Wasted Again

In a March 1990 speech in Los Angeles, World Bank President Barber Conable said: "Fighting poverty is at the very heart of [the bank's] mission." A new report by the Cato Institute contends that the only poverty the bank alleviates is that of its own staff.

Study author Michael H.K. Irwin, the bank's former health services director, reports that in 1987 the agency undertook a "corporate-style reorganization" to trim bureaucratic fat. At that time, it had 6,150 regular staff members and an administrative budget of $816 million. The bank then terminated 498 employees. But it paid each of them from $134,000 to $291,000 to depart.

Today, the bank has 6,100 on staff and an annual budget of $900 million. Irwin says the budget will balloon to $1 billion this year.

Not only do staff members receive hefty, tax-free salaries, but they also get lots of other perks: salary supplements for spouses and children, education grants, first-class airfare, and all-expenses-paid stays in luxury hotels.

Mention this opulence to World Bank staff members—or try to save the agency money—and they get pretty testy. Irwin writes that when he flew to Africa in business class rather than first class, he received "considerable internal criticism—from the Staff Association, Senior Vice President Ernest Stern, and many individuals." A staff physician claimed that if other bank employees surrendered first-class travel privileges, "a modest increase in the numbers of post mission travel induced strokes among our more elderly frequent travelers" might follow.

Irwin's report highlights an agency almost paranoid about public scrutiny: His former department had three document shredders for its 30-member staff. When Reader's Digest wanted to reprint an article from REASON exposing mismanagement in World Bank development programs, Francisco Aguirre-Sacasa, former director of external affairs, says that the bank tried to prevent the reprint from being published. (See "Inside the World Bank," June 1989.)

Irwin calls the World Bank hypocritical for prescribing austerity to developing countries while generating so much internal waste. He concludes that the bank's own operations "raise serious questions about whether the United States or any other Western nation should give the institution another dime."