103923 ) THE WORLD BANK GROUP ARCHIVES ORAL HISTORY PROJECT Transcript of Interview with PAUL CADARIO April 4, 17, 22 and 30, 2013 Washington, D.C. Interview by: Charles Ziegler 1 Session 1 April 4, 2013 Washington, D.C. [Begin Tape 1, Side A] ZIEGLER: Today is April 4th, 2013. My name is Charles Ziegler, a consultant for the World Bank Group Oral History Program. I have with me today in the Archives of the World Bank Mr. Paul Cadario. Paul sfarted ' his career in the World Bank as a Young Professional in 1975. After graduating from the , ,• program in 1976, he was assigned to the Western Africa Projects Department as an economist, working . first on highway projects and thell'on agriculture projects. In 1982, Paul joined the West Africa Country Programs Department 2 as a loan officer, subsequently becoming a senior loan officer. The aftermath of the 1987 reorganiiation saw him join the Asia Country Department 2 as a senior country officer dealing with China. By 1991, Paul was a principal country officer in the East Asian Pacific Country Department 2, In 1992, he became unit chief of the Institutional Development Unit in the Asia Technical Department. Paul was appointed chief administrative officer of the Europe and Central Asfa Region in 1993 . .. By 1998, he was operations advisor, Operational Core Services. In 2001, Paul was appointed manager, Trust Fund Quality Assurance and Compliance, rising to senior manager in 2003 and retiring in 2012. Well, Paul, it's great to see you again. We did know each other slightly durlng our Staff Association days. CADARIO: Right. ZIEGLER: So we'll get right into it. In terms of your early life and education, just briefly, when and where were you born? CADARIO: I was born in Toronto in June 1951: · ZIEGLER: I· Please relate something of your early life and education, just to put your life in context. CADARIO: Well, I grew up in a very professional middle class part of Toronto called Leaside where the fathers all either drove or took the subway to work and the mothers all stayed.home as housewives. I went to Leaside High School, a public high school, which was 3 minutes from our house, which seemed like a long way when I was a student ... ZIEGLER: And Leaside is spelled L-E-E ... CADARIO: L-E-A-S-1-D-E. Very post war, solid, middle class, professional place. All the houses 1 had the same inside, but they all looked different from the outside,-which was interesting. And I }Vent to University of Toronto because, of course, it was there. I'd defied my science teacher, who felt, really, civil engineering would be. like taking 'the cure. I said, "Well, I'm interesting in civil engineering, so that's what I'm going t9 do, rather than engineering science, which is high end and theoretical." Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 2 At U ofT, I was involved a lot in student and university polities and, when I graduated, went to Oxford as a Rhodes Scholar where I studied philosophy, politics and economics. ZIEGLER: Typical Rhodes Scholar ... CAD ARIO: Kind of thing. That's whatyou'd do in those days, and I remember a recruitment visit to Oxford where they came to sell the Bank where Basil Kavalsky, who was, I guess, actually not so much older than me at the time, but he said, "Well, really, you don't have to be the best. You just have to be the best Canadian," which I thought was remarkable and brazen from a recruiter ZIEGLER: , Well, maybe the Canadians were pretty good. CADARIO: Well, maybe we were.· And the YP [Young Professionals] Program was big then, I think; 50 or 55 people twice a year because it was a fairly new program in 1975. And I was interviewed in Paris. I had a very testy interview--where I thought afterward, "Oh, my God, I've;;: messed this up" --and fairly · candid. And the quest~on I remember was--well, there were two questions. We had a big discussion of the Caracas metro, and I finally said to the YP administrator, who clearly knew nothing about urban transport, "Well, you can't rely on a metro to solve every problem a city has. That's just not the way it works," which pleased somebody else in the room, I noted, who was smiling and nodding. And then the last question was, "Well, how long do you want to s~ay at the Bank?" And I said, "As long as I'm happy and the Bank is happy." So I joined the Bank in October of '75. ZIEGLER: So you joined the Bank pretty much right out of university? CADA.RIO: I traveled that summer to Russia and Israel, and visited Oxford classmates in England, and then caine to Washington. ZIEGJ::,ER: Did anything in particular induce you to become a staff member or ... CAD~O: Well, during--! can't say I was particularly on the left, but I was pretty socially progressive when I was an undergraduate and spent two summers' up in the Canadian Arctic working for one of my professors doing research on the infrastructure of Inuit communities (water, sewage, garbage, drainage fire protection) and came back shocked at certainly a very third world experience in Canada and said, "Well;' there must be a better way to do this somewhere. Why aren't m:ore engineers not working on these issues for poor people?" · · And then between my two years at Oxford, one of my mentors at the University of Toronto knew somebody who was setting up the.planning office in Papua, New Guinea, before it became"independent. So he kindly organized that I would go off and spend the summer in Papua, New Guinea, working in the planning office on various things. And I got to go to rural areas and see poor people, where the house I was minding was burgled one night while I was out and I was glad--I think I arrived and the burglars left rather than be discovered. But by the end of my time in Port Moresby I had an appreciation for global issues related to poverty and development. · And then, of course, the job ·came with an around-the-world air ticket, so I just stopped everywhere in Asia on the way back and really got a taste for, ru,ral India and rural Burma and Thailand and was very excited by what I saw. So I guess there were not a lot of people at the YPP interview who talked about having traveled in Asia and having worked in the Canadian Arctic. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 3 ZIEGLER: After you joined the Young Professionals in 1975, what were your assignments as a Young Professional? CADARIO: Well, I had a very interesting first assignment. I arrived about ten days before they expected me, arid so I was taken over to the country unit. I, think they were called--w:µat were they called then? Country Program Divisions I think they were. · ZIEGLER: Hmm, sounds right. CADARIO: I was working on Greece and Turkey, but it wasn't quite clear what I was going to do. This was a group that did Greece, Turkey, Cy'prus, Oman, like a ragbag. Greece and Turkey were the big . clients ... ZIEGLER: They were somewhat at loggerheads in 1975. CADARIO: In 1975, they were. And in fact I was given the things YPs are given to do. You read stuff. But it wasn't clear what exactly I was going to do. . So I d~cided, "Well, I better' sit down and read the operational manual." So I read the operational manual from cover to cover, which you could do then. You were given your own copy, and it was numbered, and you were told you weren't allowed to take it on mission and then you were told you coul9n't take the country program pap-er on mission and there were all sorts of things you couldn't do. But, of course, you took a briefcase that identified you as a World Bank staff member,· and so people would come over to you in the hotel restaurant at breakfast and see if you worked for the World. Bank. And those were the days where you didn't have to worry about saying, "Yes, I do." My fu;st mission was to Turkey because there were some issues about trade and we wanted to get them ready to join the European Economic Community, as it was at the time. ZIEGLER: They're still not in. CADARIO: No, they're still not in. And then I went off to Greece. Now, this trip to Greece was to accompany a preparation mission for an area, a rural development project right on the border of Turkey and the Evros River that divided the two countries. · ZIEGLER: That's in the European and that little bit of Turkey on the European side, yes. CADARIO: On the European side, which I'll come back to in a minute. So I'd been--there were some . probl~ms here because the Country Program Division chief, Adi Davar, who was a very cunning and clever ·manager, and I sat right beside his office. And I don't think he realized how thin the walls were becaus.~ the 'stuff that I would overhear on the phone with various ministers and things were quite ,· amazillg, but I learned an awful lot about the Bank secondhand eavesdropping on Adi. And Adi had said, "Well; there's this project. We absolutely have to do it, but the project people aren't cooperating, so, Paul, read this." So I read the note that had been'. prepared, and I said, "Well, it's very interesting, but it's right on the border of Turkey so there are riparian issues." ' And everybody looked around and said, "Well, riparian issues?" Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 4 And I said, "Yes. Well, there's water, and there's a river, and you're proposing ground water extraction, which will affect ground water on the other side of the river. Let me show you." So I used my engineering to show all these economists and loan officers how things worked when you developed and exploited · groundwater. "Oh!" So Lwas sent along on this mission because the programs people really want to do this project, and the .projects people, no, they weren't pe~sua_ded. And so there was a deft maneuver where they got somebody very senior. who was thought to be not quite so opposed to the project. And my job was to babysit Alec [Alexis E.] Lachman to make sure that he saw the benefits of doing the project rather than what his people were telling him. ZIEGLER: Lachman? CADARIO: Lachman. L-A-C.;H-M-A-N. So, anyway, off I went. This was a military area. There was one. day where we were driving along and you could see the radar domes across the river in Turkey. So I would see the radar domes are over to the right, and I would say, "Alec, what's going on over there?" And I would point to what's going on on the left. ·' · At one point, Alec got out of the car and said, "Oh, what a lovely spot. I must take a picture." And I said, "Well, I wouldn't go too much further because that sign there says there are landmines and I really wouldn't want to get to close to the fence because that's where the land mines are." So he got back in the car. Anyway, we actually did the project, and the Turks, indeed, the day before it went to the Board objected on ripa1:i.ari grounds. Of course it was a little late then. Fast forward. This is where today in 2013, the biggest source of smuggled immigrants into the European Union, including human trafficking. So I was just giving a talk at the university and wanted to go back in my early career at the World Bank, and when I Googled to see whether the project was in the archives ·and had been released and I could take a map and show this, my first map that came up with showing illegal.migraIJ.tS penetrating Europe and guess where they were coming in? The river is very narrow, and, of course, once you get across the, you're in the EU. So, anyway, so that was one of the things that ... ZIEGLER: With the project, what happened with the ground water then? Did everything turn out all right in that . . . CADARIO: Everything turned out all right. And, in fact, we di~ a country economic memorandum, and I was on that mission several months later where we actually, the theme of the memorandum was that, Greece had to understand there were things it had to do to get ready to join Europe by the time it was going to be ... ZIEGLER: And aren't they happy they did that? CADARIO: Well, exactly. I don't think we anticipated any of this. I should come back to that later in another part of my career. But nobody in the Bank knew anything about the EEC [European Economic Paul Cadario April 4, 17, 22 and 30, 2013 ·Final Edited 5 Community], so I said to the mission leader (because it was really easy to reach), "We must go to Brussels and you must hear about the Common Agricultural Policy." He didn't believe that Greece would be paid money and then the products would be burned if they didn't meet the EEC's standards. So off I went to Brussels with the mission leader senior economist, Shakil Faruqi. He had to be helped out of the Commission office because he just couldn't believe what the Commission said. Well, here were the negotiating points for Greece's entry and the first one was what they would have to do and that there would be agricultural reforms and all this. And it was quite eye-opening: he was just shocked. And it was actually interesting that we had all these what we would today call clients in the periphery of Europe, not, of course, as many as we have today. And the Bank knew literally nothing ~bout what was necessary to bring them, what would be necessary for them to become members of the European Community. I did that for six months. And then I went off to do something that was closer to what I'd done as an economist, transport economist. So I ended up in Western Africa. This was after the South Asia group had tried desperately ... · ZIEGLER: Is this still ... ' CADARIO: YP program was meant to be two 6-month assignments. So in the YP program, I've been sent off to look for my second assignment. I arrived, and the South Asia people were desperate to have me. And I said, "Well, teUme about what we're doing in transport and how it fits with what we do for ~angladesh as, ho~ Bangladesh is." And the division chief said, "Well, really, our, goal in Bangladesh is just to make sure that the deterioration doesn't accelerate." And this didn't seem to me to be something I really was keen to be involved in. So I ended up working in Western Africa because I spoke French. I was in that division for about a month. And we had a little problem in Guinea, and the colleague who was in charge of Guinea didn't really speak French. And his other problem was that he was a Czech refugee who had a Belgian passport, · and he was afraid of going tci what was, de facto, a satellite of the Soviet Union. So we had to send a senior highway engineer, Stan [Stanley B.] Hayden, who spoke not a word of French. And I can't say my French was terribly good at that point. But, anyway, if--we had to go off and persuade the government that having just signed this loan in Guinea for the first highway project, they couldn't get rid of all the operatillg costs and all the supplies. We weren't going to just let them buy equipment. This was touchy because the Minister of Public Works was an engineer and the nephew of the president, Sekou Toure, who was running the prison of Africa. I knew .a little bit about Guinea because one of my professors at Oxford had actually written books about Guinea and about Sekou Toure. ZIEGLER: Now, was this person African or British? CADARIO: No, no, he was South African .. ZIEGLER: Oh, okay. CADARIO: .. with a British passport. On the way to Guinea I stopped in London because the Bank didn't really care how you got places at that point, and I had to go to Brussels anyway, so it was fine. ' There's no way to· get directly to Brussels; so I went up to Oxford for the weekend. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited ·6 So Nick, Nick Johnson said, "Oh, well, I'm thrilled that one of my students is going to Guinea, and let me tell ·you about Guinea. And, in fact, I have a spare copy of the works of Sekou Toure, all six volumes, that I'd like to give to you." Okay. · . I So I got the six volumes of Sekou Toure, put them in my World Bank briefcase and flew across to Brussels and then down to Conakry and said, "Well, I guess I better have a look at this. Let's get out the six volumes," and thinking this must be fascinating because it would be the whole history of Guinea since 1958, here's the World Bank. This was only the second real project we've done in Guinea. We've financed the infrastructure, for the big bauxite mine, so the Guineans liked us, even though nobody else did and they didn't have diplomatic relatiop.s with France. And it was a bl.eak place. I got through the first three pages--because it was written in French, in a fairly turgid French--! thought, "Oh, my God." So I arrive in Guinea, and Guinea was bleak, and it rained for the whole five days' we're there. Like non- stop, 24/7 it rained, and I mean rained. It poured. And we were put in a government guest house, and various other high-ranking visitors, I think from the ·French partners in the bauxite· mine, were evicted from their rooms so that we could be put ill this guest house. It just didn't start well. Eventually, we all played bridge, and jt was fine. So off I go to meet the project director. The project director is a kid about my age. ZIEGLER: This is the Guinean ... CADARIO: The Guinean project director was a kid about my age. The consultants were there, but the consultants, the French had told us, were not allowed to speak. So the kid my age welcomes me~ but he welcomes me with a "The World Bank had better do this and that, and the World Bank needs to understand that," like he'd been told he had to be very aggressive; we're going to have it done this way. So I said, "Well, Mr. [Bengali] Camara, this is iny first trip to Guinea. Thank you very much for your kind welcome., and it's good to have the go:vernment's concerns and wishes laid out on the table. I am reminded, though, of the beginning of S6kou Toure's book Thoughts ofthe Revolution." So the room fell silent, an~ I said, "Because in the first, the very first page, 'des actes, rien que des actes'/'actions, nothing but actions,' and I really hope that's how the World Bank and the Ministry of Public Works will operate on this very iinportant project for Guinea. And I'm pleased. I don't know your country very well, and I'm going to do my best to know all the rules of the Bank so we can help you do what needs to be done." So this, of course, was the way that I was supposed to respond. And, of course, the poor American engineer didn't know what to do because this was all going on in French, and he was a little baffled. So I said to him everything will be fine. L So, we got the government to back down. The minister wasn't sent to the prison, and we did, actually, a very good project, so Mr. Camara and I became very good buddies, which we'll talk about in a little while. ZIEGLER: How would you describe your overall experience with the Young Professionals Program as a whofo? CADARIO: Well, it was good because--! think because the Bank,was busy growing and there was more than enough work to do. And . . . · ZIEGLER: This was at the end of the [Robert S.] McNamara period, which was a high-growth period. