-Caveat Lector-
"By tradition, the president of the World Bank is
required to be a citizen of the United States, while the
managing director of the International Monetary Fund (IMF),
the Bank's SISTER organization, must be European."
Who is James Wolfensohn?
World Bank president James Wolfensohn is a man of charm,
talent and managerial skill. When he speaks in public, he
conveys an impression of sincerity and commitment. He has
convinced many people that the World Bank under his leadership
will finally tackle poverty and environmental degradation and
work for a better world.
The test of his sincerity lies in the actual performance of
the Bank. Since he has now been at the helm for quite some time,
there is a substantial record to examine. In fact, the Bank
continues to lend large sums for OIL exploration, road building,
big dams and the like. So it remains environmentally unfriendly
and it is hard not to conclude that its President's environmental
commitment is largely rhetorical. The Bank also has recently
promoted harsh "structural adjustment programs," pension
privatization measures and other attacks on the poor. By all
measures, income inequality worldwide continues to widen. So it
would appear that Mr. Wolfensohn's "commitment" to reduce poverty
is not very deep either.
In March 1997, The Nation magazine published an article that
reported that the Bank's lavish remodeling --at a cost of $314
million-- includes gold leaf ceilings and rare woods of the sort
that are to be found only in the most elegant business offices.
Though this work began before Wolfensohn took over the helm of
the Bank, he does not appear to have introduced more modest plans
in the meantime, even while wringing millions in interest charges
from the world's poorest countries.
To understand Wolfensohn, it helps to know something about
him besides his engaging smile, his shock of unruly white hair,
and his carefully-cultivated image as a committed social
reformer.
In fact, he is better understood as one of the world's
richest men and sharpest financial operatives. About his
personal fortune, the New York Times of September 14, 1997 said:
"He enjoys the trapping of great wealth, like a private jet and a
lavish vacation home in Jackson Hole, Wyoming."
Wolfensohn was born in Sydney, Australia. In 1959, he took
an MBA degree from Harvard Business School. He then he rose very
rapidly in the financial world and developed a reputation as
smart and ruthless. He held high posts in brokerage and
investment firms in Australia from 1959 to 1967, when he moved to
London as a top officer of the Henry Schroder investment banking
group. Concern for the poor does not seem to have been on his
list in those years.
In 1970 he became head of Schroder's operation in New York,
a post he held through 1976. He then became an executive partner
in Salomon Brothers, the hard-charging bond and investment house.
At Salomon he played a key role in the bailout of the Chrysler
Corporation by the United States government. His Chrysler play
brought him into the world of official policy in Washington,
where he caught the eye of World Bank President Robert McNamara.
Rumored to be on the short list as McNamara's successor,
Wolfensohn speedily arranged to become a U.S. citizen so as best
to qualify for the post. When the Bank passed him up, he left
Salomon in 1981 to set up his own firm, James D. Wolfensohn Inc.
The new firm was a key player in the hot mergers and
acquisitions game on Wall Street during the 1980's (the firm has
since been bought by Banker's Trust). Wolfensohn built up his
own portfolio along the way and by the end of the decade, he was
a millionaire many times over and a close compatriot of the
Rockefeller clan.
To his credit, Wolfensohn is more than just a money shark.
He plays the violin and is a cultured person who appreciates the
arts. He has served on the board of directors of a number of
public charities, like the Kennedy Center for the Performing Arts
and the Rockefeller Foundation. He has also sat on the board of
a number of private corporations, like communications giant CBS.
And he belongs to the ultimate insider institutions like the
Bilderberg Group and the Council on Foreign Relations.
Let us not judge Wolfensohn unfairly, but let us not close
our eyes to who he is and how his career and his millions have
shaped him. If he is a Wolf in sheep's clothing, would that
really be so surprising, for a President of the World Bank?
___________________________________________
1995: James Wolfensohn Selected President of World Bank
by Henry Bofinger
The World Bank's Board of Executive Directors unanimously
selected James Wolfensohn on March 16 to become the institution's
ninth President. Wolfensohn will assume the presidency June 1,
succeeding Lewis Preston who is retiring because of ill health.
Wolfensohn, 61, is an international investment banker who
founded his own firm in 1981. Since 1990, he has been Chairman
of the Board of Trustees of the John F. Kennedy Center for the
Performing Arts in Washington, D.C. He is Director of both the
Business Council for Sustainable Development and CBS Inc. and
Chairman of the Institute for Advanced Study at Princeton
University.
His selection to the Bank presidency follows his nomination
by the White House earlier this month, during which U.S.
President Bill Clinton said, "James Wolfensohn has already had an
extraordinary career in finance and public service, spanning four
decades and three continents... [He] has a long-standing, broad
and active interest in the developing world and development
issues... At a time when the role and mission of and funding for
the World Bank and other international financial institutions are
major issues, the deep respect Jim Wolfensohn already enjoys will
allow him to serve as a forceful advocate for the Bank and
development issues."
Retiring Bank President Lewis Preston issued a personal
statement that read, "We have known each other a long time. He
has proven himself to be a strong leader, and there is no doubt
that the Bank will prosper in his able hands. I look forward to
an easy transition."
The Bank's executive directors accepted Preston's decision
to retire with regret, with appreciation for his leadership and
with best wishes for his health.
