Wolfowitz top aide in fresh controversy/Europeans offer U.S. a deal to get Wolfowitz to quit

Wolfowitz top aide in fresh controversy
By Krishna Guha and Eoin Callan in Washington
Copyright The Financial Times Limited 2007
Published: May 8 2007 03:00 | Last updated: May 8 2007 03:00


Paul Wolfowitz's closest aide was involved in crafting an apparently misleading public statement on the Shaha Riza secondment for dissemination by World Bank spokespeople on an anonymous basis, the Financial Times has found.

The disclosure regarding Robin Cleveland came as the panel investigating Mr Wolfowitz's role in awarding pay and promotion benefits to Ms Riza, his girlfriend, sent a copy of its findings to the bank president, and a second top aide, Kevin Kellems, resigned from the bank. The bank's board meets today to discuss the panel's report.

Mr Kellems told the FT: "In the current environment sur-rounding the leadership of the World Bank group, it is very difficult to be effective in helping to advance the mission of the institution." Mr Kellems paid tribute to bank staff in his resignation statement: "I have tremendous respect and admiration for the bank staff and management."

Ms Cleveland and Mr Kellems joined the bank with Mr Wolfowitz from the Bush administration and have been at the heart of his presidency, though in recent months they clashed over strategy.

Ms Cleveland met Marwan Muasher, the newly arrived director for external relations, on April 4 to discuss how to respond to leaks about the terms and conditions awarded to Ms Riza.

They agreed on a statement that was to be briefed on an anonymous or "background" basis by senior bank officials. This included the apparently misleading claim that "after consultation with the then general counsel, the ethics committee of the board approved an external assignment agreement which was reached with the staff member".

Mr Muasher confirmed the agreed text with Ms Cleveland in an e-mail, a copy of which has been seen by the FT, and its authenticity has been attested to by two bank officials. The statement was then briefed to the FT and other media organisations by senior bank officials.

The claim that the agreement was approved by the ethics committee after consultation with the general counsel was immediately disputed by Roberto Danino, then general counsel, and Ad Melkert, then chairing the ethics committee.

The interim report by the panel found no evidence that the terms and conditions "had been commented on, reviewed or approved by the ethics committee, its chairman or the board".

The panel also said it was told by Mr Danino "he was not involved in any way in the implementation of the ethics committee advice".

Neither Ms Cleveland nor Mr Muasher responded to a request for comment. In a letter to the panel last week, Mr Wolfowitz said he assumed the ethics committee was aware of the terms and conditions because it decided a later anonymous complaint about Ms Riza's pay "did not contain new information warranting further review".

He said: "I relied on this letter when I advised my staff that they could tell the press that the committee had reviewed the matter."

At the time of the April 4 meeting with Ms Cleveland, Mr Muasher, a former deputy prime minister of Jordan, had been at the bank for only 2½ weeks.

Ms Cleveland was Mr Wolfowitz's senior aide at the time of the secondment and her signature is on some documents relating to the secondment arrangements.

Europeans offer U.S. a deal to get Wolfowitz to quit - World Bank panel says he violated rules; top aide quits
By Steven R. Weisman
Copyright © 2007, Chicago Tribune and The New York Times
Published May 8, 2007

WASHINGTON -- Leading governments of Europe, mounting a new campaign to push Paul Wolfowitz from his job as World Bank president, signaled Monday that they were willing to let the United States choose the bank's next chief, but only if Wolfowitz stepped down soon, European officials said.

European officials previously had indicated that they wanted to end the tradition of the United States picking the World Bank leader. But now the officials are hoping to enlist American help in persuading Wolfowitz to resign voluntarily rather than be rebuked or ousted.

The goal, they said, is to avert a public rupture of the bank board over a vote, possibly later this week, to sanction Wolfowitz. Even if the vote is a reprimand, they said, it could effectively make it impossible for him to stay on.

The Europeans worked to arrange a quick exit for Wolfowitz as a special bank committee concluded that he was guilty of breaking rules barring conflicts of interest in arranging for a pay raise and promotion for Shaha Ali Riza, his companion and a bank employee, in 2005.

The decision was sent to Wolfowitz on Sunday night after a month of turmoil over the situation. The panel's findings were not made public, but people familiar with the report said it reviewed documents and testimony before concluding that Wolfowitz had breached his obligations in arranging for Riza's reassignment from the bank to the State Department.

"What I'm hearing from colleagues is, 'Let's not push the Americans too hard,'
" said a senior European official involved in policy on the bank. "We want to avoid a split between the United States and its European allies. We're willing to say: 'OK, you find a capable American to run this institution and we can live with that.'
"
Key adviser steps down

In another sign of Wolfowitz's difficulties, his top communications aide, Kevin Kellems, resigned Monday, saying that "the current environment surrounding the leadership" at the bank made it "very difficult to be effective in helping to advance the mission of the institution."

Kellems said in a statement that he had "tremendous respect and admiration" for the bank's staff but made no mention of Wolfowitz, with whom he had a close association when the bank president was deputy defense secretary.

European officials did not disclose details of how they were communicating with the Bush administration, but they said the suggestion that Wolfowitz resign in return for having an American successor was first raised with Treasury Secretary Henry Paulson Jr. in mid-April.

Well before Wolfowitz took office in 2005, leading European countries had begun agitating to discard the custom that had existed since the 1940s of the United States choosing the bank president. The United States has that prerogative because it contributes the largest share of the bank's financing.

Bush administration officials say that American leadership of the World Bank is essential to maintaining influence over its policies and priorities, including which bank programs and countries receive financing. The officials fear that if the bank is headed by someone lacking the confidence of Congress and Americans in general, it could lead to a breach similar to the one between the former UN secretary general, Kofi Annan, and critics on Capitol Hill.


Credibility said 'beyond repair'

European countries customarily choose the chief of the bank's sister institution, the International Monetary Fund, though a European-American conflict has arisen there as well. Its focus is a drive supported by the Bush administration to reduce the European voting share in favor of China and other fast-growing countries.

The United States has 16.4 percent of the voting share at the 24-member World Bank board that chooses the president. Europeans have twice that share if they stick together, which many bank officials say they have signaled they are willing to do to remove Wolfowitz.

The senior European official said Wolfowitz's credibility was now "beyond repair."

That view has echoed through the bank's ranks. Hundreds of bank employees assembled at an auditorium Monday to hear Mark Malloch Brown, the former top aide to Annan at the United Nations, say that with Wolfowitz in charge, the bank's anti-poverty agenda was "hugely at risk" because Europeans were balking at the financing.

The committee's finding of guilt against Wolfowitz was tempered by a finding that the bank shared at least some blame for Wolfowitz's failure to comply with its rules. According to people familiar with the report, it said the advice to Wolfowitz from ethics officials at the bank was less than clear and evidently subject to misinterpretation. Nevertheless, the report was clear in its conclusion that Wolfowitz breached his obligations.

Wolfowitz's lawyer, Robert Bennett, said the bank was giving Wolfowitz too little time to rebut its conclusions before a board vote later this week.

"I don't feel it would be appropriate to share the report, but I am deeply troubled that they have only given us 48 hours to respond," he said. "This is not fair to Mr. Wolfowitz."