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 7 CADARIO: Oh, the high-growth period was still ori in the mid-'70s. It was slowing down a bit, and Mr; McNamara was around until 1980 .. ZIEGLER: '81. CADARIO: .. '81, and thei:e were enough people around the Bank who were brought there by Mr. McNamara so everybody was quite keen to do things. That is still true, of course, and this was· true the whole time I worked at the Bank: I joined in '75, but everybody was still talking about the 1972 reorganizatiOn and the creation of loan officers. And we on the project side all had very strong views about 16an officers, but of course I had worked with loan officers so I saw that they were generalists of somewhat variable quality. And, well, I had experience of what do they do exactly, and some of them just wrung their hands and picked menus for official lunches. But others knew very well what was going on, and it struck me that the good ones actually were very good because they knew who was behind the third door in the hallway on the way to the minister's office and that that was the person you had to know both before and after you wanted to see the minister because that was the person that the minister turned to and that was the person that was going to get whatever the minister promised done. And those were good loan officers, and they were excellent. . - The YP Program was. very much a learning experience, but you were thrown right into the deep end, if you had a good manager. And I think that the general standard of managers at that time, by the standards of what it was to be a good manager at that time, the standard of management was much higher than it became in the course ofmy career ... · · ZIEGLER: I'd like to talk about in due course. CADARIO: In due course, we'll talk about that. But that people, everyone I met in the aftermath of the '72 reorganization, with the exception of some of the weaker loan officers, people knew the country, the managers were very hands-on, they rolled their sleeves up, they read things, they gave you feedback (some which you didn't want), they edited things if they didn't have the right direction on them. They were also very good, and we'll talk about this. When I graduated from the program, when I came back from Guinea and the division chief and his deputy called ine in, and I thought, "Oh, my God, what did I dor And the.division chief said, "Well; I don't really see the need to keep you around for six months. I'd be afraid that South Asia might attract you., I will confirm you right now." After two months with him: "I will confirm you, and I want you to stay." Since ~thought working on Guinea was really cool, I was really excited by some of the engineers that I · was working with. It was a good place ... ZIEGLER: So this was your first assignment. CADARIO: Well, yes, my--my second YP assignment turned into my first regular assignment, getting - confirmed after being there for two months. But you had--in the way that the Bank was configured, both on the programs and the projects side, you had people on the programs side that understood the countries, were diplomats and strategic, and you had people on the projects side that had tremendous depth and practical experience with the problems that the Bank was helping solve. You had people that had run highway departments. You had people that had run rural extension programs. You had people that had been--not volunteers for the Peace Corps but that actually worked in governments. Now, that was partly Paul Cadario April 4, 17, 22 and 30, 2013 _ Final Edited 8 because there were colonies when these people were starting their careers and the Bank was able and very lucky to get some very smart people. ~ And Robert McNamara had very high standards. He expected his management to perform and had a very strong senior vice president [J. Burke Knapp]. Slackers and idiots were just not tolerated. And there were some extremely talented people from whom it was possible, if you got to know them, to learn a great deal, and if you went on mission with your manager--because they went on rriission--and they came on mission to meet the illinister and to get in the Jeep and go out to the countryside and to have dinner with you and regale you with stories about how the Bank had been. ZIEGLER: I remember there was what the--in East Africa there was the Agricultural Development Service I think it was . : CADARIO: . Oh, yes, yes. ZIEGLER: .. and that had a whole bunch of Brits who had been:·. CADARIO: Oh, yes. ZIEGLER: .. in the colonial service, and they were recruited for that. CADARIO: Right. And we'll come to that later. I have a little story about that. But the Bank even had a hub in West Africa, too, where all these people had been former colonial service officers. And in fact they knew some of the people who were what we would today call clients. And so when they arrived, "'.ell, the red ca.rPet came out and these people spoke with authority that was received with a tinge of fear, and like you got this sense that some of our clients were quite impressed with Bank people, even if you didn't know them yourself I took the assignment, and moving into that I wasn't just going to work on Guinea, I had to work on Sierra Leone.'Well, Sierra Leone--and this is a very interesting story, which I think I was glad I had this . experience my first trip.~ Sierra Leone we were going to build something brand new. We were supposed to go and pre-appraise the Freetown coastal road. The Freetown coastal road was an expressway that was going to co~e from the ferry, the place where the ferry from the airport arrived, and right into the heart of downtown Freetown, which was a small African .capitaL And we w~e sent off with a preparation report from detailed engineering that had been done by the Bank: as executing agency for UNDP [United Nations Development Program]. My predecessor for Sierra Leone, who was a young Ghanaian engineer thought to be quite a hotshot, had been' in charge of this. So of course you read the feasibility studies and all the documents with it. Four of,,us were sent off, and the four of us, we had a highway engineer who had been in the Bank for a year all.d a half. This is a guy who couldn't go to Guinea because he was afraid of the Soviets. We had me who had been in the Bank for nine months. We had an urban specialist who had been in the Bank for six months, and we had ~other YP who had bee~ in the Bank for three mont}J.s. So the comqined Bank experience of this group was somewhere under three years. Offwewent. I ZIEG,LER:· Would that be considered unusual? Because I remember I came to the Bank in '72, and it was nothing to some who had been back for 20 years at that time. And today, of course, you don't--we don't see that. So that seems like an unusual .. Paul Cadario Api:il 4, 17, 22 and 30, '2013 Final Edited 9 CADARIO: Well, in a way it was. ZIEGLER: .. rmx. CADARIO: But with George [Trnka], the highway engineer was in his--1 would have said late 40s, so · he was someone of experience but had just joined the Bank recently. And he was one of the people that were around and available to go and deal with this problem because we committed to do this. project, but it languished a bit. And why it languished wasn't obvious until you got there. Okay. So as was the case in those days, the Bank mission is staying at the best hotel, which was a 15- minute drive from the center of the city down this gorgeous beach and you get to the Cape Sierra. So what you did was to take the airline bus from the airport to the ferry. You go across the estuary. You get to the city. The airline bus takes you in the center of the city, and then you get a cab .. So I get on the.airline bus and I'm taken to the center of the city and I'm looking around and thinking, "Well, this is exactly, this is downtown Freetown, this is all suppos~d to be terribly congested and the road is going to help." But I'm thinking, "It's 3:00 in the afternoon, where is all the traffic?" So this is very puzzling, so I'm thinking, well, this is funny. And I get my map out and take a· look. Well, this is exactly where they're 'saying there's congestion. It's supposed gridlock, which we didn'tuse those terms. But this is all very Graham Greene. The whole place is like where are the cars? Where's the traffic?. · Where's the gridlock? So we get to the hotel, and everybody else is arriving on different flights. The urban guy arrives and everybody arrives and we're sitting and having dinner. So the urban guy says, "Well, how did you come in from the airport?" So we all told him, "Same way you did." He says, "Well, there I was in Freetown this afternoon, and where was the traffic?" He had had exactly the same impression. So I said, "Well, funny, I had that sense, too. Like, what do you think the issue is?" And he said, "Well, where do you think the traffic would be?" And I said, "Well, I don't know. It seems like--1 would have said it was half what's in the report, and I guess maybe I don't know what's going on today, but no traffic." Anyway, so we ferreted around. It was quite clear that the government was determined, all the civil service, "We have to do this project. We have to do this project." We're saying, "Well, we have to look at the economic justification," because the economic justification was a little squishy anyway. But, anyway, so one afternoon Peter [Midgely] (the urban specialist) and I are saying, "Look, this is just getting worse. We're not getting any data. The government is adamant. The Ministry of Public Works is adam~nt, but we're not getting any facts. We've got to find out what the story is because none of us think there's enough traffic here." So Peter and I stood in the pouring rain with a clipboard under umbrellas counting traffic for half a:p. hour. It was, as we surmised, half what was in the feasibility study. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 10 ZIEGLER: Who had done the feasibility study? CADARIO: Well, it was an engineering firm, and I don't remember the name of the firm, but it had been supervised by the Bank. This was when we executed things [for UND_P], so we were ac~ually appraising our own work because this was the day when we didn't see there was a conflict and hiring consultants to do a feasibility study that we then made the basis for the appraisal. We didn't distinguish that. Okay, fine. So we're standing there, and the rain has let up a bit. And I said, "Well, why do you think they want to do this?" So we walked around a bit. Pet¥r says, "Look down there." So we looked down. Freetown is on a hill and there's a cliff down to the sea. So we look down, and right where the road would have gone there was a slum settlement that wasn't marked on any of the maps. So Peter said, "Well, the road goes right through here." And I said, "Yes, this is where the connector to downtown rises, and it would come right through and these shacks wouldn't be here." We looked up and this slum was right under where the president's mansion was. The President, whq was not known for having elections, really didn't like the idea that there were slum dwellers. So I said, "Weil, I don't remember. We should go and look at what else is here, but this is the obvious thing." And he says, "Well, but these people are all going to lose their homes and their livelihoods and everything. We can't be party to that." Well, at that point in the Bank's history we didn't have any resettlement rules at all, like there were no resettlement rules at all. But Peter was determined that these people were not going to be evicted, have their houses tom down. And I said, "Well, yes, but we don't have justification anyway because the traffic counts are wrong. We're going to have to have the government re-do the traffic count to prove to themselves." So I said, "But there's more than this going on because nobody wants to tell us about this slum, and everybody is insisting that, well, the traffic counts are fine but we're not going to re-do them." I said, "There's something else going on here." So we chatted over breakfast, and so the next day, while my colleagues went off to have yet another unpleasant meeting with the government, I went off to the Ministry of Justice where the land records were, and I went through the land records. Now, the fact that I could just walk in, "Hi, I'm from the World Bank. I need to look at the land records because we need to get an idea of property acquisition costs," and this was fine and they showed everything to me. I made a list of who owned all the property and all the people who owned the property were relatives of the President. So the President was going to actually make out quite well on this unjustified road that involved resettlement but also a little whiff of corruption. So we said to the government, "We're not going to do this and here are our problems with it," but we didn't tell them about the land issue because I had ·done this. And we didn't have photocopiers. I had to write everything down. · We were to leave for Washington on Friday night, and at 9:00 on Friday morning we were told that the President would receive us that afternoon. Of course, the mission leader, the guy from Czechoslovakia, Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 11 was just horrified because he was sure that we were going to be thrown in jail, and so we agreed t~ do ~- I So we went off to see President Siaka Stevens. When you're received in Siaka Stevens' s office, you walk into his office and there are two stuffed lions that sit there and they are positioned and have their eyes set so they're admiring the visitor chairs. So Siaka Stevens indicates that this is a very important project and he had been promised it by the Regional Vice President, da, da, da. So the mission leader, who had rehearsed all this, said, "Thank you, Mr. President. We will take back to the Regional Vice President your request that he remember he promised you." "i Anyway, the project was eventually killed because Wilfried Thalwitz, the project director, read the two ~ versions of the back-to-office report, and then I was called in to show the notes that they--where there's a memo to files· that just says, the notes I took of the owners of the property and put it in the official files. a~ And that was cc'd to everybody. t)S:: - j~ t.O c::» ('J en . - . ~u ~~ c:> And Wilfried went off to have lunch with the Regional Vice President and the programs directo~ ;3 ~ ~ ~ r:: And after lunch, the mission chief was called ,.., Cl" ':> to Wilfiied's office, and he came back and he said, "Well, it appears that the programs director was not at his best during lunch with the regional vice president, and so the project is killed. You have to write the letter to cover that." But I think I dictated the letter because you dictated letters in those days. Anyway, so that was my introduction of West Africa and doing a project. ZIEGLER: In 1982, you transferred from the Highways Division of the Western Africa Projects Department to Agricultural Division 1 of that department. That seems to be quite a considerable change in the area of expertise required. How did you handle that transition? CADARIO: Well, that was interesting, and it relates back to Wilfried Thalwitz, who was the project director for all this time. I had been, in that time, gone and done--what did they call them? They weren't called TTLs [task team leaders]. What did they call--project