efforts in poverty reduction and sustainable development”.
In a formal statement seen by the Financial Times, which the bank’s board will consider this week, the Independent Evaluation Group called for “swift changes in management and a concerted effort to restore credibility”.
Pressure on Mr Wolfowitz to resign as the bank’s president intensified on Monday when 42 of its senior former executives called on him to step down in an open letter published in the FT. “There is only one way for Mr Wolfowitz to further the mission of the bank: he must resign,” the letter said.
The call comes as the board prepares to reach judgment on whether Mr Wolfowitz broke bank rules or ethics when he ordered its human resources chief to give his girlfriend, Shaha Riza, a large pay rise as part of a secondment package.
The IEG said that the situation could over time make it more difficult for the bank to raise development funds and recruit staff. It warned that the “the ability of staff – particularly those working in client countries – to carry out daily interactions with clients, as well as the institution’s ability in convening partners, are eroding”.
The statement reflects intense concern within the bank’s country teams in the developing world, where many managers said they were now laughed at when they talked about the need to tackle governance issues.
The IEG highlighted what it claimed were “serious breaches of internal HR policies in certain instances, which creates double standards and impairs the bank’s ability to engage with clients on governance issues”.
It also faulted “an increasing lack of transparency in the application of [the] bank’s development policies, for example in population, climate change, governance and anti-corruption”, and criticised the existence of “parallel lines of authority and bypassing of lines” within the bank.
The board will take the IEG statement seriously. Mr Wolfowitz’s defenders are likely to claim it is not truly independent, because the evaluation group is staffed by World Bank employees on secondment. Yet its chief, Vinod Thomas, has no history of clashing with the bank president. The breadth of opposition to Mr Wolfowitz among people connected to the World Bank is clear from the presence of former top managers of the bank among the letter’s signatories – including Shengman Zhang, number two to Mr Wolfowitz in his first year at the bank, two other former managing directors and 18 former vice-presidents.
The list of signatories contradicts the argument that opposition to Mr Wolfowitz comes only from the left and outside the US. Roughly one-fifth of the signatories are American – matching the proportion of Americans in senior bank jobs – and the list includes free-market advocates such as Peter Woicke and Gerard Caprio.
The former bank bosses say that unless Mr Wolfowitz goes now, the bank’s “effectiveness as a development institution and its credibility as the international community’s trustee of resources for fighting poverty” will be “fatally compromised”.
