Wolfie's response

Doug Henwood dhenwood at panix.com
Wed Mar 15 11:28:50 PST 2000

[WB president James Wolfensohn's response to the nepotism complaint.]

Dear Colleagues,

I have read the statement issued by the Staff Association today regarding the appointment of Nick Stern as Chief Economist. Obviously I am very distressed by the statement and by some of the conclusions which appear to have been drawn by some members of the staff.

Certainly had I known of the depth of feeling of the staff on this issue I would have been more sensitive to the need for advance information on my decision. Although a kiosk announcement went out, it clearly did not do enough to address staff concerns, so let me first of all express my sincere regret that this has happened, and let me try and put the record straight, as well as indicate to you why I took the action that I did.

The story goes back to the resignation of Joe Stiglitz. At that time, I asked Joe, Amartya Sen, the Nobel Prize-winning economist, and Jeffrey Goldstein, one of our MDs and formerly an academic economist, to find for me the best economist in the world that they could recommend for this job. I told them I wanted no part of the search, that they should conduct it and that they should give me a name that was unanimously recommended by them.

A couple of months went by during which I am told that they considered over fifty names. After reviewing their top candidates in more detail, they reached the unanimous conclusion that Nick Stern was the choice. Absolutely no one else at the Bank had anything to do with the process; they reported directly to me. I consulted individually with each of them and was given a totally consistent account. Their recommendation was unanimous and enthusiastic.

I knew of the existence of Staff Rule 4.01 and was advised by the General Counsel that under Article 5, Section 5 of the Bank?s Articles of Agreement, I, as President, and subject to the general control of the Executive Directors, had the legal right to waive the application of any staff rule when it is in the best interests of the Institution to do so. I concluded on this occasion, and was supported by the Board, that the circumstances were such that this is a case where I should exercise my discretion.

I believed the integrity of the process and the quality of the individual would be sufficient to rule out the reality or perception of nepotism or corruption. I can assure you that I stand as strong as ever against them. I regret that I was not better informed about a possible staff reaction which would have prompted me to have discussed the matter and my decision with the Staff Association. With the best possible will and surely with no favoritism, I made my decision.

I have announced a recommendation and have received the concurrence of the Board after an explanation of all the facts. Nick Stern is the best person to take on this critical job, and I am convinced that the selection process warrants my unique decision to waive this staff rule. In the coming days, Nick will be here and it is my hope that many of you will have a chance to meet him. In these special circumstances, I would simply ask you to understand my judgment. I shall be discussing the matter again with the Staff Association in the coming days.

Jim Wolfensohn

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