officer? What did they call us in those days if you were the ... ZIEGLER: Not loan officers? CADARIO: No, no, no, I was the person on the project side who was in charge ... ZIEGLER: Um-hmm ... CADA:filO: Well, I did the first project in Guinea Bissau because the hlghway maintenance project in Guinea was turning out pretty well, and Guinea Bissau was joining the Bank. And Guinea Bissau had now jtlst joined the Bank, and so the Bank decided that we would do a highway maintenance project. So I had to go off to Guinea Bissau. . · ZIEGLER: Former Portuguese ... CADARIO: Former Portuguese colony. Portugal collapsed, and the--1 don't know if it was called the Frelimo, but I've forgotten what the name of the rebel unit--because we got Comrade Tito, camarade le commissaire (obras publicas), and they all spoke French because Guinea had helped them, but I didn't speak Portuguese. So anyway I spoke French to them; they answered back. There were a few that spoke English in the Central Bank and the Mi.Jiistry of Finance for this project. '-; .Raul Cadario April 4, 17, 22 and 30, 2013 Final Edited 12 / Anyway, but I was doing only highway projects. I had been to Cameroon, I had been to Ghana. The Guinea one was a raging suCC<;!SS for the time. We were doing a second project in Guinea or we were appraising one. And then Guinea Bissau. So the projects director called me to his office and said, "We're doing more infrastructure, roads and dams and everything. We're doing more infrastructure in our agricultural projects in Nigeria than we are in all of West Africa for roads. I look at the portfolio of infrastructure, it's only agriculture, integrated rural ~evelopment projects, so I want you to move to the Agriculture Division because I need somebody over there who is not going to be bamboozled and ·steamrollered by excessive requirements for infrastructure." I said, "Oh." Well, the highways division chief was none too pleased that I was going to be leaving, but there was a nice farewell party, and one of my colleagues said, "Well, you realize when you go to Nigeria, Paul, you're going to be joining the theological definition of hell." Great. So .I joined the team. It was a big team run by Di~k [Richard G.] Grimshaw to do integrated rural development projects in Nigeria and they needed an economist who'd say why do these roads cost so much. And, of course, the big issue on the projects in Nigeria was fertilizer subsidies, so the Bank, of course, would not pay for fertilizer subsidies, and I don't even think we paid for the fertilizer that was going to be that heavily subsidized. But the government said, "That's no problem.". The Nigerians just made their transition to elected, from military regime to an elected government. And I think t):i.e week before I left, for my first mission to Nigeria, to Kaduna, two things happened. The American Airlines DC-10 crashed, so they grounded a lot of flights while we were in northern Nigeria on rmss10n .. ZIEGLER: Oh, i remember ... CADARIO: They grounded every DC-10 in the world, which--of course, everybody flew DC-lOs. I think it ... ZIEGLER: One of the engines fell off. CADARIO: Well, yes, because of maintenance, because they were using a forklift to move the engines and they cracked it. And, anyway, so they grounded all the DC-lOs, which made the exit from Nigeria a little tricky. They hadn't grounded them all on the way in, but they certainly grounded them all. And this was when they flew to Kano, like everybody was flying from London to Nigeria, because it was the boom in oil ..Well, that was the first thing. The se.~ond thing was Mike Wallace had interviewed President [Shehu] Shagari on television and said to . President Shagari, "I understand, Mr. President, you preside over the n:iost corrupt government in A:fi"ica for sure, maybe in the world. What is your response?" . And the president said, "Mr. Wallace, my ministers wouldn't take bribes if your businessmen didn't offer them.'' So that was my .introduction to Nigeria. And with Nigeria, the first time you left the country you got hassled, as they knew it was your first trip. I Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 13 But after you survived that and got out, they didn't hassle you anymore. And .. ZIEGLER: ·Hassle you in what sense? CADARIO: Well, when you werit through immigration: "Well, you haven't declared everything. Well, we want to look." · "No, you can't look." And check-in was just ages. And it was just--it was a place where, as a number of my colleagues said, if Nigerians spent 25 percent of the time, they spent half, developing, the place would develop at three times the speed it's going, because they're just spending all their time sneaking around. · And th~ Nigerians were--well, we were selling a product that I didn't think was very good, ~nd my·, division_ chief and I eventually had words about that in the sense that we were setting up these rural development projects and staffing them with thirty expatriates. who would work for the Bank. We'd give them UN laissez-passers and they'd }?e. the project managers. And there would, of course, be eight good Nigerians. · (, · So we were doing about the fifth of these things, and i said, "Dick, the cost of the technical assistance is scanda~ous." And he said, "Well, it's the only _way to do it. Otherwise, they'll steal everything." I said, '.'Dick, I know your friends are all very honest, but I can't believe that there aren't eighty competent Nigerians to run this project and we have to get eighty of your old friends from London to run the project" - ZIEGLER: Was he ari old· colonial ... CADA)UO: He was an old colonial and was rough and had a farm and knew the Nigerians. And I don't think I ever saw .him in a tie, except when he had to go to a meeting with the minister. Dick was r~ugh and Dick was blunt, and he was a great manager and got the best out of his people, knew.what people were good at. This ~as' a time when Dick was a rare manager who realized that certain people responded to incentives ' differently. So some people wanted praise and some people wanted money and some people wanted new challer{ges and whatever. And in the course of those three years working with Dick--in the course of those three years Dick was building up his portfolio but then realizing that the north and the south were different. We had set up and he had put me in charge of this big rural technical agriculture technical assistance project where the first week the expatriates that Dick had hired spent a million dollars. And the director of rural development was dismayed: "A million dollars." And, "Well, it had to be done." "Well; yes, but I didn't know you were going to spend a million dollars in a week." Dick said, "Well, how did you.think the project was going to get started?" · · Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 14 Nigeria was a place where we had our little networks, so we would arrive at 6:00 in the morning because you did not want to arrive after dark in Lagos; We would take the overnight flight, arrive at 6:00 in the morning, and go straight up country, not into Lagos. And when we left, we'd spend the night at ITTA [International Institute of Tropical Agriculture] in Ibadan, we would drive in the morning and have our meetings, and then we'd go to the.airport. We'd have lunch, and we'd go to the airport to be there when check-in started at 6:00 because you did not want to be driving to the airport for the midnight flight after it got dark.' So, yes, you had all the coping mechanisms. ZIEGLER: High crime rate, I gather? CADARIO: · Yes, and the later you went the more likely you were io be hassled by immigration on the way out. · _The other thing was it was a very raw place where--like we went on a trip once, and the Nigerians were building expressways. So we drove down this expressway one morning, and there was a body beside the road. Four days later, we came back, the body was still there. It was a place where youjust--you weren't quite sure how dangerous it was, except you didn't really feel safe. _ And, eventually, Dick said--1 was rising; I think I got promoted--he said, "Okay. Well, we're going to split up the portfolio, and I want you to be the first among equals in the south dealing with oil palm." Well, oil palm was interesting because--we would never do these projects today because they involve clearance of forests and the forests--well, actually, it was oil palm and something called gmelina forestry - project. Gmelina was a quickly growing tree, and Nigerians, like everybody else, had decided to put ·in forests . for public enterprise paper mills, and they didn't have any trees except tropical hardwoods. So they ch9pped down the hardwoods and threw them into the paper mills. I think, in fact, the Bank had financed a paper mill, like we had done in Brazil. And then we had to plari.t gmelina. Where you plant them is not only where you chop down the forest but you chop down more forest to build more gmelina because it was quick growing. -, And I thought this is really not good. There were no environmental safeguards, such as they were in the mid '80s, but the foresters said, "We really need to have some diversity, so don't plant, don't chop down anything on a slope that's niore than so much." And they just clear-cut the whole thing and planted the gmelina. And you would travel through these gmelina forests, some of which the government had built and that we were financing, and there were no birds. You just traveled through the forest, and it was absolutely silent because of the monoculture. Pretty awful. But there were two things that were going on that I blew the whistle on. One of them was we had serious corruption on two of the oil palm projects. The other was that traveling outside Lagos you got a completely different view of what was going on in the Nigerian economy because it was all supported by oil. And the transfers were supposed to be made from the central goveniment to the states. The transfe.rs weren't being made, and you didn't know that until you actually went out and talked to people and saw, well, ~kay, but, "Oh, no, the money, it didn't come." And so the states weren't putting in the money for their projects because they weren't getting it from the center. So I wrote a little note thatsaid, "I think there's a fiscal problem." Well, of course for the projects people, agriculture, to write a note saying there's a fiscal problem and here are the four states I just visited and this is what I found out and here are the numbers (and I checked the numbers), well, the programs division was not amused, like, "What is the projects division doing saying that there's a fiscal problem?" Well, the res rep [resident representative] actually agreed with me. Nobody wanted to hear this. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 15 The other thing that I was saying was money is being stolen. I was supervising three oil palm projects, and only one of them is working properly. There were management issues, but the m:ain issue was money being stolen. And the one that was working properly was basically contracted out to a foreign firm who ran this plantation, which was stunning, above international standards, near Port Harcourt. ·And the other 1 two were run by the goverillnent, government departments, government project units, PMUs [project management units], expatriate help, but basically no money and sticky fingers. And money was missing. We didn't know quite where the money was going. An Israeli financial analyst [Ari Chupak] and I spent a year, three supervision missions, documenting· where the money was going. And so I went off to Nigeria and said, "Okay, books don't balance." Well, the government was, "So what?" And I said, "Well, the books don't balance, and I'in not going to say where I think the money is going"-- looking at the Rolex watches that everybody was wearing--"but you're not in compliance with this and this and this. We gave all financial records an audit, and this has gone on and we've warned you twice, and you still haven't fixed it." So I ahnounce to the Ministry of Agriculture senior director in Lagos, "We are going to have an informal suspen8ion of disbursements, and I am going back to recommend tha~ we cancel these projects. And we can't cancel them because there's corruption. We can't prove where the money is going, except neither .- And then you're not in compliance." can you. The Bank's res rep was not particularly happy, but he said, "Well, it's what you got to do." So I got on a plane and went to London, went and had dinner with a friend, and the next morning I'm sitting in the British Airways first Class lounge in Heathrow, sick as a dog for something that I ate I think in London but I don't think in Nigeria, and in walks the country director, Bilsel Alisbah, on his way to Nigeria. So Bilsel said, "Oh, Paul, lov~ly to see you. How are things?" · "Well, I'm sick as a dog, but I'm okay." "How was your trip? How was your mission?" So I explained: "And then, of course, we had to declare an informal suspension of disbursements." Well, this is not what country directors wanted to hear on their way to Nigeria, so he was just beside himself. And I explained why, and I explained, "Oh, yes, we've already sent the letters to government." ' "You did what?" [Begin Tape 1, Side BJ CADARIO: This is what he was going to have to deal with. And then the fact that the res rep arranged all this. But, anyway, we actually did cancel two of the three projects. We suspended them, and we canceled them. ZIEGLER: What was the rationale you gave for the cancellation? CADARIO: Well, the cancellation was that the government--since the Legal Department says you can't cancel for corruption--and I said, "Well, we're not going to continue with this because they're not going to Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 16 achieve their results. If the idea is that the grandchildren of the people that are there now are supposed to pay oack this money, the money was all stolen, but they are not in compliance with financial management obligations, and we told them that. We've done it twice. We told them that the audits are not acceptable. We did at least have all the financial management stuff, and we documented all this." I said, "We're going to suspend it and cancel it because its objectives will not be met." Objectives not being met was actually okay as far as the Legal Department was concerned because we said, "Well,· it says the government has ·committed itself to these objectives, and it's quite clear they're not doing anything to achieve them." It took quite a while to negotiate internally. The federal government was of mixed views. There were some people who said, "Well, we don't like those two states anyway, so go ahead." There were others who were annoyed because the one project that . was working that was doing quite well was run completely by expatriates, like there were Nigerian staff, bi'.it it effectively had been contracted out. They were more business-like in the east, in the former eastern Nigeria. So we survived that. · On my last trip to the forestryproject--well, we would be very tough in the_ project area with the project management, what they weren't doing, what they needed to do better. Then when we went to Lagos, we'd say, "The problem is that the provincial capital doesn't have any money," and then we'd go to Lagos and say, "The .real problem is you're not giving them the money in a timely fashion. They can't plan. If they .can't plan, they can't buy the stuff they need to do the work. If they can't do the work, you're not going to get the trees. You can't do the trees. That paper plant you never should have built is going to be a white elephant." So it was, it was interesting. The ot:P.er thing, traveling around Nigeria, because we would do these long treks on the road and nobody would sit in the front seat the whole trip. And the roads were just treacherous. They were new and wide .. ZIEGLER: Excuse me. So nobody would sit in the front seat? CADARIO: Well, yes, because you didn't want to be thrown through the windshield. ZIEGLER: Oh, okay. CADARIO: 'They had rules about Bank staff and roads and vehicles were--but working in Nigeria you really-~it was the whole point about you are the Bank because we didn't have, we didn't have telephones, we dicfu't have email. If you wanted to get back to the Bank, you had to do a telex. So I had to learn how to run a telex. The final trip Dick Grimshaw said--Dick was about to leave, too--Dick said, "I want you to do a little tour, and I want you to stop in some of the middle states because I'm interested in whether we're doing the right thing there because I think we've calmed down a bit on rural development and we've got a model. But go around and give your impression.". So I went around. And one of the things, we did a little detour to Abuja, which the government was spending money on. But .. ZIEGLER: This would be the new capital ... CADARIO: The new capital. It wasn't open yet. "Well, let's go and see if we can find it." Well, the driver and I looked all over, and we couldn't find it, and, well, what are they spending their money on? It's supposed to be here, but where's the new capital? Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 17 And I canie back and wrote a lengthy piece about my experiences looking over the south and what did we need to do next. And I said, "The interesting thing about Nigeria is, I traveled through vast parts of Nigeria and there were no people. And this is a country that claims to have 125 million people. Where are they?" And that, of cour~e, was the big issue. I think that Nigeria is only up over 100 million now, so this was in the, , early 1980s, and the Nigerians were saying they had 125 million people. You looked at the food production and you looked at a whole lot of things, there was no way that number was right. But, again, the Bank was not prepared to say this, and the programs department was, again, very unhappy that the projects people had gone traveling all around. And, of course, they never got out of Lagos, the capital. They had no idea what was going on. I enjoyed that on-the-ground experience. Dick Grimshaw and I had a reputation of being very firm with the government and to the point Where, well, I never got into a shouting match with a client, but Dick would get into shouting matches, and then they'd go out drinking and it'd be fine because people need to understand that. So when I was leaving to go back to do, go back to West Africa programs person, which I guess is the next thing we're going to talk about .. ZIEGLER: Hmm. ·+ ~ I i=fil f:~ - (0 Cl ~ & . ('.! u:i:: Cl') ~~ ooo c::> et:: qi..l i:; ~~ <( :E .& 0 0 :>< '') You could be blunt because Nigerians loved it, but it was a matter of, "We're all in this together, and, my brother, you must understand that this will not work unless you" da, da, da. And, again, I think that that was a very fine line to walk in those days, but a lot of us tried to behave that way. And basically we all knew at some point or we had , managers who knew what the line was that the Bank didn't cross. But when I think of the notes I wrote to people about what I'd seen and comments to government about what they were doing, I got away with a lot because I think that, if anything, we're dealing with clients in the Bank. There wasn't time to pussyfoot around. If your good intentions were clear, then the clients were actually quite interested in what the Bank thought. ZIEGLER: You later worked in two country program departments in the Western Africa region. What Paul Cadario April 4, 17, 22 and 30, 2013 · Final Edited 18 were your notable activities there? CADARIO: Well, that was fun and a part of my career that I look back on with fondness. In 1982, when I was in the agriculture division, again I was sumnioned by Wilfried Thalwitz, who was the director, to say, "Well, you've done a great job, and my colleague, Xavier de la Renaudiere wants to talk to you, and I'm not going to tell you what it's about, but talk to Xavier." So, anyway, I run off to Xavier. Xavier was the country programs director. Xavier was very French and ~ very cunning, like foxy and played four moves ahead and a diplomat, the consummate diplomat. But unlike the people, a lot of the people around the Bank who were just diplomats, he actually knew what he d3I ~ was doing and was very clever. ell c.o =~ ~j - <.;;; ~- u:I: ;a~ c:::> ~ ~ ·.= = ~~ 0 ::£: fr ~ ~ Xavier was really good. So, anyway, Xavier said, "The guy who's in charge of Senegal is leaving. I think you are one of the few people who actually understood Guinea and the politics and the region, and I think we need a new look at Senegal. So I'd like you to come and work on Senegal." ."Okay." ZIEGLER: Was [Leopold Sedar] Senghor still president during ... CADARIO: Yes, yes. Senghor, yes, well, Senghor was president forever. So when I worked on agriculture---well, I had--the French countries were interesting, and I liked working ·in French and working on French countries. Wilfried said, "I think it would be a good move for you. You've been in projects for a long time. It's probably better for you to move out of Africa, but Xavier is keen to have you and I think you'd do a good job there.'.' So off I go to Senegal where they had done a structural adjustment loan, I think the first structural adjustment loan that had ever been done in Afric8: because this was in the '80s. So '82 I arrive, and there was a little problem of the second tranche, so I had to go as the senior loan officer to work out what the problem is, we really Want to release the money. And we had a res rep in Dakar who was diplomatic but not terribly strong. And my predecessor had also been diplomatic but not particularly strong. So I went in and--and Chris [Christopher J.] Redfern .. ZIEGLER: Oh, I knew Chris, yeah. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 19 CADARIO: .. was the country economist for Senegal. So Chris had said, "Well, I'll let you make your own judgments, but, you know; the country is not adjusting." So, anyway, I went and got the loan and loan agreement and said, "Okay, so where do we stand?" Well, it turned out that there were eleven conditions for the release of the second tranche. The only people who knew what's in the loan agreement were in the Ministry of Finance, but all the conditions required some other ministry to do something. And it became fafrly clear that there was not terribly good coordination within the ministry or with other ministries. 1 So I said, "Well, we should convene a meeting with the senior people from all the ministries, and we'll have them over to the Bank office and we'll give them coffee to have a discussion of this." So they were all invited, and they all came, and they all looked at this, and they saidM-the loan agreement-- and they said, "Well, what's this?" And it turned out that the Ministry of Finance hadn't bothered to tell any of'the line ministries what they were supposed to do. And the line ministries were somewhat annoyed to be told this and that what they were doing was standing between Senegal getting the money and not .gettingthe money. And they were really annoyed that the minister of finance had agreed to this without telling them. · So that was the ruckus in the meeting. And the Ministry of Finance was furious that we had gotten everybody together; And I said, "Well, who· did you think I was going to get? We thought you had gotten them all together and did''--the whole issue of why did my predecessor, why did we agree to this if we didn't think, like who were we talking to when we were doing this SAL [structural adjustment loan]? So I had to go off and brief the deputy illini.ster. I briefed the deputy minister--or the director general sometlling or other--and I briefed him. And the deputy minister was very kind, and he said, "Well, I knew you were in town, and J do want to say it is very good that we have a new voice speaking for the Bank, and the next time I see Mr. de la Renaudiere I will say that I appreciate his bringing in someone who will look a(our collaboration with new eyes," which I think was a signal that they weren't partiCularly happy with how things had worked before, which Xavier had probably sensed but never would have had the conversation. Xavier wanted to bring in somebody whose style was completely different and see whether he could get to the bottom of what's going on, which, of course, I had. So we.chatted, and I said, "Well,"--and when I left, I said, "Well, I think the last point I would make on the second tranche conditions, and I cannot say wh'at the Bank will do in terms of waiving any because . we're not at that point yet. Given that you haven't met any of the conditions, we're not going to waive them." Of coqrse, the French--! had to go and briefthe French embassy, and they were beside themselves to raise the mqney because they were on the hook. They guaranteed the currency, they propped up the government. They were doing something in parallel but relied on us. They were beside themselves that we had found this, and they didn't seem terribly surprised, but nobody in the line ministries knew what they w:ere supposed to do. But I said, "But, Mr. Director General, there is something else. This is my first time tO Senegal. I think it's really important that you proceed with this program or you adjust it because you realize, of course--my"impression of Senegal is that Senegal has two exports: groundnuts and charm. And the world price for both is falling." So the director general was a bit taken back and then laughed, and then he said, ''Yes, I think, ~ctually, that's a point a lot of people don't realize." Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 20 Anyway, at this point, after I had done my first mission and upset the applecart and put the bright lights . on what was not going on and Senegal was important, Xavier calls me in, and he says, "Well, the loan officer from Guinea has decided to leave ,the Bank. He's going back to England. And, Paul, the reason you're here is I really appreciated how well you understood Guinea when you worked on the project side. of the house. So I'm wondering, Paul, if you would mind if I moved you 9ver to work on Guinea rather than Senegal." This :r;nay, of course, also.have resolved a problem, and that having a new eyes and ears on Senegal was important but, nonetheless, maybe he didn't need quite this much change. And that was fine. And I said, "Oh, I rather enjoyed Guinea. I have many good friends in Guinea, and I rather like what's done in Guinea and I follow what's going on. So, yes, I'm very flattered that you'd ask me to go back again to Guinea." So I arrive~ back in Guinea, which was great. By this time we had a whole lot of projects, and Guinea was at the point where we were blocked in Guinea because they had an inconvertible currency. There was a black market, and the currency was terrible, and they had a terrible human rights record, and Sekou Toure was still in charge. And it was an important country strategically because there was a war going on in Angola and guess where the Cubans and the Russians were landing airplanes on the way to Angola? It was geopolitically somewhat important. ZIEGtER: They were somewhat sympathetic to the Soviet Union, as I recall. CAD ARIO: Somewhat, somewhat--well, like the full extent of what had happened didn't really come out until later, but the thing was that after Guinea said, "No," and the French just took all the light bulbs and left in 1958, Sekou Toure really had nowhere else to turn. And it was only when the Bank intervened- . -and then the whole issue of France really did cut them off. General de Gaulle said, "Guinea made its. choice; and we are not going to guarantee the Konkour:e hydroelectric dam and aluminum plant to sit right next to the biggest deposit of bauxite on the planet. We're not going to guarantee it; they made their choice." And that was in '58. By the.· time I started to work on Guinea, the Bank had figured out.a way to do a guarantee for all the infrastructure for the bauxite mine. But the aluminum plant had been built in Ghana, and then there was another one built in Cameroon, I think, so that effectively Guinea's road to wealth, which would have been from taking their bauxite and turning it into aluminum using their hydroelectric power, had been basically foreclosed when Guinea chose to be immediately independent. And Guinea was still smarting from that. And the French were saying--well, the French were not real happy that they made the choice. De Gaulle was gone by this time, but relations between Paris and Conakry were still very chilly. The French had opened an office of the Caisse Centrale there, and I don't know whether they had an ambas~ador. I don't think they had full diplomatic relations, but they had Caisse Centrale there. So Guinea had changed a bit in three years. So offil go to Guinea. And I'm the loan officer, but of course I traveled all around the country and I had a sense. So I'd deal with other government--other ministries, and when the projects pe9ple came in to do, like, James Bond did his first mission to Guinea, and I took him there. And; of course, "Monsieur Cadario would be accompanied by Monsieur Bond, James Bond." This was, "Well, of course, who else would Paul bring?" So James Bond was brought around to everybody. ZIEGLER: I remembered there was an article about him in Bank's World. CADAIUO: There was. Exactly. And, Guinea was his first mission, and I was there to Illi!ke sure he got properly introduced to Guinea. And Guinea was a terribly sad place because you had--it was a city where Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 21 you had the French colonial architecture, because Guinea was far more important than Dakar or Abidjan was because Guinea was a country with resources and Guinea had a huge reservoir of French expatriates who had worked there and they were all expelled. They all went back to France but had the fondness for Guinea and the Guineans, and at some level the Guineans had great fondness for them and for France. And so we would have lunch every day at the black market hotel and the black market restaurants, and madame cooked just things that used local ingredients. She cooked like you were in a French bistro. Where she got the food, where she got the ingredients was never clear: I Anyway, we're proceeding right along, and all of a s11dden--and I don't remember the year, it might have been early '85, late '84 or early '85--Sekou Toure died at the Cleveland Clinic, had an aneurysm, was flown to Cleveland in the King of Morocco's plane. Died. So what's going to happen? Sekou Toure has ruled the place with an iron fist. And one of his nephews took over the highway project and had gone to jail for it. My successor, Frida JOhansen, on the highway project had denounced the corruption in the second and third highway project, third highway project where the guy had built a tennis court at his farm and do~e the road to_the road and all this. And he was put in jail. He was tried for corruption and diversion of state resources and bad management of a World Bank project. And for bad management of a World Bank project he was given the death penalty,. which was commuted because he was the president's nephew, after all, to life imprisonment at Camp Boiro. And as Xavier said at the time, "He'll probably, after a.month or two at Camp Boiro, wish he'd just been executed," because Camp Boiro was really very unpleasant. One of the ministers, one of the president's other, his half-brother, Ismael Toure, us_ed to go down, if he was bored on Saturday night, to torture people at Camp Boiro. This was not a nice place. And you had the sense that there was--that there were--that everything was bugged. It was not a nice place. But it was, nevertheless, opening up a bit. · And the Bank had quite good relations with Guinea. And I was a loan officer, and I had good, very good country economists, Eugene Scanteie, who was Romanian and Canadian. And so Eugene and I would go off and, as somebody once said to us afterwards, "The reason that we didn't like the IMF" [International Monetary Fund]--Guinea had no relations with the IMF-"was that the IMF expected to sit in an air- conditioned conference· room and have data brought to them." And he says, "It's bad enough that we didn't have any data or statistics, but we didn't have any air-conditioned conference rooms either." The Bank didn't worry about that. The Bank teams came in and rolled up their sleeves. You went around; you met people all over. And when I would go--we didn't have an office, either, so I would go to UNDP. Ifl needed anything or telex, I'd go to UNDP. But I would always let my friend, the head of the highway project, know I was there. He would lend me a little Deux Chevaux for the time of my trip, with my driver, Mr. Diallo [phonetic]. Mr. Diallo would come and pick me up .and I would go around to Conakry in the front seat of this t~o-person Deu:x: Chevaux, bright green. So of course everybody knew where I was because the car would be there and there weren't a lot of bright green Deux Chevaux, which was--it was funny. Bengali Camara, the manager of the highway project who had. said, "You have to understand the revolution," had been the. per~on who had helped finger the minister who had stolen the money from the highway project, and everybody thought he was going to go to prison, too. But, no, he had laid out all the evidence so that it was easy to find. He was now the head of the port authority, so I would call him and he would give me a port authority car, the little Deux Chevaux. And sol had my connections with the Guinean government. So Sekou Toure dies. "Oh, what's going to happen?" I was, of course, the senior loan officer for Guinea, so it came to me to write down was going to happen. So I wrote the note, the only person in the world to write a note that said, "There could be grave Paul Cadario April 4, 17, 2~ and 30, 2013 Final Edited 22 turbulence. They're his family, and there's Ismael Toure, the half-brother, and there is another relative who's the minister of health, and there is, of course, our friend, Mohammed Lamine Toure, who is1he ·ministbr of public works, former minister of public works and nephew of the