Wolfensohn, upon announcement of his confirmation, said, "To
follow Lew Preston is a privilege and a responsibility. He has
taken a number of initiatives which I will follow... The Bank is
a remarkable institution. My wife Elaine and I look forward to
dedicating the rest of our working lives to advancing and
developing its effectiveness for the betterment of all people."
As Bank president, Wolfensohn will be ex-officio chairman of
the Executive Directors of the IBRD and IDA; ex-officio chairman
of the Board of Directors of the IFC, MIA, and the Administrative
Council of the International Center for Settlement of Investment
Dispute.
Wolfensohn is a U.S. national, born in Australia. He has
degrees from the University of Sydney and the Harvard Graduate
School of Business. He and his wife, Elaine, have three children
- Sara, Naomi and Adam.
The World Bank's Presidents
Though its Articles of Association do not specify the
nationality of the institution's president, by a long-standing
agreement the Bank's president is a U.S. national while the
managing director of the International Monetary Fund, the Bank's
sister organization, is European.
James D. Wolfensohn will become the 9th president of the
World Bank on June 1 of this year. His predecessors were:
EUGENE MEYER (1875-1959) who assumed office on June 2, 1946.
He served as president for six months.
JOHN MCCLOY (1896-1989) served from March 1947 to April
1949. He resigned from the Bank to become U.S. High Commissioner
in Germany.
EUGENE BLACK (1898-1992) assumed the presidency in July,
1949, and served almost 14 years.
GEORGE WOODS (1901-1982), a former investment banker, served
from January 1963 to March 1968.
ROBERT S. MCNAMARA (1916-) became president in April 1968.
He was U.S. Secretary of Defense during the Kennedy and Johnson
years. He served until June 1981.
A.W. CLAUSEN (1923-) served one five-year term beginning
July 1981. Prior to this, he was president and CEO of Bank of
America and BankAmerica Corp.
BARBER B. CONABLE (1922-) was a member of the U.S. House
of Representatives for 20 years. He was Bank president from July
1986 to August 1991.
Current President LEWIS T. PRESTON (1926-) took office
September 1991, prior to which he was chairman of the Executive
Committee of __J.P. Morgan__.
The Bank Under Preston
Since joining the Bank in September 1991, President Lewis
Preston has guided the organization through a series of changes
which have helped to position it to face the global challenges of
the post-Cold War era. Above all, he has led the Bank toward
being more flexible, cost-effective, and focused on results in
meeting the rapidly changing needs of its 178 member countries.
Preston oversaw the establishment of the organization's
relationship with the states of the former Soviet Union. Two
months after coming to the Bank, he traveled to Moscow to meet
then-Soviet President Gorbachev and Russian President Yeltsin.
Thus began one of the greatest efforts in the Bank's history in
terms of re-deployment of staff and mobilizing financing. Today,
the Bank is at work in all 15 states of the former Soviet Union,
helping them make the transition to market economies, and its
direct commitments to them exceed $5 billion.
During Preston's stewardship, 23 countries joined the
institution, marking one of its most rapid periods of membership
growth. Of particular note during that period, the Bank began to:
*provide support for the peace process and for economic
development in the West Bank and Gaza;
*initiated a program with the newly democratic South Africa;
*and resumed lending to Viet Nam, after a 15-year hiatus.
In all of this, Preston has reinforced the World Bank's core
mandate to open markets and strengthen economies in order to
improve the quality of life and expand prosperity for people
everywhere. He emphasized that in addition to the Bank's capacity
to borrow on the world's capital markets, its contribution to
development in emerging economies lay increasingly in its advice
and technical expertise.
The composition of the Bank's lending changed dramatically
under Preston, with commitments for education and health tripling
over the last three years-and projected to increase by 50 percent
and reach $15 billion over the next three years. Lending for
environmental protection also grew rapidly, reaching $2.4 billion
last year alone.
And support for the private sector has been given greater
emphasis: the Bank's guarantee powers have been expanded to
leverage additional private financing for infrastructure and
other projects; and the loan and equity commitments of the Bank's
private sector affiliate, the International Finance Corporation,
increased to $2.5 billion last year.
To reflect these operational priorities, Preston reshaped
the Bank's organizational structure, creating new units for the
private sector, human resource development, and the environment.
Other important institutional changes revolved around making the
Bank:
*more open - by expanding information available to the
public about the projects that the Bank supports, and
establishing an independent Inspection Panel to investigate
complaints that the Bank may not have adhered to its own policies
(making the Bank the first multilateral organization to create
such a body);
*leaner and more cost-effective - introducing a dollar
budgeting and a cost-accounting system; cutting costs; altering
the skills mix of staff and removing an entire layer of
management superstructure;
*results oriented - from the beginning of his presidency,
Preston emphasized that it is results that count. At his
initiative, the Bank focused more on the impact of projects
already being implemented - and less on increasing the volume of
new lending in itself. This led to a significant restructuring of
the Bank's portfolio in a large number of countries.
Also under his leadership, the Bank moved from a
project-by-project operational approach to countrywide
strategies, with assistance programs tailored to the specific
needs of different clients. "We must be as effective in helping
with privatization as in helping to increase education for girls;
from assisting with economic reforms in the former Soviet Union
to fighting hunger and disease in Sub-Saharan Africa," he said.
___________________________________
<cont'd in part 2>
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