Bank staff works in a different world

Marketplace Staff Apr 30, 2007
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Bank staff works in a different world

Marketplace Staff Apr 30, 2007
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KAI RYSSDAL: Paul Wolfowitz spent the day trying to hold onto his job. The beleaguered president of the World Bank told a special committee he acted in good faith when he gave his girlfriend a promotion and a raise. And that the incident is being used in a smear campaign to get rid of him. The bank’s board is supposed to make a decision about Wolfowitz’s fate later this week.

Commentator Amity Shlaes says you’ve got to put it all in context.


AMITY SHLAES: One-hundred-and-ninety-three-thousand dollars was the number that got Shaha Riza and Paul Wolfowitz in trouble in the first place. People say it’s a girlfriend salary. By that they mean a mysterious wage not quite tethered to market reality. Colleagues at the Bank were irate.

But maybe the important fact here wasn’t that Riza got a girlfriend salary. It’s that hundreds of World Bank colleagues also do. The bank employs 12,000 people. A senior professional starts at $92,000 and can go up to $168,000. That’s what a congressman makes.

That was also Riza’s pay range. She was reassigned to the State Department after Paul Wolfowitz arrived at the bank to avoid a conflict of interest. But she stayed on the bank’s payroll. So, the caricature of Riza receiving unheard-of compensation is inaccurate.

Next come managers. They can make more than $226,000. Some 1,000 employees are in that range. Riza was on the shortlist to become a manager before she hit the news pages.The next salary level includes directors or senior advisers. They earn as much as $269,000.

But that’s not all. If you are a non-American bank employee, you take that salary home tax-free. Non-Americans make up three quarters of the bank staff. Did I mention the private school tuition subsidies that drive the rest of Washington crazy?

Now, if the Bank were a private bank, it would be the bank’s business alone what it paid. But World Bank shareholders are governments — including our government. So there’s nothing wrong with taking a good look at every aspect of the World Bank.

We know why World Bank staff are targeting Wolfowitz: They want to replace him with someone they consider more competent. But don’t discount another factor at the bank. Insiders are spotlighting Wolfowitz to keep the spotlight off themselves.

RYSSDAL: Amity Shlaes is a Bloomberg News columnist.

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