Ethics and the World Bank

Paul Wolfowitz was the head of the World Bank from June 1, 2005 through mid-2007. At the time he became president of the bank, Mr. Wolfowitz was romantically involved with an executive at the bank, Shaza Riza. Mr. Wolfowitz went to the board with an ethics question about their relationship and her employment, and the bank board advised that Ms. Riza be relocated to a position beyond Mr. Wolfowitz’s influence because of their relationship and also because she could no longer be promoted at the bank. On August 11, 2005, Mr. Wolfowitz wrote a memo to Xavier Coll, the bank’s vice president of human resources and suggested the following: â??I now direct you to agree to a proposal which includes the following terms and conditions: The terms and conditions included her future at the bank when Mr. Wolfowitz was no longer heading it as well as an obligation to find her other employment. Ms. Riza now earns $193,590 per year at a nonprofit organization, following a stint at the State Department at World Bank expense. She earned $132,000 at the World Bank (a salary that was tax-free because of diplomatic status). Evaluate Mr. Wolfowitz’s conduct.

a) What ethical issues do you see?
b) Did Mr. Wolfowitz act properly?
c) What should the board have done?
d) The overarching goal of Mr. Wolfowitz’s tenure as head of the World Bank has been eliminating corruption in all countries that deal with the bank. What effect does his personal conduct have on that goal?

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