Multilateral Development Banks

Notes on a scandal

(May 1, 2007) How ethical are Paul Wolfowitz’s detractors?

Meet Dennis de Tray. In the summer of 1998, the University of Chicago-trained economist had his 15 minutes of fame when, as director of the World Bank’s mission in Indonesia, he was called by The Wall Street Journal to account for the bank’s performance amid that country’s economic collapse. After 30 years and $25 billion of loans to the Suharto dictatorship, it turned out that “World Bank officials knew corruption in bank-funded projects was common, but never commissioned any broad reports tracking how much money was lost to it,” according to Journal reporters Marcus Brauchli and Jay Solomon.

Why the relative indifference to the problem? Because, as Mr. de Tray explained at the time, “there is a trade-off between, shall we say, being pure and helping people,” and also because “sometimes calling a spade a spade is not the best way” when it comes to confronting corruption.

Had matters rested there, Mr. de Tray, who still consults for the bank while working at the Center for Global Development in Washington, D.C., might never again have had his role in the Indonesian debacle reprised. Yet his name pops up as a signatory to a letter published on April 22 in the Financial Times under the headline, “For the good of the World Bank, Paul Wolfowitz should resign.” The letter is meant as an indictment of the bank’s controversial president, who may soon lose his job for a promotion and raise he authorized for his girlfriend, World Bank staffer Shaha Riza. But look closer and what emerges from the letter is a testament to the hypocrisy, or worse, of Mr. Wolfowitz’s leading accusers.

In Mr. de Tray’s case, it may seem strange that a man who was willing to countenance the theft of the bank’s money by Suharto & Co. as the inevitable price of “helping people” (which people?) should now wax indignant about the damage Mr. Wolfowitz has supposedly done to the bank’s “credibility as the international community’s trustee of resources for fighting poverty,” in the words of the FT letter. Yet Mr. de Tray is nothing if not consistent . . .

Read the full text.

Bret Stephens, Wall Street Journal,  May 1, 2007

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