World Bank Staffers Protest Appointments

By Paul Blustein
Washington Post Staff Writer
Tuesday, January 24, 2006

Tensions flared yesterday between World Bank President Paul D. Wolfowitz and bank employees, as the bank's staff association criticized some of Wolfowitz's recent appointments and Wolfowitz fired back that he was trying to correct lax enforcement of the bank's internal corruption rules.

The controversy is the starkest sign of discontent among the staff nine months after President Bush chose Wolfowitz to head the bank. Wolfowitz is a former deputy defense secretary best known for his role in planning the invasion of Iraq.

In a letter circulated yesterday evening to bank staffers, the staff association chair, Alison Cave, raised pointed questions about last week's appointment of Suzanne Rich Folsom, a bank official with Republican party ties, to head the Department of Institutional Integrity, a unit that investigates misconduct and corruption at the bank. The letter also cited the recent naming of Kevin S. Kellems, a former aide to Vice President Cheney, as the bank's top communications strategist.

Their selection, the letter suggested, had been undertaken without a properly open and competitive process, potentially undermining the bank's ability to persuade developing countries to adopt transparent and clean procedures in hiring and procurement. "We are concerned . . . that the positions were not filled in accordance with established recruitment procedures, which exemplify our commitment to good governance," the letter said.

Wolfowitz strongly disputed such criticism, saying in an interview that staffers had grown too "comfortable" with the laxness of the Institutional Integrity Department, which he said had been run with "very puzzling negligence" until Folsom took over as its acting director in October. Although he emphasized that the overwhelming majority of bank staffers are honest, he said, "I'm aware of a particularly serious set of allegations" involving a senior bank official.

Wolfowitz declined to name the individual under suspicion, because the investigation is continuing. But internal bank documents obtained by The Washington Post show that the watchdog unit is investigating Mohamed Muhsin, who retired three months ago as the bank's chief information technology officer. Sources familiar with the investigation said it involves alleged improprieties in the bank's procurement of technology services.

Muhsin's attorney, Joshua Hochberg, said Muhsin "is shocked, as are his colleagues, that unfounded rumors have circulated at the end of his 17 years of dedicated service during which his integrity was never questioned." He added that Muhsin expects "full exoneration."

With a worldwide staff of nearly 10,000, the World Bank lends about $20 billion annually to developing nations for projects aimed at reducing poverty. To the relief of the staff and most of the executive board representing the bank's 184 member countries, Wolfowitz has not significantly changed the policies of his predecessor, James D. Wolfensohn. But disquiet has mounted in recent weeks over a small group of high-level American staffers with GOP connections -- Folsom and Kellems prominent among them -- with whom Wolfowitz consults on nearly all major decisions.

The most powerful is Robin Cleveland, who worked with Wolfowitz in her capacity as the top national security specialist at the Office of Management and Budget and now serves as his chief adviser. Folsom is an attorney specializing in ethics issues who came to the bank in 2003, prior to Wolfowitz's arrival; she worked for various Republican causes and for Bush's parents during the 1980s.

Cave's letter said that "the overwhelming sentiment expressed [by staff] has been one of dismay" over the recent staff announcements. Although the president has considerable prerogative to appoint senior managers, she said the bank usually fills even junior positions only after open competitions that winnow candidates down to short lists. "It is vital that we go through the same due process for those [jobs] of such critical importance if we are to have credibility in the work we do outside the institution," she wrote.

Wolfowitz said that his selection of Folsom was aimed at putting muscle behind his resolve to set the highest standards for the bank's own ethical practices. "The reputation for financial probity of this institution is perhaps its greatest asset," he said, because the fight against corruption is "integral" to promoting development in poor countries.

He said that when he took the bank's helm he was troubled by a backlog of cases -- nearly 400 in all -- that had accumulated under the Institutional Integrity Department's previous chief, Maarten de Jong. There was also "a puzzling pattern with respect to sanctions" because the department had failed to crack down severely enough, in his view, on firms found to be engaged in misconduct involving bank-funded projects.

Although a search firm had found a number of candidates to succeed de Jong, who was leaving, none of them seemed as qualified to him as Folsom, Wolfowitz said, so he named her as acting head of the unit in October. He was so impressed with her performance that he made her appointment permanent.

"The 9,000-plus people who are doing what they ought to be doing should understand that I have great confidence in them," Wolfowitz said. But "it seems to me," he added, that the discontent about Folsom "comes from people who had gotten comfortable with an [Institutional Integrity] unit that had 387 open cases. I have a real problem with that."

He said that making the unit more effective may make some people unhappy, "but I'm doing it because it's critically important to the development process and I think that if properly explained, 99.5 percent of the staff would agree."

"One of my goals would be to have the Institutional Integrity unit viewed as an ally" of the people who work on the bank's loans, he said. "Not someone watching over them, but someone helping them watch over what we do. We're all in this together."

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