WOLFOWITZ'S NEPOTISM DEALS BEGAN WHILE AT PENTAGON

by Emad Mekay

(IPS) WASHINGTON -- The nepotism controversy besetting World Bank President Paul Wolfowitz and his long-time partner and colleague Shaha Riza heightened Monday with new revelations that Riza may have had a history of flouting Bank rules while financially benefiting from jobs associated with Wolfowitz's former post at the Pentagon.

In his first public statements on the matter, Wolfowitz said he took full responsibility for decisions taken regarding Riza, but denied any wrongdoing.

According to the Government Accountability Project (GAP), a whistleblower protection group that helped break the story, inside Bank sources familiar with the details of the case have now verified that in addition to receiving two large pay raises in recent years, Riza never applied for nor received permission to work for SAIC, a major U.S. defense contractor, while Wolfowitz was the deputy secretary of defense.

In its March issue, Vanity Fair reported that Riza was earning paychecks as an expert on the Middle East from SAIC when the company was providing intelligence services to the Pentagon prior to the Mar. 19, 2003 U.S. invasion of Iraq.

"This is a gross violation of World Bank staff rules, which require Bank employees to clear extracurricular professional activities with the Outside Interests Committee in order to prevent conflicts of interest," GAP said in a press release.

Such "undisclosed parallel employment" is usually grounds for dismissal from the Bank, but it does raise serious concerns of conflicts of interest, GAP said.

"Considering that Riza was reportedly romantically involved with Wolfowitz at the time, that the Iraq war was imminent, that SAIC was a defense contractor, and that the World Bank had active projects in Iraq, multiple conflicts of interest probably existed," said GAP International Program Director Bea Edwards.

The disclosure comes only days after news surfaced that Riza had received two unprecedented pay raises since Wolfowitz came to office, provoking some Bank staff to express disappointment at the apparent display of favoritism in an institution that professes integrity and good governance.

In his statement, Wolfowitz said that he made the decision to transfer Riza to an external assignment at the U.S. State Department only after consulting with the Board's Ethics Committee.

"As president of this institution, I accept full responsibility for the actions taken in this case," he said in the statement addressed to the Bank staff. "I have already indicated to the board my intention to cooperate fully in their review of the details of the case."

However, Wolfowitz cited Bank rules providing for "the right of every staff member to the confidentiality of his or her records" as a caveat for his cooperation.

His statement described Riza's situation as "exceptional and unprecedented" and said her assignment was in fact involuntary and would last for length of his tenure at the Bank, instead of the normal three years.

But the Government Accountability Project argues that Riza's position at the State Department was never in question and that the unexplained salary hike she received when she moved there, along with a subsequent raise, are the crux of the matter.

"Wolfowitz makes no mention of this, yet these decisions were his," notes the statement on GAP's website.

Payroll data obtained from the World Bank and made public by GAP showed that Riza, a communications officer in the Bank's Middle East Office, received a $47,300, or 35.5 percent, raise to $180,000 after Wolfowitz arrived.

This raise was followed last year by another $13,590 raise, or about 7.5 percent, to a total salary of $193,590 net of taxes.

"The Board did not recommend that Wolfowitz award a salary increase of such dimensions to Riza, and this is why the Board is looking into the issue," said GAP.

Bea Edwards said that questions of nepotism still hovered over the Bank.

"All that we are really saying is that there was a violation of World Bank rules in 2002 and 2003, that this woman has had a history of favoritism in places associated with Wolfowitz's authority," Edwards said. "She has a career that tracks very closely in terms of benefiting from places where Paul Wolfowitz is in authority."

Wolfowitz had kept mum on the issue for the past two week and appears to have addressed staff in his message only after the Board of Directors said they will probe the matter.

In a message seen by IPS, the 24-member board said last week it "decided to acquire all the information related to this matter and will respond to the issues raised as soon as possible, in accordance with their responsibilities as Executive Directors of the Bank Group."

Wolfowitz, a controversial figure for his neo-conservative views and key role in planning the invasion of Iraq, has had rocky relations with many of the Bank's employees since he first arrived at the Washington headquarters in 2005.

Complaints have surfaced that he appointed former aides from the Pentagon at the expense of better qualified career Bank employees. Several staff members told IPS that they want the board to question him personally about his hiring and promotion practices.

Since taking office, Wolfowitz has spearheaded a campaign to fight corruption, cronyism and promote good governance in Bank projects and loans in developing nations. This latest controversy already threatens to discredit the campaign.