Wolfowitz’s Golden Parachute

Before Robert Zoellick is confirmed as president of the World Bank Group, his bosses on the World Bank’s board should ask him a simple question: Are you, like your predecessor Paul Wolfowitz, aiming to get rich off of eliminating poverty?

While the scandal involving the pay raises given to longtime girlfriend Shaha Riza proved to be Wolfowitz’s downfall, his own extraordinary compensation should have raised just as many eyebrows. After lengthy negotiations with the institution in 2005 (when he reportedly asked for a salary of $1 million), Wolfowitz got a salary 29% higher than that of his predecessor, James Wolfensohn. Even accounting for cost of living increases, his salary of over $390,000 (Wolfensohn got $302,000) is excessive. And that’s not counting all the money he will now get in severance pay.

Wolfowitz’s contract allows for extremely generous compensation in the event of early termination. It states:

“At the end of your term, or if your service is terminated by the Executive Directors, or if you resign or die in Bank service having served for at least one year under this agreement, The Bank will pay a termination allowance. The termination allowance will be an amount equal in amount to your salary for one year, minus the amount of any income you receive from regular and continuous employment of not less than six months’ duration during the year following the end of your service.”

We know that Wolfowitz has earned $390,000 a year, so that’s the amount of the bonus that he’s already getting. There are also rumors of a side letter (not in the publicly available contract) that guarantees him yet another year’s salary as compensation if he stays on beyond the two-year mark. While those following the story have been unable to confirm the existence of such a letter, it hasn’t been publicly denied since the rumor started about a month ago.

Wolfowitz’s suspicious departure date – over a month from his resignation, even though he can’t effectively participate in any management decisions – is sure to add fuel to this rumor’s fire.

Luxurious Salaries

Whether Wolfowitz is getting $400,000 or $800,000 out of the deal, this is a travesty and reflects an institution that offers its staff (not just its president) luxurious salaries and benefits while the number of people globally without access to basic services like clean drinking water, access to lifesaving medicines and adequate nutrition continues to rise. Visitors to the World Bank’s headquarters in Washington are greeted by the words: “Our Dream is a World Without Poverty.” Perhaps it should read: “Our Dream is a World Where Our Staff Live in Luxury”

When compared with the ample pay packets of Bank staff, the amount of money available for national governments to use on desperately needed social services is all the more sobering. According to the World Bank’s flagship publication (World Development Indicators), Liberia spends an average of $4 per person on healthcare. Zambia spends less than $8 per student on primary education. The Wolfowitz payout could have provided healthcare for 10,000-20,000 Liberian citizens or educated 5,000-10,000 Zambian children. But the World Bank believes it is a better use of that money to give it to a discredited neocon who is leaving the institution in disgrace.

And that’s not all. Riza wasn’t the only Wolfowitz crony to benefit personally from his presidency. Others who Wolfowitz brought to the World Bank from the Bush administration such as Kevin Kellems, who resigned in disgrace a week before his boss did, received astronomical salaries and guarantees of promotions. Wolfowitz’s own private security has cost the World Bank about $5 million a year.

Others who have taken the role of World Bank president have approached the job with an element of service; you’re there to serve the world’s poor, not to make a few bucks. These petty negotiations indicate that Wolfowitz was more interested in asking what the Bank could do for him, rather than what he could do for the Bank. Zoellick, another neoconservative with heavy private sector ties should make it clear that he will not follow in Wolfowitz’s footsteps.

Sameer Dossani is the Director of 50 Years Is Enough: U.S. Network for Global Economic Justice and a frequent contributor to Foreign Policy In Focus.