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Wolfowitz pledges graft fight

Wolfowitz says he is willing to withhold funding or halt the approval of loans for some World Bank projects.

india Updated: Jan 25, 2006 13:00 IST

World Bank President Paul Wolfowitz says he is willing to withhold funding or halt the approval of loans for some World Bank projects if there are concerns about corruption in a country.

In an interview late on Tuesday, Wolfowitz said he had stopped several bank projects, including one in Bangladesh, and was scrutinizing two project loans to Kenya plagued by corruption.

He said the bank, the globe's biggest development institution, lending about $20 billion a year to poor countries, should be more willing to review or reject projects when corruption concerns arose.

"We are going from an era where nobody wanted to say no to anything, to an era when people have to be encouraged that if there are serious problems, they bring them forward, and saying no is a good thing," Wolfowitz said.

Just eight months since his appointment as World Bank chief, Wolfowitz has caused unease among some employees over his management style. They say an air of distrust and a lack of consultation has prompted the resignation of senior officials.

This week the World Bank Staff Association raised concerns over a lack of transparency in senior staff appointments by Wolfowitz, including that of Suzanne Rich Folsom, who has Republican ties, as head of the bank's anti-corruption unit.

In a letter to its members, the staff association said it recognized it was Wolfowitz's prerogative to appoint managers.

But "certain positions do not lend themselves to this type of recruitment and we should hope that such critical positions be filled in a transparent manner, through competitive selection and against clear terms of reference," it said.

Wolfowitz defended his appointment of Folsom, citing her wide experience as an ethics attorney and "the right kind of seriousness".

He denied that her appointment was political.

"It has absolutely nothing to with Republican ties," Wolfowitz stressed, adding that the Department of Institutional Integrity she heads "clearly needed cleaning up", with a backlog of 287 cases, including 283 that had been open more than a year.

"Some of it is just a transition from old management to new management and ... grumbling is not a surprise," he said of the criticism.


Wolfowitz said he recognized there was "enormous anxiety" among staff and some directors of the board of member countries over the appointment of a successor to the bank's former number two official, Shengman Zhang, now with Citigroup Inc.

Last month Wolfowitz named a committee headed by World Bank treasurer Graeme Wheeler to find candidates from developing countries to replace Zhang. Wheeler, a former New Zealand treasury official, is also leading a committee on anti-corruption standards.

"People should not be afraid. People are not going to be held to account for a standard that didn't apply in the past," Wolfowitz said of his anti-corruption drive. "This is not a witch hunt".

In an interview broadcast on the World Bank's internal Web site on Monday, Wolfowitz said some "turbulence" was to be expected from an institution in transition.

"One doesn't like turbulence, but the standards have changed and it's going to take a while to adjust," he said, adding that combating corruption also meant tackling a "few bad apples" among the bank's staff.

"The reputation of this institution is perhaps its strongest asset and it is the reason why so many countries trust us with their money and trust us to run programs, so preserving the reputation of the place is important," he said.

"Also, no country is perfect and you can get a lot done despite this burden (of corruption), but it's a huge tax on development and in some African countries made development impossible."

First Published: Jan 25, 2006 13:00 IST