nepotism at WB?

Doug Henwood dhenwood at
Wed Mar 15 11:28:00 PST 2000

[Circulating within the World Bank. The Washington Post article mentioned in the memo is appended.]

To All Staff:

By now, you will have read of the appointment of Mr. Nicholas Stern as the

Bank's new Chief Economist. As you may also know, Mr. Stern is the brother of

Human Resources Vice President Richard Stern. This appointment has been made

in direct violation of Staff Rule 4.01.

Staff Rule 4.01, para 4.03 (a) states: The following close relatives,

including relatives by adoption, are not eligible for employment: ..?Brother..

There is no provision for exceptions to this rule. Para 1.03 states: Except

where otherwise specified, the provisions of this Rule apply to all staff

members. Despite this rule, Mr. Wolfensohn recommended to the Board that Mr.

Nicholas Stern be appointed, overriding Staff Rule 4.01.

This is not the first time that management has blatantly ignored a staff rule

that it rigorously enforces on the rest of us. Those with long memories will

recall that Mr. William J. Cosgrove, who was also VP for Human Resources,

sought elective office in his home country of Canada while still in the Bank

and while charged with enforcing the staff rules which, of course, expressly

forbid this. Mr. Cosgrove resigned when this became known to the rest of Bank


Staff members have strongly raised two important issues with the Staff

Association about the appointment of Mr. Stern as Chief Economist. The first,

of course, is their grave concern that management has clearly shown with this

action that "the rules only apply to the 'little people' and not to those in

positions of power". This is especially disturbing to many staff since, in

our discussions with management, the SA has been frequently asked why the staff

does not trust management. It is, at least in part, because there seems to be

two sets of rules--one for us and one for them. Several staff members say

that their family members have been denied permission to work for the Bank

expressly because of this Rule 4.01. And there have been instances recorded

when some staff have, in fact, been fired because they violated this rule.

Dual standards of this kind simply cannot be part of the Bank.

The second issue is even more important and relates to our work on corruption.

Mr. Wolfensohn has, to his credit, strongly pushed the issue of corruption.

There is now a corruption hot line, the issue is on the agenda at the

international level, and the Bank is taking a strong stand against the issue.

Nepotism is, of course, a part of corruption. Many of the staff who have

communicated with the SA on this issue believe that the appointment of Mr.

Stern easily lends itself to a perception of nepotism and corruption in the

Bank, as suggested in a March 10th article in The Washington Post entitled: A

Case of Nepotism?


The Staff Association must express its deep disappointment that the Bank Group

management and the Board approved this appointment. The SA believes that it

must disassociate itself from this appointment because it represents a flagrant

disregard for very important and time-tested rules of the Bank. It also

believes that if this appointment stands it will badly tarnish the image of

the Bank, threaten the Bank by exposing staff to pressure on appointments of

relatives, and ultimately demean the ability of staff to speak in a credible

way with clients about corruption and hamper our work on issues of governance.

With deep regret, therefore, and without comment on the talents of Professor

Stern, the SA believes that the offer of the Chief Economist's job to Professor

Stern must be retracted.

Morallina Fanwar George


Staff Association


Washington Post - March 10, 2000

A Case of Nepotism?

World Bank President James D. Wolfensohn announced the appointment of Nicholas H. Stern as senior vice president and chief economist Wednesday to replace the controversial Joseph Stiglitz, who was part of the search committee. The high-profile job involves overseeing economic policy behind the bank's lending and other operations. For five years, Stern served as chief economic counselor to Horst Koehler, president of the European Bank for Reconstruction and Development and Germany's latest candidate for managing director of the International Monetary Fund.

But there is a problem. Dare we say nepotism?

Stern's brother, Richard, is the World Bank's vice president for human resources. Bank policy prohibits the appointment of the brother of a current staff member under Staff Rule 4.01. A memo to bank vice presidents from Andrew Ewing, director of Wolfensohn's office, explained: "Jim decided to vary the application of the rule in this particular case," noting that Richard Stern "has had no involvement" in the search or selection and "will have no input with respect to his [brother's] induction."

A bank spokesperson said yesterday that Wolfensohn told his board that while he took the rule of sibling ineligibility seriously, Stern's qualifications prevailed. The human resources office will not handle any personnel matters in Stern's case, which will instead go through Wolfensohn's office, she added. "Most significantly, the importance of this position cannot be overstated. It is therefore imperative that the bank appoint the single most qualified person available . . . I know you will agree," Ewing's memo said. Do they?

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