president. And then the:re are . two or three other personalities. So," I spid, "nopody ever expected Sekou Toure was going to die., This group is divided in terms of their openness, a:nd Ismael Toure is a very powerful minister of mines with whom the Bank basically ruptured relations because we said we would not finance the 1100 kilometer railway." (And Marianne Haug did this bluntly in her own way. She said, "This is just fantasy. This is a dream, and the World Bank does not finance fantasies. And if you'll excuse me, I have another lunch," and went upstairs to her room a~ the Grand Hotel de l'Opera in Paris.) Well, all right, that really was something, and Ismael Toure might well become president. I said, "The only question is what will happen in the barracks. We do not have relations with the military; we do not know anything about the armed forces. From the little I have seen, the French probably have had, in their thawiIJ,g of relations, some relationship with military officers, and I cannot imagine that the military would let Sekou Toure 's family plunge the country into civil war based on tribal grounds. And we will just have to see whether there's something that's going to happen from the barracks." And seven days later .Sekou Toure's relatives were overthrown by the military. I was the only person in the world to predict that. ·So then, of course, they open up. The first thing they do is they send send a telex to the Bank to say, "We'd like to have a mission from the Bank to figure out how we can have a mission from the IMF." At this point, we're in business. · So we then did a big structural adjustment program and said--first goal was to join the CFA [Cormnunaute Financiere Africaine] Franc ..And the structural adjustment program was negotiated. We had a new country economist, a very clever Frepchman, Jacques Daniel. ZIEGLER: There were a lot of clever Frenchmen around the Bank. CADARIO: Yes, there were. In those days, there were a lot of clever Frenchmen, former colonial peopl~, probably all associated with the French security services, and they all knew Africa really well. So we had a really clever French guy who--and by this point we also could open a country office. We were given one of the villas that had been built for the OAU [organization for African Unity] conference, _which was been held the year before, right in downtown ConakfY, walking distance to the Novotel. And we were given one for the office and one for the res rep's house. · So we'are in business. So we're doing structural adjustment. And it's decided that the President of the· Bank will go to Guinea because they've really made all the right' ... ZIEGLER: And this is [Alden W.] Clausen ... CADARIO: Tom Clausen. 1 ZIEGLER: Yes. CADARIO: And I'd have to check the date. Was that before or after we were doing the structural adjustment loans? But, anyway, we were moving right along. I think maybe, I don't know, that would have been '85 that he went. I think it was '85. Anyway, so we prepared all this, and the Guineans moved along with the structural adjustment. And we had the ~ank former country economist, who was now the IMF res rep [resident representative], and then ' i Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 23 we had Louis Goreux, and Louis was the guy who had negotiated with .Mobutu [Sese Seka] the IMF program in Zaire. And Louis kept-saying, whenever he would say, he meant to say Guinea, he'd say Zaire. And whenever it was just awful because Louis kept saying Zaire. And the whole issue of, well, what the Fund had done in Zaire, whether. that was what we wanted to . model Guinea on. Same issue about dictators, but now we had a military regime that was trying to be friendly with the French, and the French : had reopened an embassy. · 1'\nd the other thing about when I dealt with Sekou Toure and even when I was dealing with .. ZIEGLER: Did you ever meet him, by the way? CADARIO: Oh, yes. He was scary. And it was just very brief. I never had to go and sit through a whole meeting with him. And before Sekou Toure died, Xavier de la Renaudiere had actually made some inroads in terms of, "M. le President, if you want to do what needs to be done in your country, you will have to come to agreement with the Fund. We have reached the point where the Bank cannot help you, other than project by project by project," because Sekou Toure and his team wanted the structural adjustment loan. And we said, "No, your currency is a mess. You've got to have an: agreement with the Fund on the currency, and we're not allowed to talk about currency. But until you get that agreement, we're not allowed to help beyond proje~ts." And then Sekou Toure died, and then we had prepared the ground so the Fund could move in fairly quickly after he died with the Babk, under cover of the Bank. And Louis Goreux had dealt with these · bizarre situations. And, of course, the Bank knew tht: economy because, to the extent that there were statistics, we had done things by this time in agriculture and we had done things in roads and we had done things in education. We had an idea of how the economy worked, and Eugene Scanteie and then Jacques Daniel, who were both very good at teasing data out of people or taking data and doing it in a way where it was plausible that it hung together. So a lot of the Fund's work that they needed done to do a program and then for us.to do a structural adjustment loan w~ere co-financing was in place. So we got along with all that. And then )Ve brought Tom Clausen, and that was the reward because they were well on their way. And Wilfried Thalwitz was there. And Wilfried was by this time the RVP [regional vice president], and so he was accompanying Clausen. And, well, they're going tn stay at the state guesthouse, and I said, "Well, that's fine. You'll have to, but I'm staying at the Novotel because I' need to be sure there's going to be electricity, and I'm going to try to figure out a way with the res rep that you don't have to stay ~t the state guesthouse because it's going to be awful, bu~ please don't tell Mr. Clausen that." So then, of course, we had to write up briefing books. So I wrote up the briefing books. And I don't remember why I threw them together very quickly. It was something to do with, I think maybe I'd been on vacation and then came back and had to write all these briefing books for 'an the meetings. So 1--you get the model from the President's office, and I took the model rather· literally. So I said, "Okay. First thing is why are you having this meeting? Second thing is what do you need to know about this person? Third thing is what we'd like you to say to him. Next thing is what he's likely to say back to you and how you need to respond." And we got that all on two pages. So fine. The briefing books were prepared. And Wilfried signed off on them, and off we went. So the.only thing I remember about Mr. Clausen's trip was that we brought the most wonderful interpreter. (So actually this was maybe after the SAL was done. But, anyway, they were happy with us; we were happy with them.) We brought along the most wonderful woman interpreter who became a celebrity on Guinean television, a French woman. And she just took everything that Mr. Clausen said, Mr. Paul Cadario · April 4, 17, 22 and 30, 20.13 .i Final Edited 24 Clausen being very low key, and made it exciting. So we were followed around by television cameras, and you'd watch this thing in the three days he was there in the evening. He would be saying something, but the camera would be pointed at her because she was doing the talking. So Mr. Clausen and--and it was a big mess because Mr. Clausen was going to fly commercial from Cameroon to Guinea. And then the President of Cameroon says, "Oh, Tom, I don't know why you're flying commercial. It will take you forever. Let me just lend you my jet.'' Well, of course, Clausen was going to arrive an hour and a half early because he wasn't stopping everywhere. So I got out in pouiing rain, and I come out with the government to meet him at the plane and look after him. The government guesthouse was every bit as awful as we had thought. But it was a good trip. And Clausen was--he read his book and did what he had been asked to do. So we get rid of Clausen, on a plane to wherever he's going, I think to Paris, I think to Paris. And so I'm back at the hotel and I turn on the television, and Wilfried is going out on another flight. And I said, · "Well, do you want me to go to the airport?" And he said, "No, no, no, you've done a lot ofwork. It's fine. You can go, andthe driver will take me to the airport." And the res rep was junior enough to take him. So, anyway, I'm at the--I'm watching television, Mr. Clausen and all, and there's Wilfried saying, "And, of coll!"se, economic freedom can only be enhanced with political liberty." And I'm thinking, "That was not in his briefing book." At this point, we weren't exactly sure what the government's intentions were about political liberty. Well, the government played this every 15 minutes for the next two days because they wanted to send the signal. Now, whether the signal was genuine or not, you know, was never really clear. '' . . . And a lot of what we did in the structural adjustment program was very edgy for the time, like we did the first civil service census that had ever been done in any African country doing structural adjustment program. The government said, "Well, we need to do a civil service census, but we still have loo many people. What shall we do? Should we test them?" And we said, "Test?" And the minister said, ''.Yes, test." The minister of finance said, "Paul, yes, he said test, testing." ' I said, "Well, yes." And so they appointed this young guy, and we helped the Ministry of Finance through the Ministry of Agriculture do a test. We started off on the livestock part, and, oh, you had to be tested if you were going to keep your job. That was how the government was going to decide, now that we knew. who was there, that was how the government was going to decide who would be kept. ZIEGLER: So they didn't even have a real grasp of who was in the government? CADARIO: No, no,'this was pretty typical, like ghost workers were the big issue in the '80s when you were looking at governnient finance. Well, actually, how many people are there here? How many people are fake? How many people are double dipping, etcetera? Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 25 And we got the census done. The French government and the Bank co-financed the census of th~ civil service. And then it was, "Well, how are we 'going to decide which ones to get rid of?" And the government said, "We'd like to have a test." And I said, "Oh, this is not going to end well." But they were just adamant: "We're going to test them," because otherwise there would have been tribal issues, et cetera. ZIEGLER: So this was a objective type test? CADARIO: That's right. And I think, literally, the people involved wanted it. So we did--this must have been like '86 or '87. The structural adjustment program was continuing. There were issues about the releas~ of the second tranche, and there were great fights. And at one point, I said to the minister of finance, "You need to tell your colleagues that, although I am not going to work on Guinea forever, you better meet the conditions because my successor might not be so libefal and so 'familiar with your country as I am, and the longer you wait, Minister, the more likely it is that that other condition or two other conditions, satisfactory economic performance and a relationship with the IMF, the first two before you get to the details, the first two, the longer you wait the less likely it is those conditions will be met. So I would advise you to tell your colleagues that they better get their act togeth~r on this. We were all in the room when this was negotiated. We're not doing it another Senegal"-- because I told the new minister of finance the whole thing about Senegal----,"We're not making any agreements. You're not making agreements for the rest of the government. They've all got to sit in the room here, and nothing goes to the president unless we've been in the room where the other ministers 1 have made the agreement because we just can't, we just can't have this where some minister says, 'I never agreed to that.' No, we're all going to sit in the room." This led to some very hot meetings, but we came up with a structural adjustment program that actually read pretty well. And, of course, we knew it was going to work well and it would be well described because after a full day of meetings--moving back a bit from the Clausen visfr--after a full day of meetings my YP and I would go to the office to write the government's letter of development policy or to edit it. ·We're not supposed to write letters of development policy, but, hey, the government is giving us their stationery, we've been to meetings, the minister said, "You have you have power at night; we don't." And niy YP was Tamar.Manuelyan-Atinc, so Tamar and I worked in the evenings tyP,i_ng out the govertiment's letter of development policy. We had a great time, and she was a YP. We had a wonderful . time, and she was great to work with. ' And then we would have the review of the public investment program, so Mr. Cadario would bring his red peJ1, the crayon rouge would be brought, and the crayon rouge would be applied liberally to the list of things:«And the Ministry of Planning loved this because if we were doing it they didn't have to. And, of cours~, Tamar and I would explain why this had to, why we had to draw the red line through this because the government had not done this, the ministry needed to show the following, da, da, da. And eventually there Was--the deputy director in charge of pl~g, "I think actually I'd like to make you a present," so I gave him my red pen, and I said, "You're ready to do· it yourself." · Guinea. was great theater, but it was, I.think, an example of what I like to think goes on today, where Bank staff sat in government meeting rooms and worked with them together on things that were important. There was some conflict, there was firmness, but there was also collegiality and collaboration in coming to, decisions together. And I would hope our younger staff are doing that. I get the feeling, talking to YPs today, that; yes, a lot of them are still doing that, which is great. But I think there was a Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 26 time when people looked at what we did in Guinea and say, "Well, that's really very unorthodox." And I think we actually made good progress. So, no, I could go on about Guinea for hours and hours and hours, but I will--! will finish with one story. [Begin Tape 2, Side A] CADARIO: I'll talk about structural adjustment now. Structural adjustment has a bad name, and I think that there has been--the Bank has done ample research of its own about, well, they got too complicated or foo many conditions. I think that's probably true, and some of them really were complicated and had too many conditions. I suspect, like the one in Senegal I was talking about, that we didn't--we cooked it up with the Ministry of Finance, and then they'd sign because they wanted the money, but there was neither the willingness nor the capacity to implement the undertakings that were· there. And it could well--I'm not sure that there was anything, there was underlying theory of what was being done that was wrong because structural adjustment loans didn't call for slashing health budgets or slashing education budgets. It µright have been that the Bank and the Fund didn't look carefully at where the· government was taking steps to bring its budget into something closer to its revenue. And, again, I couldn't comment on that, but certainly on any structural adjustment I worked on we didn't tell them they ' to fire X teachers or close Y health clinics. had Going back to Africa, as I did for several years just before I retired, to Nairobi, to Addis, Bujumbura, to Kampala, on the trust fund beat, I think that the argument is probably pretty clear and pretty hard to argue with that there would not be prosperity in Africa today and growth, even in the countries that did not have resources, had it not been for what the African governments did with structural adjustment. That's not to say that they implemented them exactly the way it was supposed to be, but they deregulated and they privatized telecoms and they privatized energy and they did all sorts of things that created space for the private sector; And then, also, I think the whole debate over structural adjustment and what it had done also professionalized a lot of goverinnents. I'm not saying that the governments aren't too big and that they're capable of everything they do. But, nonetheless, it cleaned out a whole lot of what had been left by the colonial powers where there were a lot of parastatals and government this and government that and the regulations were just the ones that they'd cooked up themselves after independence. No, there was a legacy of state involvement in the economy that structural adjustment, however clumsily, helped .address. And when you go to the countries that did the structural adjustment, and many of them have had civil order problems and some of them have even become failed states, it's not because of structural adjustment. It's because of other things that, as one of my colleagues who worked on Kenya after the last election said, ''Things about the country we chose to ignore." It had to do with tribalism. It had to do with corruption. It had to do with inequality. It had tO do with who actually ran the economy. And ~hether those people bought the economy at low prices, as one would argue happened in Russia, or whether they were the people that were running the state enterprises and it's now their children that are running the private companies and the state enterprises, J wouldn't want to comment. But I think SAPs [structural adjustment program] in the way it's being used now by the NGOs who actively still do it, this is not an accurate description of how structural adjustment was conceived, how it was implemented, or the impact it's had. And I would argue that if you go to large parts of the world, a lot of that adjustment--which some would argue some European countries need to make now--was actually a good investment in those countries' futures. And cleaning out your banking system, like they did in Indonesia and other places. I think that structural adjustment, if it was properly discussed with everybody Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 27 in the room, was actually, is actually being given a bad rap from what happened. Now, a lot of other things went wrong. Countries fell off the path to democracy, the new elites from the military that overthrew the ~orrupt government before got corrupt, and certainly that happened in Guinea and it happened in a lot of places. And a lot of what we see today ill Africa where there have been civil wars--Cote d'Ivoire, failed states, Guinea Bissau--resulted because countries didn't put in place governments that were going to work and that were resp,onsive to the public al}d gave the public what they needed. . ., · · And so you get to a point where there's really little-way, short of disorder, to get the government back on the straight and narrow. And a lot of the post-colonial elite forgot that this was post-colonial. Our goal in Abidjan and Dakar is not to recreate Paris'. I always used to say when I went to Abidjan I'd rather go to the real Paris, thank you very much, because in Abidjan, I got to eat the croissants that were flown in. It was just vulgar. And the Bank played that--the Bank played into that whole mentallty about the. elites and the elites and all this because Felix Houphouet-Boigny was a big friend and a member of the French Academy, like Senghor. And Senghor--well, I never understood why Senegal was important, but it was right there on the coast and this very !Ong runway ... ·~ ZIEGLER: Well, he and McNa,mara had a real rapport ... ~ CADARIO: Oh, yes. I never saw that, but it was clear that Senghor, being a French intellectual, and r"l~ w ~[1 ....... <::> ~ J ('J McNamara had a very good deal of shared geopolitical view, which Senghor was happy to collude in and E-4 :l:: en Uu ~~ leverage. And I guess Senghor was important to France, and Mr. McNamara understood that our major c::> (l>J sharehqlders need to be listened to, ooo a=: < ~ ta~ ::E ·.; 1 ( So what happened in Guinea with the second tranche? We then had the country director, Ismail ~ Serageldin, and we had a briefing for Ismail because Clausen had been there and Wilfried had been there and now Ismail had to go. So Ismail wanted a briefing book. Ismael was in East Africa for some reason. He was coming to West Africa: Ismail gets off the plane in Conakry, absolutely gray, clutching the briefing book and says to me, "Why did you write it this way? It's so blunt." I said, "Because you said you wanted to have the same sort ofbri~fing book that Mr. Clausen had." "Mr. Cl~usen had a briefing book like this?" "Ah, yes, didn't you read it before you sent it upstairs?" Well, Wilfried had been there, so Wilfried had been the one that cleared it. So, of course, Ismail was just panic-stricken that this_ briefing book was going to escape iii Guinea because the briefing book actually said where we thought this person was stealing money, and the briefing book commented on whether the mimstry was well run or not, and the briefing book was fairly candid about what the sore points of our relationship were, where we thought they were, so that there was a.whole. And by then we had a new country programs division chief, Bob [Robert F.] Skillings, and Bohwas, I think, probably one of the only--Jim [James W.] Adams nearly made it to 40 years, but I think that Bob Skillings .. ZIEGLER: I was going to say I think .. CADARIO: .. was the only person--Bob Skillings retired on the last, in"87, June 30th, '87, when the Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 28 reorganization happened, and he was the only person ever to work for the Bank for 40 years. Anyway, Bob came to Guinea; he was the country programs division chief. Bob, lovely man, but Bob had a serious case of white man's guilt. So our division was reorganized, and my division got incorporated into Bob's division, and so I was working for Bob. Well, Bob was--Bob was delightful to work with, but Bob was, basically, "We have to give governments what they want" and ~ll this. Bob was finicky. And he had been in the Bank for 40 years; he could be a little quirky. So Bob is going to do his farewell trip just before the 1987 reorganization, which we'll talk about. This is a run-up. Bob was going to do his farewell tour, and Ismail said, "It's not clear where any of us are going to end up, but I want you, Paul, to go with him. And although it's not clear where you're going to end up either, I need somebody to tell the government that we will make sure that our programs are not disrupted. And it!s more likely, given that we know they know Bob is leaving, but they don't know about you, where you'll go, and you don't have to say because we don't know yet, but I need somebody to give that · assurance, so I want you to go along. I also want to make sure that Bob doesn't promise anything that your successor, my successor, his successor . . will not be able to deliver because ' it's a bad idea." So off:we went. Bob was affectionately known (though he didn't know this) as "Papa Skillings." So off I go to Benin, where Shigeo Katsu was the res rep, and Togo, where I think it was Emmanuel Mbi, and· ·· then, of cqurse, to Guinea, my old stomping ground, which is going to be Mr. Skillings' last trip for the Bank and Mr. Cadario's last trip to Guinea. So we go to Benin, and that's fine. And then we go to Togo, and a dinner is held at the res rep's house. And the res rep hired Togo's number one rock band to play at the dinner, and they're going to play a new song they've written, which was "Bye-bye Papa Skillings." Well, all the Bank staff, we were going to burst: .~'Bring me another drink. This can't be going on." Well, Bob thought this was just wonderful and all was lovely and an original song and didn't know that everybody in the whole Bank, the whole West Africa· gang, called him "Papa Skillings." · So off we go to Guinea. Well, Bob has never been to Guinea, a11d Bob, I think, has the impression that I'm being far too tough with the Guineans. And it's tricky because this is Mr. Skillings' first and last visit to Guinea, and Mr. Skillings is Mr. Cadario's boss, but _Mr. Cadario is the one who has to come to say goodbye to everybody and encourage them. · And we were having problems with the second tranche at this point, not that things weren't agreed. It's · just that there was a little slippage. And I think a minister had changed, and it was a minister who was quite unpleasant and didn't really think that this should have ever been agreed to and wasn't, shall we say, keen to do this. · Antl so I had to sneak off one morning and go see the minister of finance, and.the minister said, "You have an open door. Come at 8:00. My secretary knows to let you in if I'm not with somebody." And the minister and I "tutoi-ed" (from French verb tutoyer) each other, and we could--"tutoi-ed'; each other in this meeting. And I said, "Well, okay." So last morning in 'Guinea, Paul is going to take the KLM flight to Amsterdam. And we're at the [Bank] office getting ready, and the phone rings and the res rep takes it. It's the minister of finance who says that the president cifthe republic will receive you at10:15. Now the plane is supposed to leave at 12:30. 10:15? . Well, okay, well, the president of the republic is going to receive you. And it was my plane. It wasn't Bob's plane. Bob was going, I think, somewhere else. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 29 So off we go to the presidency. In we go--and I do recall I didn't have a suit or anything. Bob and I were all packed and ready to go, and we were already at the office. And the res rep· said, "It's not an issue. Here's a tie. You've met the president, and the. president has probably never seen you in a tie anyway." Anyway, off we went. In we go. And it's difficult from a.protocol point or' view. We go in, and I'm ready to present Mr. . Skillings. Well, the president says, "Oh, Mr: Cadario, come in, sit1down," and puts me in the chair right beside .him and said, "Well, I wanted to say goodbye to you on your last trip to Guinea. I want to thank you," and--everybody is looking--and then, "Ah, Mr. Skillings." So he had clearly been briefed he had to pay a little bit of attention to Mr. Skillings. And I said, "Well, we're very pleased; Mr. President, that you were able to receive Mr. Skillings on his last visit to Africa and his first visit to Guinea." · . Bob started to talk, and the president said, "Yes, I'm so glad you came along with Mr. Ca' And I don'•t recall whether Javed was also a Rhodes Scholar, too, but I was sent off, and Ismail said, "As long as you .don't bite Javed's head off, he'll hire you." So I went, and Javed and I got on v~ry well. So I got hired. The whole iss:ue ~f could you be p~omoted, and in the whole mess it turned out that a whole lot· of personnel filing had not been done, so I was lucky because my HR [human resources] officer went through my file and said, "Where's his OPE [overall performance evaluation] from. last year? I know there was one, Why isn't it in his file?" But by that time I it was too late to be considered for a deputy, whatever they called them. What were they called? Deputy division chief, wasn't it? ZIEGLER: Uh-huh, yeah. CADARiO: Effectively, the promotion to level 25 wasn't going to happen because there was something that w~s not in my folder, jJ1 my file. All right, fine. So the whole thing was badly handled because, as I think I said at the time, the Bank paid 400 million dollars to get rid of 400 vacant positions, like vacant as in unfilled, and to get rid of a whole lot of people who should have been dismissed on performance grounds. And that was really the scandal. And then all the friends of the organizers made sure they ended up in positions that were more important and more glamorous than the ones they had. ~ . So theri they set out organizing these country departments, and effectively you still needed somebody who was going to integrate, but you created all these technical units that were far too small to have everything in it and you made it very difficult to access knowledge from the technical departments themselves. Like you had the SODs [sector operations divisions] and the CODs [country operations divisions], and the COD was still doing what the old programs division did, if it was working properly. But then they did have all the country economics in the COD. And then the SODs were too big to be ignored and too small to be useful unless you're working on a big country like China, a big and important country, and then you had a really good SOD. ZIEGLER: That's the sector operations .. CADARIO: Sector operations division. And you had a really good SOD with a really good manager becaus'e they were big enough to attract the really good people; they didn't have to go to the technical department. So the technical departments were stuck with--inmy view--filling in the gaps ifthe SOD was weak and puny and miserable or just being ignored because you really didn't need them if you had the right people or you'd call somebody from elsewhere in the Bank to come in and fill in whatever gaps you had . It did, on the other hand; in the SODs lead to some great work. And, of course, my comments on all this are tinged by China, which was an exceptional client. The Chinese were used to saying what they wanted, and they got it. And tlie China office was big. It had a muscular and arrogant res rep. And we had good division chiefs on the SOD side and on the COD as well, even though Javed and Baelhadj [Merghoub] didn't get on very well and Baelhadj didn't always get along with the res rep, Ed [Edwin R.] Lim, very well. But clearly the Chinese were going to make whatever system the Bank presented to them work, and we were going to make whatever system we had to work because China was important. And moving off to work on China--I think the reorganization was, was badly handled because they should hav~ paid more Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 32 attention to individuals but without having to basically make it, "Which crony is going to help this person who lwant to stay stay?" And, again, I'm not sure what other interviewees have said about what was going on-because I'm sure a lot of the senior staff were involved in the chicanery that went ori. It was not particularly transparent process nor do I think it was particularly fair. But any .. · ZIEGLER: Well, one result, one person who was--well, you'd know him. Jamil Sopher--said to me on the terms of the reorganization, in his view what happened was that before the reorganization you owed your allegiance to the institution. After.reorganization, you owed your allegiance to the guy who hired , you. So it essentially created these various fiefdoms within the Bank. CADARIO: Yes, I think that's ac:curate. And I look at the fiefdo~s and networks of cronies that exist even today, and I would say that they go back to the '87 reorganization where Ismail Sergaldin called up Javed Burki and said, "Javed, I want you to take Paul because he needs to move and he'd be good." But I don't know whether Javed, ifhe was given a list of people, whether Javed would have picked me. And . now you've got senior vice presidents where you can't work for them unless you worked for thedi before. And we had one like that--and we nearly got a president of the Bank who adopted that position--she added· a passport dimension. But that's a not inaccurate observation. I don't think it explains everything that went wrong with the '87 reorganization and the vestiges of it that exist today. But, nonetheless, I think it's pretty accurate. The vestiges today, I think, in five years--provided they're strict oii the retiree STC [short term consultant] rule, and that will depend on how the next reorganization is implemented--whether .. ZIEGLER: And there will be one. CADARIO: And there will be one . . . whether the crony networks that were set up are going to hamper the Bank to the same extent. They got in the way of attempts to fix the matrix, put the matrix in place, and then fix the matrix, which they did in the late' 90s. But that's not inaccurate, because at the end of the day if you wanted to move around, you could, though I would agree with Jamil, but I woul~ add that's the way it worked if you wanted to move .. So the moves put in and established networks and cronies, whereas if you were just moving, if the job you: had and the job you were going to do was geographically localized enough, then you probably didn't have that crony network, like ... ZIEGLER: You still owed that position to whoever hired you. CADARIO: You owed it to whoever hired you, but I'm not sure of that. I was one of the people who wasn't selected in round one or whatever it was called, and, well, I didn't worry because I knew I wasn't going to be out on the street. But various people did call me. Actually, I was quite--1 got a whole.lot of calls as I was negotiating with China, and when I finished, and I didn't really haveto negotiate very much, I got 11;• lot of calls from people. I never knew how they got my name because I didn't know them, but they clearly liked what they saw and asked me to work in sectors I had never worked in. So I don't think it was that bad, but I would agree with Jamil. I would hope that the next time the Bank reorganizes that they will go back into the history. And I'm sure everybody says now that the utter lack of transparency and the bad, not terribly inclusive design principles led to a whole lot more trouble and a whole lot more cost that lasted a whole lot longer than anybody thought. ZIEGLER: Well, Paul, after the 1987 reorganization, you wen~ working on China, correct? Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 33 CADARIO: Absolutely, yes. It was an interesting·period. Although when I joined the China, China Department in '87, Chlla had been a member of the Bank for six years, there was still a lot of work to be done. The World Bank clearly had a tremendous brand in China. Although China is a very big country; we hadn't looked everywhere. We had, by that point, worked in infrastructure. We worked in agriculture. We had a program of technical assistance with the Ministry of Finance, which I'll talk about because that was what I worked on. We had very good relations in Beijing. We had a very strong res rep who had, of course, ~ritten the flagship economk report. · ' ZIEGLER: That was Ed Lim, right? CADARIO: Ed Lim: He'd been the principal author, the team leader for that. And that report was still the most significant. Well, the whole strategy of Deng :{Ciaoping and McNamara saying, "Well, first thing we need is we need to open up China to the outside world by describing the situation as World Bank sees it and that the World Bank brings prestige and objectivity to this, and the messages are important within China and to China and also to the people who want to come and work in China. So, of course, the World Bank has got to come and tell the story." · It was very exciting, and it spoke a lot to the brand that we had by then, and then, I think, reinforced the brand because in a way dealing with China and then looking at China today, a lot of what happens, what's happening today with China's opening to the outside world is due to, of course, political decisions that were taken after 1989, but it was on the basis of an economic trajectory, the foundations of which were laid by World Bank, lending with World Bank, dialogue in the '80s and the early '90s, well, '80s '!lld '90s, when I thirik we had very strong economists as country directors who had the credibility to do that. Their record as managers was perhaps a bit uneven. We had, at the time I worked on China, excellent staff, excellent Chinese staff who were from the ministries who .. ZIEGLER: Who were country staff. CADARIO: Country staff. Chinese staff who were from the ministries, and so they knew the ministries, so we didn't have to worry about nuance, they knew how to interpret what we needed to say. They were also extremely good technically, so it wasn't that they were just interpreters. We had people from the Ministry of Agriculture and Ministry of Transport who worked in our office and were very strong: · \ The whole thing about our relationship was what did China learn the most from the World Bank. I was there at the tenth anniversary, and I think it was true in the twentieth, and maybe even the thirtieth. They said international competitive bidding. And, of course, this was all, I think, quite insulting to all the people that wrote fabulous economic work in collaboration with local institutions. And although the China 2030 paper that Bob [Robert] Zoellick was a TTL for had, frankly, rather too many old timers on China working on it; nonetheless, the fact that it was the first jointly branded paper, I think, disguised the fact that virtually everything we did in China was investigated, if you will, and then framed and published with the strong input of our Chinese collaborators, the clients really. You didn't come and do a mission and send the reports later. The Chinese had a pretty good idea of what was in the report because they had helped do it, which was very exciting.' · And then the Chinese staff were very good. I think the fact that China said from the outset that "our relationship is too important for us to expect all of you to learn to speak Chinese" was excellent becarse they said, "We're going to provide superb interpreters and you're going to send the world-class Bank. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 34 staff." So we had good interpreters, some of whom went on to become senior staff at the Bank even though they didn't have a lot of deep technical skills. I think that also meant that we were able to pick people to work on China, attract people to work on China, who were strong technically and who would show .. ZIEGLER: On our side. CADARIO: On our side. Because if they said you're strong technically and you have to be able to speak Chinese or you have to be willing to speak Chinese at a certain level, that would have denied the Chinese the access to some of the very best people that the Bank could throw at the Chinese. I was very fortunate. I had a tutor come to my office for an hour three days a week. And so that was fun because I could deal with the social situations. That included being at a banquet and speaking Chinese well enough where they'd up the ante and then, eventually, there would be something where I just couldn't say it, and then, "Oh, Mr. Cadario, your Chinese is so good," and you'd say, "Oh, no, no, no, no, where did that talk come from? Nali, nali." · But China is a place where showing respect for China is essential. And even you can say, "I once had this problem in Africa," and they would say, "Don't compare us to Africa." At the same time, if you could speak Chinese a little bit, they'd say, "Well, he took the trouble to learn." And the fact that I could say Beijing, that's how they say Beijing, and people think Beijing. I've sat in meetings with senior people who would say "Bei-zhing, Bei-zhing, Bei-zhing." Okay, fine. If you've never been to China before, you can say that. But if you don't know how to say the name of the capital and i.fyou don't know how to say "thank you"--how hard is it to learn how to say"'thank you" when you come !o C~a three times a year, four times a year, and you were taken out to a banquet every night? You can at least, god dammit, learn how to pronounce the name of the capital. And it used to offend me that this was not well looked after. . Dealing with China. was tricky because everybody had an opinion. I was the principal country officer. I was there to screen stuff and fo make sure that we were going in the right line. I had my areas. There were two other country officers that did things, and they were fun to work with. We divided things up well. Learlling to speak Chinese was good because not only was it socially very respectful and there are things where if you're walking.around Beijing it's nice to be able to ask somebody. Also, in dealing with interpreters at a meeting, you're dealing with the same subject matter, so even ifthe words are not part of your active vocabulary you know what the words are and how they're strung together and what you or your colleague just said in English and whether the Chinese has got it right. I would say something, and I knew how you have to chunk it in Chinese so the interpreter can do it. . And I always tell people, "If the interpreter starts by saying 'ta ~hou'-'he said'--that means that your last comment was too long so shorten it. Never mind what else they said, but that's probably a paraphrase. If you want to be paraphrased, then just keep talking. If you have something that's really important, you have to make it short." And that has helped a whole lot of people, I think, who otherwise would have just gone on and on and on as Bank people tend to do. But also by being able to listen and realize that the interpreter didn't get my second point, and then I can say, "Well, let me just repeat my second point," and then all the people across the table, most of whom would speak English but we did everything with interpreters, all the people across the table would then have to wonder how much Chinese does he actually understand. And I think that was always a certain Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 35 amount of mystery that's necessary in dealing with tlfese things. The time I worked on China--and Tiananmen, !think, is an inflection point, and I think that as more and more histopans go back and look at China, it's a political inflection point in terms of the politics behind China's rise and integration in the outside world. The Chinese leaders realized that they can only offer the increase in living standards which were necessary to have political stability if they increased the rate of growth, and the only way they could do that was to embrace what the Bank had been working with them on about openness, about trade, about fiscal reform, about banking and monetary policy, and about modernizing infrastructure and education. They had to embrace it big time. After Tiananmen, they realized, was not the time to slow down. On the contrary, all the things that were going to help you distract people from political issues, you've got to do them big time. And the Chinese did it. For ex1iffiple, you look at the railways, the Ministry of Railways. Well, we didn't do high speed trains, but we did everything else. And everything that we financed was built with a view that eventually you're going to do high speed trains and, eventually, you're gomg to want to put fiber optic cables in your railway right-of-way because you're going to want to have the internet, whatever that is. It will be used as a telecommunications enabler. The Chinese central agencies of economic management were messy, and the Chinese knew that. And so we haci this series of technical assistance projects, technical cooperation, I think there was TCC 1 [Frist ./ Technical Cooperation Credit, and then I was the TTL for the PSSSP [Planning Support and Special Studies Project], project support and special studies I think it was called, which was with the Ministry of Finance but also with'the State Planning Commission. And the Ministry of Finance and State Planning Commission didn't get on. They didn't like each other, but we said we're going to do--it was like the last $30 million of IDA, and we said, "You want this; you got to work together:" So grumble, grumble, they worked together. · But this, of course, meant that they could also commission studies in other parts of the government, which is what I did. So I come in. The thing is, t:P.e ink on the Credit Agreement is barely dry. I read this thing. And so Javed calls me in,. and he says, "Okay, you're in charge ofthis, Paul. You're the senior country officer," but I wanted to be principal country officer. And how I got my 25 is we had a retreat about the new country strategy paper, and I came in and quoted from parts of Mao's Little Red Book, which I had, about "when I look at what we've done, it seems to me we've done this, we've done this, and done this in the Little Red Book, but here is some areas in the red book we haven't done and I think we should be doing that and I think we need to be a little bolder in some areas." Anyway, so Javed, I said-"Well," he said, "we have this very important project. We're trying, new organization, must get involved with the Ministry of Finance and Ministry of State Planning Commission. We, of course, have cooperation with the DRC, Development Research Center of the State Council." It was situated very welL He said, "Well, what. do you think?". And I said, "Well, I looked at this description here, and it's toys and tours." He said, "What?" I said, "Yeah, it's toys and tours. It's quite clear that the way that--like I've read the negotiations minutes and I looked at the way the PAD [project appraisal document]was written and the SARs [staff appraisal reports] were written and," I say, "the government just wants this for equipmerit, and they want to go o,n study tours. And my view is that we have ample experience in Africa in the }"hole Bank that equipment and study tours don't build .capacity. Now, it's not up to us to say what your capacity ought to be, but, Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 36 ffankly, f think we can hold the Chinese to a higher standard. And looking that I'm taking this over from my colleague who used to be at UNDP, I'm not surprised it's toys and tours, but 1 think we owe the · government of China, a very important client, and I think we need to do thls like I did in Africa. We need to use this as an instrument of our dialogue, and I would like to do that." Well, this didn't sit well with my colleague, who was into toys and tours, or some factions within the Beijing office, shall we say the local factions. Fortunateiy, the country economist absolutely agreed with me, Peter Harrold, with whom I became great friends. And we basically ran a 24/7 operation for PSSSP because what we did, the Chinese said, "Well, no, we don't want to study; we don't want to do a study of the steel industry." And we said, "Well, that's fine. We'll just cancel the money for the steel industry.'' So he says, "What?" "Well, you agreed to do it. If you aren't going to do it, we have to amend the proJect description. So don't think you're going to just go on more study tours." · And then the study tours, we resisted the study tours. They had to come up with.criteria for study tours, and nobqdy had ever asked them. I said, "Well, you're the Ministry of Finance. You're presiding over this. What criteria do you use?" · "Well, we've never had to use criteria." I said, "Well, how will you know whether the study tours are reasonable and how will you get reports from tlie end of the study tours? Like, it's not about the touring, it's about the studies." And so we went through all this. Fortunately, son;ie of this'resonated with the deputy director of the Ministry of Finance, Mr. Luo Qing. Mr. Luo and I became great buddies because Mr. Luo was the person who ferreted out corruption. That was one of the other things. Whenever there was a question about procurement, Mr. Luo and I would have a conversation, and Mr. Luo would go off to the province where there was a problem, and then Mr. Luo would come back and the problem would have gone away because that was Mr. Luo's job. And so Mr~ Luo and 1--and Mr. Luo loved the fact that I tried to speak Chinese, so it was always, "Oh, 1 Mr. Cadario, is your Chinese improving?" "No, it l.sn't, Mr. .Luo. If it was improving, you wouldn't be speaking to me in English." And his English wasn't very good, so there was always an interpreter there. But there was that feature. But th~re was another one of his, somebody who te!Jorted to Mr Luo's peer, Mr Wang Liansheng, China's first EL> [executive director] to the Bank, a very young and brash staff member called--! think you probably know him--Mr. Sliengman Zhang, who became a Managing Director at the World Bank. He was one of my clients. Ah, and so whenever he would do something when he was a Managing Director, he would: say it is my fault. I didn't teach him how to be a ... ' I So Mr: Zhang and I were good ~uddies, and I remember taking Wilfried Thalwitz to China. Wilfried Thalwitz, senior vice president, wanted to go to China, had been invited to China. This was--when did we go to China? In '91 or '92. Paul Cadario April 4, 17, 22 «rnd 30, 2013 Final Edited 37 The Soviet Union started to collapse, and the Chinese said Mr. Thalwitz-this was after the reorganization of the central vice presidencies, so he was a senior vice president of research.