Verklaring Melkert: Wolfowitz liegt

woensdag 2 mei 2007 08:42

Statement of Ad Melkert to the World Bank Board's Ad Hoc Group, 1 May 2007

I am pleased to be able to provide background and context to this matter, as various statements and references have misrepresented many key facts.

I am deeply hurt by efforts to manipulate information, including in statements on the Bank's website and elsewhere. Together with my fellow members of the Ethics Committee I acted in good faith to save the great institution that is the World Bank from a confrontational and embarrassing situation involving its newly appointed President. Indeed upon the advice of the Ethics Committee the central issue of potential conflict of interest for the Bank President was resolved by Ms. Riza's secondment outside the Bank.

Other aspects of the secondment that have now come to the forefront are very relevant to the current Board but did not pertain to the Ethics Committee’s task of giving advice on the matter of Ms. Riza working under the supervision of Mr. Wolfowitz. Having received confirmation from Mr. Wolfowitz that he would follow our advice to relocate Ms. Riza outside of his potential supervising influence, we naturally assumed that implementation at the staff level took place in accordance with the Bank’s rules and practices.  I therefore reject any direct or indirect allegation or suggestion that the Ethics Committee was aware or should have been aware of the terms and conditions of Ms. Riza's contract for her secondment outside of the World Bank.  As Section 5 of the Bank’s Articles of Agreement makes clear, it is the President – not the Board or its committees-- that is directly responsible for staff matters.

1.Background

- The Ethics Committee was established – after many years of discussion within the Board – to advise on ethics matters involving Board members including the President of the Board. It has been and continues to be a very cumbersome process to reconcile general standards of corporate governance with the special features of the Bank that make the Board a less independent oversight body than it should be, given that most of its members act upon instruction by the respective capitals.

- The President was proposed as the only candidate by the US administration and appointed with the firm support of the G8, including European members that had defined their position even before the Board began the formal appointment process.

- Within this political reality the challenge of the Ethics Committee was to find a solution that would i) require the President to abide by staff rules (that were very clear on the need to prevent professional contacts between partners); ii) to prevent confrontation and division at the start of the new President’s term; and iii) avoid putting into jeopardy political support for the appointment of the new President.


2. Mr. Wolfowitz's initial proposal for recusal

- Mr. Wolfowitz held an unchanged opinion that his initial proposal to be recused from personnel issue-related contacts with Ms. Riza would suffice. However, contrary to what the staff rules allowed for, Mr. Wolfowitz’s proposal explicitly insisted on the possibility of maintaining professional contacts with Ms. Riza. He kept that opinion even after grudgingly following the advice by the Ethics Committee. Thus Mr. Wolfowitz denied that the general staff rules should be applicable to his particular situation. I did and do appreciate that he was genuinely concerned about the risk that it was the woman having to bear the consequences of her partner's prominent position. Therefore attention for Ms. Riza’s career interruption was justified. However there could be no doubt that the existing rules and their application had to prevail.

3. Ethics Committee advice

The Ethics Committee advised that

a) Ms. Riza be relocated to a position beyond the potential supervising influence of the President, and that an external assignment was one possible option for doing so. 

b) Whatever option was chosen by the President for avoiding the conflict of interest, the potential disruption to Ms. Riza’s career could be recognized with an “in-situ” promotion on the basis of her qualifying record and consistent with the practice of the Bank.

- Contrary to Mr. Wolfowitz's statement of yesterday the Committee did not "decide" that Ms. Riza should be relocated outside of the Bank.  Contrary also to Ms. Riza's statement of yesterday the Committee did not advise that she should be "'relocated to a position' outside the Bank".  The Committee advised that Ms. Riza should be relocated to a position beyond the supervising influence of the President. In addition to a secondment outside of the Bank, Mr. Wolfowitz could have pursued the option of a reassignment within the Bank to a position outside of his supervising influence, such as the Evaluation Office or another Bank body.

- The Ethics Committee was not consulted, nor did it approve, the terms and conditions of the external placement including:

- The large initial pay increase.
- The stipulation for subsequent annual increases.
- The stipulations for subsequent promotions.

