Gilding the World Bank
The Nation magazine, New York
March 10, 1997, pp. 5-6
The World Bank, ever a stern taskmaster when dealing with its Third World clients, demands cuts in government spending, consumer subsidies, social programs and other "frills" that get in the way of debt payments to international creditors. Countries that fail to meet economic targets set by the bank's "structural adjustment programs" are deemed economic pariahs and swiftly cut off from international financial markets.
The bank is not nearly as austere at home. The compensation package for its president is $305,000 a year, while the top seventy four officers average in excess of $120,000. Employee perks include a free in-house health club and complimentary travel home for vacations. Michael Irwin, a former personnel manager, describes bank staffers as "living and working comfortably in the Washington area, and venturing forth in luxury...out of touch with both the realities and causes of poverty in the Third World."
When investment banker James Wolfensohn took charge of the bank in late 1995, he promised to hack pitilessly at excess spending. It appears, however, that the structural adjustment is lagging. The bank is currently completing a $314 million renovation of its offices, running more than $100 million above the original estimate. This boondoggle began before Wolfensohn arrived, but some of the more vulgar excesses, as I have recently learned, have been carried out during his tenure and indeed continue.
So far, the bank has been adept at damage-control. Bank flacks recently led a credulous Washington Post reporter, Benjamin Forgey, on what was apparently a Potemkin Village style tour of the new headquarters. In a glowing review on February 8, Forgey wrote, "Money certainly wasn't wasted on materials, for though the building looks sharp, it doesn't look extravagant.... In any case, thank goodness, there's no excessive display of wealth in the form of lavish marbles, rare woods and such."
Forgey missed the gold leaf on the ceiling of the thirteenth floor, in the opulent entryway to a new executive boardroom, in the boardroom itself and on a wall of the executive dining room. An enormous ceiling in the lobby leading to the atrium, the building's centerpiece, gleams with aluminum leaf.
Though it sounds modest, aluminum leafing is almost as expensive as gold because both procedures involve high-cost labor. According to a source at the bank, the aluminum leafing near the atrium was applied over a period of several months by a crew of about six workers. "The bank's inability to control costs at its own headquarters has to make you wonder about the quality of the economic advice it offers the Third World," Bruce Rich, author of Mortgaging the Earth, a critical history of the bank, said of the gold-plated remodeling.
I described the leafing at the bank to Stanley Robertson of the Washington, D.C.-based Chelsea Lane Conservation Studio. He said that a low-end estimate of $1 million provided to me by a source at the bank sounded about right. "All gilding work involves a lot of labor because the preparation has to be absolutely perfect," he observed. "The job you're describing would be extensive and expensive." Another local renovator characterized it as "a high-end job for someone with a very big budget. It's definitely extravagant."
The Post's intrepid Forgey also overlooked the use of anegre, an exorbitantly priced wood from Africa. Anegre was used abundantly in two executive boardrooms (on the ceiling and walls, and to make two enormous conference tables) and in a basement library. "We're not talking about knotty pine," a woodworker affiliated with the job told me. "They didn't spare any dollars on the wood or on materials used in other parts of the building." He said that it took about four years to accumulate the anegre because of difficulty in finding logs of sufficient size and matching grain patterns. The company that performed the work was paid well in excess of $1 million, the woodworker said.
Bank spokesman Tim Cullen said, "Heavens no, where did you hear that?" when l asked if gold leaf had been used in the renovation. He called later to say he'd been in error, that gold leaf had been used -- but that it was "comparable in price to similar materials." Loyal to his P.R. calling, he defined the elaborate work above the lobby as "aluminum-style foil on the roof panels," as if it had been as simple as wrapping a baloney sandwich. Cullen said the cost overruns resulted from a "grossly understated" original estimate, and assured me that "the emphasis has been on low-cost materials." The bank said it was not possible to give me a budget for the leafing and woodwork.
The shameful renovation at the World Bank is reminiscent of the one in 1993 at the London-based European Bank for Reconstruction and Development. President Jacques Attali was forced to resign after disclosure that the cost of operations and of buildin the E.B.R.D.'s new headquarters, including $1.1 million for Italian marble, exceeded $300 million more than the bank had channeled to Eastern European nations it was chartered to help.
The $314 million price tag on the World Bank's remodeling could also have gone a long way toward helping its clients. Between 1990 and 1993, Zambia spent $37 million for primary school education, while sending $1.3 billion to international bankers. Uganda spends less than $1 per capita for primary health care versus $9 a head for debt repayment. Ghana spends about $75 million annually for all social programs, less than one-fifth its payments to overseas creditors.
In 1994 alone, these three nations—all held up as models by the World Bank for their diligence in implementing austerity programs—exported a total of $2.7 billion to international bankers. Almost $300 million of that went straight to the World Bank -- providing almost the entire cost of the renovation of its Washington H.Q.
Ken Silverstein is co-editor of CounterPunch, a Washington, D.C.based investigative newsletter
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