WORLD BANK: WOLFOWITZ, ZOELLICK and The Rest of Us

 It is no longer news that World Bank President, former US Deputy Secretary of Defence and Nuhu Ribadu’s friend, Paul Wolfowitz, is due to step down from the plum job of ‘fighting’ poverty as World Bank President by the end of this month, following his indictment for the pay and promotion deals he approved for his mistress (deuxièm bureau in francophone parlance) and World Bank Libyan employee Shaha Riza.

For those who have always questioned the notion of a US controlled-World Bank fighting poverty in third world countries, the report of the World Bank committee that investigated the accusations of nepotism against Paul Wolfowitz, came as a heart-warming one as he was found to have "clearly and unequivocally " breached bank rules by arranging a sweet pay deal for his babe. The report came to light in spite of the shamefaced and sterile defence put up by him and his paymasters in Whitehouse and AIG Nuhu Ribadu’s infantile and unsolicited allocutus.

According to documents released by the bank, whose mission is to fight global poverty, Wolfowitz personally ordered a pay package worth nearly 200,000 dollars for Riza (Perhaps his own nifty way of fighting poverty in Libya). The package included an immediate 60,000-dollar pay increase and guaranteed promotions, eventually taking her up to the highest career rank of vice president, once she returned from an outside assignment to the US government. Riza stayed on the World Bank payroll during her external assignment from its Middle East arm to the State Department, which was designed to prevent conflicts of interest after Wolfowitz took charge of the bank in June 2005.

Based on the foregoing, there is no iota of credible doubt that Wolfowitz’s concept of integrity and moral conduct in a public office as elevated as the office of the Bank President stretches from mundane to bizarre levels. For Wolfowitz, a former University Don, former Pentagon deputy and an architect of the Iraq war who promised to clean up corruption in borrower nations after taking the helm of the multilateral bank in June 2005, the end seems to have come albeit too early, on the altar immorality-induced nepotism and irresponsible concupiscence. This embarrassing degree of moral aridity and hasty descent to the acme official misdemeanour has of late, become recurring decimals in the rise and fall of both public and private organisations around the world with global bodies and conglomerates in the US the worst hit.

The list is endless. Enron, WorldCom, Tyco, RiteAid, Adelphia Communications, Qwest, Xerox and a lengthy list of other giant firms led the pack in executive corruption and sleazy financial misconduct while the main accounting firms supposedly there to audit company books and keep them clean like Arthur Andersen came under investigative spotlights as accomplices in the liquidation of financial empires and hopes of the investors. To grasp the full meaning of this looming global implosion, it is not enough to look inside seemingly blessed America alone. From Germany, France and Britain, to South Korea and Japan, similar epidemic of failure, widening cracks and gaping holes in key institutions abound. Recent corporate crises and scandals have been even more dramatic in South Korea where messy scandals have led to the flight of the founder of Daewoo, the suicide of the son of Hyundai’s founder, and the imprisonment of the Head of SK, one of the country’s mega firms. In Europe, the recent scandal list includes Volkswagen in Germany, Parmalat in Italy, Credit Lyonnais in France, Skandia in Sweden, and the oil companies Elf and Royal Dutch/Shell.

Paul Wolfowitz

Confronted by failing institutions on all sides, it is becoming clear to right thinking people that put together, these institutional and moral crises are related. In fact, the whole is beginning to add more than its parts, as these separate and distinct crises are increasingly interconnected. Today’s institutional upheaval is historically unique for a second crucial reason, namely – all these crises at national levels are taking place at a pivotal moment for global institutions too, ditto for the United Nations. Worth recalling is the 2005 allegations of large-scale corruption in its oil-for-food programme in Iraq while at the same time the son of Kofi Annan, the then Secretary General came under fire for his involvement with a company seeking contracts in Iraq. Not to mention UN’s sexual scandal as its peacekeepers sexually abused underage girls and young women in Africa. Kofi Annan himself admitted that the entire U.N. as institution is in a potentially terminal crisis due to its obsolete organisational structure

