14 August 2008
James Wolfensohn, a former World Bank president, may have assisted a corrupt businessman seeking control of Azerbaijan’s state oil company.
According to a report by the Government Accountability Project (GAP), the World Bank’s former president, James Wolfensohn, ignored staff warnings about Viktor Kozeny, a Czech businessman accused of bribing officials and stealing nearly a billion dollars from investors.
In 1995, the World Bank approved a technical assistance project geared toward restructuring the State Oil Company of the Azerbaijani Government (SOCAR). World Bank officials allegedly warned Wolfensohn of Kozeny’s corruption before he attempted to purchase SOCAR in 1998. The businessman had already exploited the Czech voucher privatization process and defrauded investors. However, the GAP report shows Wolfensohn supported Kozeny, known as “The Pirate of Prague,” by writing a letter, which claimed World Bank staff had not said it would be inappropriate for the Azeri government to do business with Kozeny. Kozeny did not manage to buy SOCAR, and, in 2000, the Bank’s technical assistance project was canceled.
The report raises a number of concerns around Wolfensohn’s behavior and calls to question the World Bank’s role in post-Soviet privatization. GAP presented the report to the U.S. Treasury Department on August 12. According to Bloomberg, Wolfensohn and Kozeny both denied the allegations and the World Bank has not commented directly on the report. A current World Bank representative told Bloomberg that the institution’s investigative arm is strong and that the Bank, in general, heeds staff warnings. In response to Wolfensohn’s denials, GAP has published several letters as documentation.
Sources
Wolfensohn Ignored Azerbaijan Warnings, Group Says (Update4), by David Glovin and Christopher Swann, Bloomberg, August 12, 2008 (Bloomberg website)
Privatization and Corruption: The World Bank and Azerbaijan, Government Accountability Project, August 8, 2008 (GAP website, Acrobat pdf)
GAP Report Details Azeri Privatization-World Bank Corruption, GAP Press Release, August 12, 2008 (GAP website)
Petroleum Technical Assistance Project (World Bank website)
Additional Resources
Governement Accountability Project