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Reuters: World Bank Anti-Corruption Chief Resigns

January 16, 2008
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By LESLEY WROUGHTON

The head of the World Bank's anti-corruption unit, Suzanne Rich Folsom, resigned on Wednesday to rejoin the private sector, a Bank spokesman said.

Folsom, a U.S. ethics lawyer, had been dogged by controversy since her appointment in 2005 by former Bank President Paul Wolfowitz, who resigned in June amid an ethics scandal involving his companion.

World Bank spokesman Marwan Muasher emphasized that Folsom had not been forced from her position.

Questions within the World Bank arose over whether Folsom's appointment was tied to her political connections with the Republican Party and escalated as her department became more aggressive in response to a controversial anti-corruption campaign by Wolfowitz, a former U.S. deputy defense secretary and an architect of the Iraq war.

"I want to make it clear that she was not fired, she was not forced out. She has a very good offer from the private sector and she chose to take it," Muasher told Reuters.

"When she approached the Bank (with her resignation), the president offered her another job within the Bank but she declined," he said, adding, "There was no attempt to force her out in any way or shape."

Muasher said John Zutt, a Dutch national who has worked at the Bank as a senior adviser and a lawyer with degrees from Harvard and Oxford, would replace Folsom temporarily at the Department of Institutional Integrity, or INT, until a permanent director was appointed.

A panel led by former U.S. Federal Reserve Chairman Paul Volcker last year recommended that the World Bank examine the role of Folsom's anti-corruption unit following concerns about its investigative practices.

In an interview at the time with Reuters, Volcker said it was not the panel's mandate to judge individuals like Folsom. But he insisted she got high marks for professionalism.

"There is no doubt there are a lot of accusations made about whether decisions have been politically involved," Volcker said, adding that the panel did not find systematic evidence that was the case.

UNDER THE SPOTLIGHT

Muasher said on Wednesday an internal working group reviewing the recommendations of the panel had completed its report and would be considered by the Bank's board next week.

New World Bank President Robert Zoellick, who replaced Wolfowitz in November, said in September he planned to keep Folsom in her job, dismissing speculation he was about to start dismissing some of Wolfowitz's top-ranking appointees.

Asked whether Folsom's resignation was tied to internal work currently underway to examine the role of the integrity department, Muasher said: "Not at all. When she expressed her wish to leave, the president asked her and she agreed to stay on until the review is completed."

Frank Vogl, a founder and board member of anti-corruption watchdog, Transparency International, said Zoellick recognized following the Volcker report that the credibility of the Bank was at stake with respect to how the Bank tackled governance and anti-corruption in the future.

He said it has been very difficult for outsiders to believe that all of Volcker's recommendations could be fully implemented without significant personnel changes.

"My comments don't go specifically to Ms. Folsom because the Volcker commission did not single her out for any particular criticism but from an institutional perspective," Vogl said.

"In order to strengthen the credibility of the bank in the anti-corruption area it is very important that Mr. Zoellick carry out what he pledged to do and that should include, we think, some major changes in personnel," he added, "To that extent we certainly think that (Folsom's resignation) may be a helpful step."

The Washington-based whistle-blower protection group, Government Accountability Project, a long-time critic of Folsom, called her resignation "long overdue".

It said Folsom's dual role as head of the anti-corruption unit and as counselor to Wolfowitz represented a conflict of interest, especially "when she failed to react to complaints of impropriety involving Wolfowitz and another World Bank staff member."

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