These and many others, have reinforced the belief held in some quarters that the UN and all its organs, just like Babylon the Great and the Roman Empire, may be on its way down the dunghill of history as corruption and moral decadence of epic proportions were the Achilles heels of these two great empires. In addition to these is the non-transparent nature of appointments and selection of officers for the world body and its organs as well as the World Bank. Kofi Annan’s effort at institutionalising transparency appears to have been lost in transit as Ban Ki Moon’s UN now wobbles excessively under official impositions. The cost of backroom fixes versus competitive selection is now jeopardizing the institutions themselves. When leadership is not trusted, reform becomes next to impossible, and the institutions become mired in political gridlock. This has become evident at both the United Nations and the World Bank.

Robert Zoellick

The recent Wolfowitz scandal and the nomination of another American, former Deputy Secretary of State Robert Zoellick, has once again brought to fore, the potency or otherwise of a World Bank, that reels drunkenly under heavy Whitehouse manipulations and machinations. The 185-nation bank, created in 1945 to rebuild Europe after World War II, provides more than $20 billion a year for projects such as building dams and roads, bolstering education and fighting disease. The bank's centerpiece program offers interest-free loans to the poorest countries but by a curious tradition, the bank has been run by Americans ostensibly because the United States is the bank's largest shareholder and its biggest financial contributor.

However, this singular tradition so to speak, continues to impede the banks effectiveness and global development as problems such as the environment, poverty, public health, financial stability and security cannot be handled only at the whims of a particular nation in a world that is so bound together yet multifarious. Global institutions, starting with their leadership, are often ill-suited to the task of framing solutions that can win wide support. What's more, rapid changes in relative economic standing and political stature of new, under-represented powers (such as India, China, Brazil, South Africa and Nigeria?) and the old guard (especially the United States and Europe) are increasing the tensions at these international organizations.

Wolfensohn, Wolfowitz' predecessor (WorldBank likes crying wolf) 

The impact of this can be seen in the World Bank’s characterisation of Africa in the wake of the virtual collapse of the continent’s economy in the 1980s. The collapse was caused by the catastrophic failure of the so-called “economic structural adjustment programme”, formulated by the World Bank/IMF and implemented on the ground by the infamous African kakistocratic regimes. As dictated by the World Bank, the age long terms of the glaring asymmetrical Africa-West socioeconomic relations have always favoured the West to the detriment of poor African nations. Tagged a “developing continent” by the bank, Africa crucially became a net-exporter of capital to the West as a result, a cardinal feature of its economy since 1981. In these past 26 years, Africa has transferred the gargantuan sum of US$700 billion to the West. These exports include those routinely made by thieving heads of state and other state officials. The other stunning consequence of the economy’s collapse is the flight of its middle classes to the West and elsewhere. They are part of the 12 million Africans who have fled the continent in the past 20 years and who are now the principal external source of capital generation and transfer to Africa.

It is noteworthy that despite the bank’s colossal failure to eradicate extreme poverty in Africa, it has in the past taken valiant steps which have pretended to position it for effectiveness especially in Africa and Asia with the appointment of a well-qualified Turkish development economist and former finance minister, an ex-Portuguese prime minister, a Sri Lankan human rights activist, a Swedish anti-corruption campaigner, a British counter-terrorism chief, a Gambian development expert, a German environmentalist, and of late, Nigeria’s Due Process exponent, Oby Ezekwesili

As Zoellick prepares to take over, an overhaul of the shareholding and ownership arrangements of all these institutions including the World Bank, the IMF and the membership of the U.N. Security Council and putting in place competitive, open selection processes for choosing their leaders is a vital step towards restoring their effectiveness. Ultimately, the power to select the World Bank president must come to rest with its board, not with the White House. These organizations need to be seen to work for all of us if they are to work for any of us.

Atâyi Babs©