Wolfowitz Affair Challenges Workplace Ethics

May 16, 2007 — -- The Bush administration has publicly lined up its support behind embattled World Bank President Paul Wolfowitz, arguing that he did nothing wrong in connection with his girlfriend's substantial pay package, but left his future open-ended.

Secretary of State Condoleezza Rice said: "It doesn't seem to be the kind of thing that you would want to see the dismissal of the World Bank president over."

White House spokesman Tony Snow said: "What we've said is, yeah, he made mistakes.That pretty much is obvious. On the other hand, it's not a firing offense."

Treasury Department spokeswoman Brookly McLaughlin: "Missteps occurred on all sides and communication may not have been clear enough."

Meanwhile, Wolfowitz made an emotional appeal to the World Bank board to allow him to continue as president. Also, in a response Tuesday, Wolfowitz appears to blame his girlfriend Shaha Riza for what has transpired.

For example, Wolfowitz writes: "Everyone acknowledges that Ms. Riza was extremely angry and upset…and felt very strongly that she was entitled to compensation," and that World Bank ethics committee members "did not want to deal directly with a very angry Ms. Riza."

A special bank panel has already concluded that Wolfowitz broke bank rules and that his involvement in Riza's salary "went beyond the informal advice" given by the ethics committee he consulted, and that he "engaged in de facto conflict of interest."

So why, as one colleague put it, is Wolfowitz seemingly selling his girlfriend down the river? Isn't it obvious that what he did was simply wrong? His own review group says he broke the rules that govern favoritism in the workplace.

While the World Bank's board listens to Wolfowitz's defense and determines what to do next, ethicists say all institutions, whether in the public or private sector, face this sort of "workplace nepotism and fraternization" on a daily basis and they all have some sort of policy that is supposed to keep it from happening.

Randy Cohen, who writes "The Ethicist," a weekly column for The New York Times Magazine, told ABCNEWS.com it's pretty easy to understand.

"I think most of the regulations out there are pretty good and it's essentially about avoiding a conflict of interest or favoritism with those who are most intimately affected," he said. "It's for the good of the organization and all of the others in that organization. It's especially urgent with the World Bank as to issues of governance and transparency because, as an institution, the World Bank demands those qualities from those they work with."

According to human resources and management consultant Ethan Winning, "Favoritism, perceptions of favoritism [and the ensuing rumor mill], conflicts of interest, confidentiality [as in nondisclosure agreements], hostile work environments and sexual harassment" must all be taken into consideration at the workplace.

"Certainly we have to face the fact that the workplace is now the place where we often meet our significant others," he writes in an article posted at ewin.com. "And what do you do as an individual? Well, start with being discreet. If the relationship does become 'serious,' and there's a policy in place, accept the fact that one -- or both -- of you will either have to transfer or be terminated. It might be considered unfair, but it is just another condition of employment that you agree to when you join a company."

Seymour Adler, senior vice president and industrial psychologist at Aon Consulting, agrees: "Virtually every organization's sexual harassment policy says it's the manager's responsibility to take action to avoid a relationship with a subordinate," he said. "For a CEO, something has to give -- either the CEO or the person below has to leave that position. Does someone get affected? Sure. But if it's for love? Well that's their decision."

Some employers are not as strict. Educational institutions are somewhat more liberal when it comes to workplace relationships.

Princeton University permits employment of individuals of the same family or those who have a personal relationship. However, that permission is limited. "Employment within the same department normally is prohibited for individuals of the same family or for those who have a personal relationship," according to university policy.

What about potential conflicts of interest of the type that Wolfowitz is accused?

The policy addresses that. "No supervisor may influence, directly or indirectly, salary, promotion, performance appraisals, work assignments or other working conditions for an employee with whom such a relationship exists."

How is that rule policed?

The policy states: "Any supervisor involved in a consensual romantic or sexual relationship, in the context of employment supervision, must discuss the matter on a confidential basis with his or her own supervisor or with the Office of Human Resources."

In other words, it's up to the individual and his or her willingness to "come clean."

"The downside is that if an institution doesn't follow best practice hiring policies, it will lead to resentment and cause someone not to be treated fairly," Anita Levy of the American Association of University Professors told ABC News. "I've heard anecdotal stories where it doesn't work out. It depends on the institution."

Levy said colleges and universities have had to become more lenient in their policies because of a shift in the work force. "Spousal hiring is more common these days than it was 10 years ago because more and more women are in academics and it's a problem for couples to find positions on the same campuses."

Mary Burgan, former head of the English department at Indiana University, told ABCNEWS.com that she dealt with a potential conflict of interest concerning her husband who was on the same faculty.

"Everyone knew who we were," she said. "We joined at the same time and we got married while we were there. We thought anyone who said you can't do that [work together in the same department] was really retrograde."

In Burgan's case, the test came when she was promoted.

"I became chair of my department and I put my husband's salary and appointments in the hands of a committee and set salaries for everyone else," she said. "Someone with a personal relationship should recuse themselves from promotions."

That said, no university, and for that matter business, is without its share of violations.

As for Wolfowitz, ethicist Cohen said the World Bank president is "one of the architects of the policy to deny due process in places like Guantanamo, yet he seems very vocal about due process in his own case."

Cohen said that sort of hypocrisy is endemic in the Bush White House these days.

"Wolfowitz comes from an administration that demands accountability for everyone but themselves," he said.

"I think in the World Bank situation, once Wolfowitz discovers he's lost the board's confidence, he should perhaps resign."

Aswini Anburajan contributed to this story