- As the Ethics Committee had advised that Mr. Wolfowitz' proposal for recusal from personnel matters was insufficient because it did not include recusal from professional contacts, it is completely incomprehensible that subsequently Mr. Wolfowitz did exactly what he originally had proposed not to do: to engage directly in personnel matters concerning his partner. It would have been perfectly appropriate for him to instruct his relevant Vice Presidents to resolve the issue in accordance with the advice he had received from the Ethics Committee and with the Bank's rules and practices, and then to otherwise recuse himself from the negotiation and approval of the terms and conditions.

- As an important principle, as established by the Articles of Agreement, Board members could not and should not give instructions to staff. Simply put, the Board communicates with the President, and the President / CEO communicates with staff. The Ethics Committee therefore communicated to Mr. Wolfowitz and it was up to the President, as chief executive of the Bank to instruct his respective Vice-President to follow-up on the advice in a) and b) above. However it should have been self-evident that he should not have mixed up this responsibility with instructions on the substance of the package for his partner.  Mr. Wolfowitz himself acknowledged this in his statement of 12 April in which he said he wished that he had "trusted his original instincts" and kept himself "out of the negotiations". In the same statement Mr. Wolfowitz admitted he had made a mistake for which he is sorry. 

Mr. Wolfowitz's statement of yesterday says that it is "inconceivable" that the Ethics Committee did not know the details of the arrangements with Ms. Riza. This reflects a continuing misunderstanding of the Committee's role. The role of the Committee was to advise the President on options for avoiding a conflict of interest. The Committee naturally assumed that the implementation of any decision would take place in accordance with the Bank's rules and normal procedures, and for this reason, once Ms. Riza had left the Bank, communicated back to the Executive Board that the conflict of interest had been dealt with "appropriately".

4. The anonymous "John Smith" e-mails

- All Board members received the anonymous "John Smith" e-mail half a year after the new President came into office. In some ways this gave the impression that this represented protests by many staff at the time on the President’s appointment. I held the view that the Board should handle the allegations in a careful way, not letting itself be influenced by prejudice.

- The Board's Personnel Committee considered the allegation on high salaries of staff members recruited by Mr. Wolfowitz (Messrs. Cleveland, Kellems and Jackson) but did not intervene because matters concerning specific staff are outside its jurisdiction. Concerning Ms. Riza, the letter referred to a promotion. Therefore the Ethics Committee had no reason to review it because it was consistent with its advice.

- I stand by the decision of the Ethics Committee not to intervene in managerial decisions on salary matters and maintain the conclusion that the conflict of interest had been addressed by Ms. Riza's secondment outside the Bank.

- However the formulation of the letter to Mr. Wolfowitz was politely reminding him of his responsibility to adhere to standards of the institution by saying: "that the allegation regarding appointments of Bank staff do not appear to pose ethical issues appropriate for further consideration by the Committee" (italics added). This referred to the cases of Ms. Cleveland, Mr. Kellems and Mr. Jackson as highlighted in the anonymous letter. As to Ms. Riza's case it stated that the letter "did not contain new information warranting any further review by the Committee" (italics added) which referred to the procedural side and did not contain any further judgment. It is important to note that the anonymous letter stated a salary figure but did not refer to other aspects of the terms and conditions in question.

- Efforts to focus attention on this part of the proceedings are therefore simply diverting attention from the responsibility of the President as the CEO to adhere to established standards of the Bank’s staff rules and practices. It should be noted that there is a standing procedure for dealing with staff concerns on ethical matters involving management. This procedure involves the Banks Ethics Office, which is separate from the responsibility of the Board’s Ethics Committee.

5. Conclusion

In conclusion I am truly concerned about the authority and development effectiveness of the World Bank that is such a crucial partner in the fight against poverty. I have been compelled to speak out as some of the facts have been presented totally out of context. This became necessary as from the moment that Mr. Wolfowitz's spokesperson stated in The New Yorker that "All arrangements concerning Shaha ali Riza were made at the direction of the board of directors". Without knowing this I had at a previous moment declined a request to speak with the magazine in the interest of the institution and Mr. Wolfowitz's privacy. I only became involved with the press when it became clear that those speaking for Mr. Wolfowitz were intent on continuing to spread erroneous information on the role and actions of the Ethics Committee.