A Tale of Two Scandals

"Full confidence" for an EU official despite a romp on a nude beach with an employee.

By Bret Stephens
Tuesday, April 24, 2007 12:01 a.m. EDT

Imagine that a top civil servant at a major multinational institution arranges a job for a fortysomething female colleague that comes with a $45,000 raise and brings her yearly salary to about $190,000, tax free. Now imagine that the couple has been photographed at a nudist beach--him wearing nothing but a baseball cap.

The latest sordid twist in l'affaire Wolfowitz? Not at all. This is the story of Günter Verheugen, first vice president of the European Commission in Brussels. In its contrasts and similarities with the "scandal" now absorbing the World Bank and its president, it offers timely instruction on the nature and power of modern bureaucracies.

In April, Mr. Verheugen, a former German parliamentarian for the Social Democrats, appointed economist Petra Erler as his chief of staff. In August, the couple was spotted au naturel on a Baltic shore. Mr. Verheugen--who also has a wife--has dismissed allegations of impropriety as "pure slander" and asked the German newsweekly Der Spiegel whether "two adults [can't] do as they wish in their private lives?"

In fact, they can't: The EU Commission's Code of Conduct, which he helped draft, observes that "in their official and private lives Commissioners should behave in a manner that is in keeping with the dignity of their office. Ruling out all risks of a conflict of interest helps guarantee their independence."

Don't think, however, that the commissioner is out on his ear: German Foreign Minister Frank-Walter Steinmeier defends him as "an irreplaceable Brussels heavyweight," while Commission President Jose Manuel Barroso says Mr. Verheugen has his "full confidence." That's more support than Mr. Wolfowitz will ever get from his European friends, who are clucking noisily about the need for the World Bank to preserve its "credibility" and for its president to be "beyond reproach." (It's also more than he's getting from the Bush administration, which is offering token words of support while quietly shopping former Afghan Finance Minister Ashraf Ghani as a potential successor.)


But this isn't just a story of European hypocrisy (an old story). Like Mr. Wolfowitz, Mr. Verheugen is a man of major prior accomplishments--in his case, engineering the enlargement of the European Union to 25 from 15 member states. Also like Mr. Wolfowitz, Mr. Verheugen came to his current job pledging to make war on the methods of his own bureaucracy. "The idea is that the role of the commission is to keep the machinery running and the machinery is producing laws," he said last October. "And that's exactly what I want to change."

The machinery had a different idea. Mr. Verheugen announced plans in 2005 to do away with scores of economically burdensome and antiquated regulations, which he thought could help lift economic growth. When his efforts went nowhere, he gave an interview to the press blaming the failure on the opposition he'd encountered within the Brussels bureaucracy. The Commission's staff union reacted predictably, by calling on him to apologize and suggesting he resign. Not coincidentally, it was around the same time that stories of his special relationship with Ms. Erler, and of her new job, came to the attention of the press and the public.

Now consider the Wolfowitz saga. Superficially, the similarities with Mr. Verheugen rest with the details of their respective scandals: a close lady friend on staff, a suspiciously generous pay raise, allegations of nepotism and conflicts of interest.

But aside from the facts that Mr. Wolfowitz is unmarried and prefers his clothes on, the substance of the cases could not be more different. Mr. Verheugen seems to have obscured the nature of his relationship with Ms. Erler; Mr. Wolfowitz acknowledged his relationship with Shaha Riza before he took the job as Bank president. Mr. Verheugen sought to use the power of his office to bring Ms. Erler nearer to him; Mr. Wolfowitz sought to use the power of his to move Ms. Riza away. Ms. Erler moved into a better job; Ms. Riza was forced into a lesser one. Mr. Verheugen ignored his own code of conduct; Mr. Wolfowitz followed the instructions of his ethics committee, whose chairman later praised him for acting in a "constructive spirit."

What the Wolfowitz scandal comes down to, then, is that he gave Ms. Riza a fat raise after the Bank's board agreed that she deserved compensation for losing her job. This is where the bureaucracy comes in and the real similarities with the Verheugen case begin.

When Mr. Wolfowitz arrived at the World Bank in 2005, it was to an institution ideologically committed to seeing him fail. When he announced that he would make the fight against corruption his signature issue, the ideological opposition became institutional as well. As development economist William Easterly observes, for the World Bank "priority No. 1 is to get the money out the door. When you introduce a wild card like cutting off corrupt governments, you threaten the loan-pushing culture."

Since then, it's been a steady dribble of leaks about Mr. Wolfowitz's every misstep and perceived wrongdoing, most of them to the suggestible Financial Times. The operative theory here, says former Bush administration diplomat Otto Reich, is that if you throw enough mud at a man "the stain will remain even if none of the mud sticks." That's just what has happened in the campaign at the World Bank: Having doused Mr. Wolfowitz in skunk juices, the critics can now say, with justice, that he stinks.


This isn't to say that Mr. Wolfowitz's tenure at the World Bank has been without disappointments: Mr. Easterly faults him for indulging utopian ambitions for what the Bank can do to alleviate poverty and promote democracy.

But that can't possibly justify the furies that have now descended on Mr. Wolfowitz. Like Mr. Verheugen, he sought to use his office to change an organization he thought--mistakenly, as it turns out--that he ran. Unlike Mr. Verheugen, he never really did anything improper. That he is now on the firing line while Mr. Verheugen is not is a point worth noting. That both men, despite the great differences between them, have been thwarted by their bureaucracies should be a reminder to everyone that the government of mandarins is more than just a danger to interloping neocons.