<http://www.guardian.co.uk/international/story/0,3604,431328,00.html> Leak reveals crisis at World Bank Larry Elliott, economics Editor Wednesday January 31, 2001 The World Bank is an institution in crisis with staff living "in fear" of the organisation's autocratic boss, James Wolfensohn, according to a secret memo seen by the Guardian. At a time when the bank is coming under unprecedented criticism from leftwing protesters opposed to globalisation and rightwing Congressmen in the US demanding budget cuts, the document provides a savage indictment of the world's largest development institution. Mr Wolfensohn went to the bank in 1995, determined to reverse its reputation for arrogance and for dictating economic reforms to governments in developing countries as a condition for loans. But the memo accuses the former Wall Street banker of being "isolated from reality", intolerant of dissent, and quick to humiliate senior managers in front of outsiders. "The atmosphere of fear that pervades the bank is based on numerous day-to-day experiences of staff and managers in their interaction with Mr Wolfensohn," it says. "He does not practice the values and behaviours he espouses for the rest of us." The bank, set up 55 years ago to help the post war reconstruction of Europe, is the biggest provider of cheap loans to developing countries. The money, used for infrastructure, health and education projects, is provided by the governments of industrialised countries, including £170m a year from Britain. Mr Wolfensohn has made a point of opening the institution up to its critics in the development community. But the memo says Mr Wolfensohn does not welcome criticism from within the bank and that staff have learned not to disagree with him. The bank is also facing a budget crisis which is putting staff jobs at risk, according to the memo. In 1997 Mr Wolfensohn promised western governments he would overhaul its management systems in return for three years of extra funding. The budget is to be reduced to 1997 levels this year, but the memo says the new management systems are not working and that staff cuts will have to made to pay for new projects personally sponsored by Mr Wolfensohn. A bank spokeswoman said the memo was one of many received by Mr Wolfensohn on morale and was not typical of staff views. "He's a reformer, and they win friends but also make enemies."
