World Bank chief loses ground in corruption fight

Bob Tippee

To the oil and gas industry's detriment, World Bank Pres. Paul Wolfowitz has sustained a blow likely to destroy his effectiveness in a crucial fight.

Normally, Wolfowitz can take a punch. Before moving to the World Bank in 2005, the former university professor and longtime federal official was deputy defense secretary in the administration of President George W. Bush. Because he helped plan the invasion of Iraq, the president's political antagonists regularly depict Wolfowitz as a demon.

Political pressure followed him to the World Bank, where he is said to have angered much of the staff for imposing change and exercising an apparently unbeloved style of management.

He also irked staffers and many governments by acting on his conviction that the bank can't fight poverty without also fighting corruption (OGJ, Dec. 18, 2006, p. 19).

That position deserves the oil and gas industry's full support. Expatriate companies need their presence to benefit host-country populations. Where corruption dissipates wealth generated by resource development, the popular welcome of resource developers suffers.

It's Wolfowitz's commendable and controversial stance against corruption that now teeters.

The World Bank chief acknowledges that he participated in negotiations that helped a former bank worker with whom he is romantically involved make a lucrative transfer to the State Department.

The move occurred because Wolfowitz properly raised concerns about the conflict of interest that developed when he became World Bank president while the woman was a bank employee. To some extent, though, he involved himself in dealings that financially benefited his girlfriend.

That's enough to have agitated his detractors at the World Bank, who by Apr. 12 were calling for his resignation. Opponents of Bush, especially of his policies on Iraq, will see political opportunity in Wolfowitz's troubles.

The biggest question, however, should be whether the World Bank chief can effectively pursue his already beleaguered campaign against corruption after these disclosures.

Seriousness of the offense doesn't matter. The indiscretion will make it impossible for the World Bank president to confront corrupt governments effectively.

Wolfowitz should recognize how seriously his potency in an important campaign has been hurt and act accordingly.

(Online Apr. 13, 2007; author's e-mail:

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