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NEW YORK � A report by a special committee of The World Bank Group, released Monday, questions Gibson, Dunn & Crutcher’s review of World Bank President Paul Wolfowitz’s transfer of his girlfriend, Shaha Riza, to a high-paying job at the U.S. Department of State. That transfer has mushroomed into a scandal threatening to cost Wolfowitz his job. Documents released by the bank show that Wolfowitz asked Gibson to review the deal in the summer of 2005. A Gibson, Dunn team, including Theodore Olson and Eugene Scalia, concluded that the contract was “a reasonable resolution of the perceived underlying conflict of interest.” But on Tuesday a special committee of the bank charged with investigating the scandal concluded that the limited and after-the-fact review by Gibson “is squarely at odds with the high degree of . . . concern for the interests of” the World Bank, which is required by the institution’s rules. Gibson, Dunn declined to comment. Wolfowitz acknowledged his relationship with Riza, a senior communications officer at the bank, before he arrived in June 2005, according to bank documents. World Bank rules state that there is a conflict of interest whenever there is a sexual relationship between a staff member and a supervisor. Wolfowitz proposed to resolve the conflict by recusing himself from personnel matters relating to Riza. The bank’s ethics committee rejected that proposal as insufficient and suggested that Riza be transferred. The committee then took the unusual step of asking Wolfowitz to help implement the transfer. Three days later, Wolfowitz sent a human resources executive a letter dictating the terms of Riza’s reassignment: Riza would be transferred to an “outside institution of her choosing”; she would be given a promotion; she would receive an immediate salary increase of almost $50,000 and annual 8 percent increases thereafter; and she would be promoted again upon her return to the bank at the end of Wolfowitz’s term.
The transfer “was not a solution, and if you think it is, you are ethically challenged.’

Deborah Rhode Stanford law professor

The next day Wolfowitz sent a memo to the ethics committee saying that the situation had been resolved. What the ethics committee knew about Wolfowitz’s role in the transfer is a subject of dispute. The former head of the committee says that the committee never approved the details of the pay package and that “it should have been self-evident” that Wolfowitz should not have gotten directly involved. Wolfowitz, on the other hand, said in a statement that he “did not seek to hide any of the details about how [he] implemented [the committee's] advice” and he “assumed the committee had access to any information it wanted about it.” After the deal was reached, Wolfowitz sought a legal evaluation. Gibson landed the assignment because of its “ability to present a strong team within 24 hours,” according to a memo from a Wolfowitz aide that was released by the board. This team included former U.S. Solicitor General Theodore Olson and employment partner Eugene Scalia. Within days, lawyers at Gibson wrote to Wolfowitz, concluding that the arrangement was “a reasonable resolution” of the perceived conflict. But the firm was careful to curb its conclusion. “Our review has been limited,” Gibson partner Douglas Cox wrote in an August 31 memo to Wolfowitz. “The key elements of the contract had been accepted and agreed to by all parties to the contract before we were retained.” The committee pointed to that limitation as one of the reasons that Gibson’s review was flawed. Gibson wrote the committee, “assessed the arrangement from the perspective of legal risk. . . . While this might have been useful, it was not adequate.” The transfer “was not a solution, and if you think it is, you are ethically challenged,” says Stanford Law School ethics professor Deborah Rhode. On the other hand, New York University School of Law ethics professor Stephen Gillers says the uproar over the contract has more to do with popular distaste for Wolfowitz’s leadership at the bank than with the contract itself. “The Gibson, Dunn assignment [appears to have been] narrow. The fact that this whole story is part of a broader political battle can’t be laid at their feet,” he says. None of the lawyers involved are talking. Gibson directed all inquiries to Wolfowitz’s personal attorney, Robert Bennett of Skadden, Arps, Slate, Meagher & Flom. Bennett, in turn, denies knowing the details of Gibson’s assignment and directed questions back to Gibson. Amy Kolz is a reporter with The American Lawyer, a Recorder affiliate based in New York City.

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