Pressure increases on Wolfowitz to go: report

LONDON (Reuters) - A group of top former World Bank executives has urged Paul Wolfowitz to resign, as the bank’s watchdog warned his actions were undermining the ability of the institution to carry out development work.

World Bank President Paul Wolfowitz looks down during a closing news conference at the final day of the International Monetary Fund and World Bank spring meeting in Washington April 15, 2007. A group of top former World Bank executives has urged Wolfowitz to resign, as the bank's watchdog warned his actions were undermining the ability of the institution to carry out development work. REUTERS/Yuri Gripas

The 42 senior executives wrote a letter to the Financial Times, published on Monday, advising Wolfowitz to give up the presidency for the good of the bank following a controversy over the promotion of his girlfriend.

“We believe that he can no longer be an effective leader,” said the letter, which was signed by former World Bank No. 2 under Wolfowitz Shengman Zhang, amongst others.

“He has lost the trust and respect of bank staff at all levels, provoked a rift among senior managers, developed tense relations with the board, damaged his own credibility on good governance -- his flagship issue -- and alienated some key shareholders at a time when their support is essential for a successful replenishment of the resources needed to help the poorest countries, especially in Africa.”

The letter concluded: “There is only one way for Wolfowitz to further the mission of the bank: he should resign.”

Upping the pressure on Wolfowitz, a former deputy defense secretary who helped plan the U.S.-led invasion of Iraq, the Independent Evaluation Group (IEG) issued a critical statement that was carried on the FT’s Web site.

The newspaper said the “formal statement” would be considered by the World Bank’s board this week.

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“The institution is at a critical juncture where its development effectiveness is being jeopardized by serious governance problems that have recently come to light,” the IEG said. “A proper and quick resolution of this problem is vital for the organization’s continued effectiveness in development.”

The watchdog warned: “The recent chain of events raises concerns in these respects. Indications are that the ability of staff -- particularly those working in client countries -- to carry out daily interactions with clients, as well as the institution’s ability in convening partners, are eroding. Trust is being damaged.”

The IEG advised “swift changes in management and a concerted effort to restore credibility”, according to the memo, dated April 20 and addressed to the board of executive directors.

Sources have told Reuters Wolfowitz’s fate will be determined this week when a bank committee reports on whether he abused his position or committed ethical lapses as it looks at the promotion for Shaha Riza, a bank employee moved to an outside job because of her relationship with Wolfowitz.

World Bank staff representatives are adamant their leader should resign. Last week, one of his two top deputies told him he should quit for the well-being of the bank.