· So Wilfried was invited to China. So Wilfried calls up Javed Burki and says, "Paul Cadario works for you. I want him to come to China with me." Well, when the senior vice president calls up Javed Burki and says Paul's going to go to China, I was summoned to Javed's office. -"Okay. So, all right, I'll do the briefing. We'll arrange it for the Ministry of Finance." So we go off to China, and of course I lugged a briefing book over to his office. So I bring the briefing book and give it to his executive assistant. "Oh, well, fine, well, Wilfried probably wants to see you just to have a minute." \ So I go in and Wilfried's eyes are big as he lookeq at the pile and he says, "You expect me to read all this?" ( And I said, "Of course not, Wilfried. I don't expect you to read all this, but my colleagues thought it would.be useful and they insisted that I lug this over. See, my arms-are tired, they were strained as I lugged this over to your officef' · · "Fine. What do I read?" · "Okay. This is the book I read." He says, "Fine, I'll take that." So he puts it in his briefcase. I said, "Now , ." And he said, "And the rest?" And I said, "Well, I'm not going to carry it back, but I think that the one or-two, let me just tell you what's here, and I think these are the two most inten;sting things in terms of your interests and what I think you want to get out of your trip." And he says, "Fine," and puts those in his briefcase. And then he says, "Anything else?" And then I also said, "Well, if you feel like it, take the rest over the weekend. There might be something that appeals.to you that you might want to read, but I think, in terms of what you'll need, the briefing book and those two documents. And I'll be there if I need to tell you something that I haven't asked you about, that I've forgotten to ask you to bring along, I can probably answer, we can wing it." {\nd he says, "Yeah, I'm sure we can." So Wilfried and I go off to China. So we're on our way, and the minions--of course, on our flights--so the minions and I are having an argument over, "Mr. Cadario, you're being too tough on us." And I said, "I can't be tough on the People's Republic of China. I'm just saying you signed this agreement that said you were going to do something, and I would be remiss if I didn't remind you what that was because somebody who signed that agreement who's higher than you might come and ask you how that was going. But if the minister says he doesn't want to do this anymore, I'm quite happy to let you off the Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 38 hook:" So Wilfried just sat there, read The Economist as this was going on. And we were back at the hotel, and he just said, "Well, that exchange you had with them," he said, "you haven't changed a bit," and he smiles because I can be a little combative. J ! So, anyway, that was how we worked with China. We helped them open up, and we established--we helped them develop their own capacities to do it because we had, I think, country directors who were good economists and that was what the Chinese iiked the most. And when you had a country director who was a good economist and was good with strategy and people or hired somebody underneath to deal with people and quality, then we really were off to the races and we made great advances with China. I think; at some points, we weren't as tough with the Chinese as we should have been. But ... [End Tape 2, Side A] [End of session] - Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 39 Session 2 April 17, 2013 Washington, D.C. [Begin Tape 1, Side A] ZIEGLER: Today is April 17th, 2013;-and my name is Charles Ziegler, a consultant with the World Bank Group Oral History Program. I have with me in the Archives of the World Bank Group Mr. Paul Cadario, and we will be conducting the second session of his oral history interview. Well, Paul, I'm glad you could make it on this nice spring day, but we're down in the basement here going at it. We were going to take up the subject of your engagement with China, which is. certainly a very interesting topic, at least to me and I think to many people. As a result of the 1987 reorganization, you assumed the post of senior country officer in the Country Operations Division of Country Department 2 in the Asia region. This division dealt with China. China . had made significant, had made a dramatic shift in policy about a decade prior to your engagement with that country, beginning a process of economic reform and opening up to the outside world. The Operations Evaluations Department report entitled "China: An Evaluation of World Bank Assistance," , published in 2005, notes on pages 5 and 6, quote, "Establishment of trust and mutual respect was a long and arduous process, but by the middle of the 1980s"--when you began your work on China--"relations were excellent and Bank prestige in China was high. The Bank's economic and sector work was a big factor," unquote. · Bow would you characterize the relations between China and the World Bank when you began working on that country, and what were the most significant challenges that the relationship confronted at that point, in your view? · CADARIO: Well, it was a very interesting time to be working·ori China because everyone who was new to the team in '87--a lot of people had been around since the beginning and some of them were being loosened and pried away and ·others--well, there were wars, but there were a lot of people who said, "Well, we worked on China, and who are you, the newcomers?" ZIEGLER: Now, as a result of the ... CADARIO: Reorganization. ZIEGLER: Some of them were still able to stay, nevertheless. CADARIO: Some stayed, and 1--there were--1 don't think a lot of us that were really new, but I was one oHhem. And that had been arranged because it was time for me to get out of Africa. HR had done a bad job of looking after people, and in fact my HR officer discovered that rriy previous year's performance review had never been filed, which I think complicated things. , And also, as I think I talked about in the last tape, I had said, "I have to go and say goodbye to Africa," and had gone with someone else who was leaving the Bank. . . And so, "Well, what do you mean you're leaving town?" I said, "Well, whatever is going to happen is going to happen," not realizing that ~ awful lot of people Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 40 were schmoozing their way into jobs they probably didn't deserve, and under some objective re- assignment of staff it probably would have turned out differently, particularly at the managerial level. Nonetheless, off I went, moved to China. So I was the new boy on the block. I inherited--and it was correct that the Bank had huge prestige in China because we had--the 1981 economic report was a thousand pages and whatever: it was--spent, I think people said it was a million dollars ... ZIEGLER: It was something of a landmark. CADARIO: It was a landmark. But then Deng Xiaoping and Robert McNamara said "If you want to open to the outside world, you have to let the Bank come in and look." And Deng Xiaoping said, "Well, I could have said that. That's exactly what I want. I want the Bank to come in, and assess what's going on." And I think, in retrospect, the fact that the Bank was candid and respectful about what could be done iri · China and what the Chinese authorities need to work on really established the credibility for our later economic work in the sector. So we had excellent relationships with the sectors. We had done a lot of investment lending, that's all we did, and in railways, in ports, in energy. In fact, a lot of the infrastructure that, the first generation of the infrastructure that makes China such an important country today, we're in a special economic zone of Hainan province, the railway system and introducing China to modern technology and to modern ways of doing things. The organizational matters were a bit more elusive, and I inherited something called the Third Technical Cooperation Project. (Actually, it was called Planning Support and Special Study.}It was supposed to be TIC 3. I inherited it from a colleague, Al [Albert] Howlett, who went on to work for me when I changed jobs, who was a UNDP alurµnus and who had crafted in the third project, PSSSP, something that was just .like the first two, as I said, toys and tours. And having worked on Africa on technical assistance for institutional development, I knewf the missions stayed at a hotel which was near their ministry because it was easier, and, , that was when it took 25 minutes to get across the city, which was a long time ago. And, today, foreigners would use this metro. Well, that wasn't done then. I , So, anyway, the protests went on. Those of us who were in Washington were jealous because all our Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 46 friends could be down at the square and see what was going on. It was really--it was fun ... ZIEGLER: y OU did not participate ... CADARIO: No, not_ participate. But it was interesting that Bank people were there. There was a buzz in the city, and I think that there was a genuine excitement that mayb_e this would spur, this would strengthen the hand of the reformers. And the students were, clearly wanted reform and they wanted reform fast. Well, alas, that was not the way it turned out. And I don't know when we knew that things were not very good. But I'll tell you the story about what happened on June the 4th. And, um .. , ZIEGLER: This was 1989? CADARIO: 1989. And they've got a huge number of people in China. So' we get home from a farewell party for a friend. It was held in the afternoon for a friend of ours from the State Department, and I turned on CNN and I see on CNN the tanks moving into the square live, around-5:00 in the afternoon. So this was 5 in the morning in Beijing, and this is live from Beijing. And I looked at that and thought, "Hmm." And there had already been some security advice: don't go to the demonstration. ' ZIEGLER: Now, you're ... CADARIO: I'm here in Washington. I'm the principal country officer. I'm in Washington. I pick up the phone, and I call Bank security and identify myself, and I say, "We need a list of ev~rybody who's in China and where they are, and we're going to need that." "Oh, no, it's only a phase one under UNDP, under UN phase warnings." 'I said, "It may be phase one now. I don't know whether you're watching CNN, but I predict it will not be phase one much longer and we will need that list very quickly." So the phone rings at 2:00 in the morning, and it's Bank security to say, "Well, we can't find anybody else. You're on the list~ Yes, it's now phase 5." And .. ZIEGLER: Which was the top ... CADARIO: Which is the top, no missions, evacuate everybody. So of course I, like everybody else in the world, watched with horror as stories came out of China. Basically, nobody would go to China. Flights stopped. You couldn't get in, you couldn't get out. The airports were closed, I guess. And then the word got out about, well, what may have happened in the square because there were enough people going around, talking about what had happened, where things were going. China was not exactly sealed off the way I think the Chinese can do it today, but word was getting out. There were enough journalists there, enough foreigners who were able to phone and say, "Well, we're okay, but this is what we hear happened." At;i.d then pictures started to come out. So the world is in trauma, and the world doesn't know quite what to· do. And China is seale_d off and has done something that everybody imagines is horrible and gruesome, as it was. · · Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 47 And then as the week' went on, we had the guy standing in front of the tanks. Like, enough was coming out of China that we know that whatever happened is not ov_er. So Bank is, "No more missions to China, and we've got to get everybody out." So there was a whole drama about where is everybody, and the list had been quite useful to have because they could then where, they, there~ there, there. And hobody knew quite what to do because I don't think we'd ever imagined we'd have to do an evacuation from China, but the Bank was talking to UN about what to do. In the course of that week everybody who wor~ed on China was quite dismayed about this, that we couldn!t have imagined this, and our friends were in Beijing and people we worked with. We don't know whether they're safe, we don't whether our Chinese, where were our Chinese staff or where were their children when this was going on? And I think that I'm not aware that anyone from China, like any of our staff or contracts, lost children in what happened at Tiananmen, but we didn't know that at the time. 1 ~ l, Sometime later that week--but it was--thewhole world was outraged. And I think at this point the Bank didn't know quite what to do because we, of course, had lending, we had projects to go to the Board in ei ~­ June. If was bunching season. We had like a billion dollars' worth oflending al.ready to go, all scheduled. ~ -J U) c::> S "" -?" , And I think at this point there was, "Well, what's the Bank going to do? Is the Bank going to lend - ZIEGLER: And they were called; rightly, every name in the book. Now, this is just generally in the press ... ' ,Uu en ~~ ~~ ~ 2: c::» ~ § ~ ~ CADARIO: Well, the press and even those of us working on China. It wasn't clear, even though I was, principaJ country officer, I wasn't quite clear what exactly the voice of the Board was. Well, so Javed Burki, who is from a fine Pakistani military family, a cultured man, decided to call the staff together. So he calls the staff together to say, "Well, it's going to be business as usual and this is just a rpinor blip, and we haye to keep working," blah, blah, blah, which he thought was a pep talk. Well, this was not the way to handle the staff at the Bank. So we:all sat there and listened to this and went out, and I said, "I can't believe he said that. I'm horrified that he' would just say this is business as usual because, first, like, even if you get into the whole issue of, well, can we go there, and we can't, we can't go there, we don't know what any of our interlocutors, what's happened to any of them. We suspeet that there are bad people in charge who might not be people we can work with. And the world--I work on China. I have to be careful who I say that to in this city because the whole issue of supporting is eventually going to be a problem. I just can't believe he said that." And we're all feeling terrible. I So, anyway, that afternoon I was summoned to Javed's office. "I understand you have been criticizing what I saidthis morning, and I just can't have this insubordination, particularly from the people that I trust and that I rely on." 7 And I said, "Javed, you totally misplayed that this morning. It may be okay for you that military goveniment shoot their youth in large numbers on global television and that that's just the way it happens. It's not okay for the rest of us, and you absolutely misjudged the feeling in this department because we· have our colleagues in the Beijing office, we have all the people we work with. We don't know anything about them. We are all in shock about what's going on in the country we're all committed, like you are, to help, and this is whatthey do. And you sit there and act as if it's business as usual." · "Well, how dare you criticize me in the corridor." "Well, you certainly didn't open much space in the meeting for us to say anything, did you, Javed? You Paul Cadario April4, 17, 22 and 30, 2013 Final Edited 48 didn't even take questions. You just made your announcement and left. And I'm frankly quite worried because you heard what I said. I don't regret that I said that. Maybe I should have come to see you, but you've been so busy upstairs. When did you find time? And if you were going to say that, maybe you could have tested it on some of us that you claim are the people that help you run this department and deliver a great progra.rrl. Yeah, I don't want the program to go under, but we can't go to the Board if they're all going to vote this down because that would be terrible. But, anyway, Javed, you misplayed it. I'm ~orry you found out in Fhe corridor, but I'm not sorry you found out. And if you'd asked me early this morning or yesterday, I would have told you the same thing." / Well, Javed was shocked because no one spoke to Javed that way. But Javed realized that I'm probably not the only person in the department that felt this way. So Javed had to backpedal a bit, but Javed was not one to backpedal. Javed also had to be very careful because he knew that .. \ ZIEGLER: Now, you did like the guy. CADARIO: Oh, yeah, I did like the guy. Yes, I liked working \Vith him. Oh, no, I liked working with him, but he was a man for whom no amount of flattery was excessive. And he was from a Pakistani military family, like when the prime minister of Pakistan was in a plane that blew up, everything was canceled, not because Javed was in mourning but because Javed spent the wliole day in his office with the door closed on the phone. One of the assistants. came and told me all the calls that had been put through to Pakistan for Javed to talk to all of his friends in the government. So Javed was a very political animal. Very smart fellow, very strategic. And I think in a way that brought us closer together because I was just one of the people who worked for him, b}.rt he realized that I was someone who would speak frankly to him. And, given that--and he surroUI1ded himself with people who spoke diplomatically, and he had his Pakistani buddies and all this, but realized (a) I had a following and (b) I'd tell him whatwas going on as I always had, but I think he realized that we actually did have a pretty good connection. . I . / I was !llso one of his only seriior staff who had taken the trouble to learn Chinese, so he appreciated that. And in the two years since the time I worked there I had gotten the Ministry of Finance to do some things that they wouldn't have done. I was able to prevent some stuff that the projects people wanted to do that was not a good idea, and I was a little badass on some of that, as far as Javed was concerned. But, nonetheless, Javed appreciated that I was prepared to go through things and be vigilant about, "Well, does this mbve us in the direction where we've agreed,to go or not and what were the risks?" . So ab0ut a week later, as all hell is breaking loose, the Americans, the Board has basically sent a signal, "Don't bring us any projects for China because"--in fact, the Americans were under legislative instruction , not to support them. So the Bank's management was in trouble, too. . And al~o we had to get everybody out of China. So finally we got everybody out of China. Now, there's one little paren, and I don't bow what happened. But a couple of days, I thirik this was the . Thurs<.lay, and the vice president had to go to the Board about what's going on in China, what are we . going to do.. · ZIEGLER: This is the regional ... CAD~O: Regional vice president. I think it was Attila Karaosmanoglu. I talked to David Pearce, who was the number two in the Beijing office, and he described to me what it was like to be in Beijing and the climate of uncertainty, and there was some fear. And he and his wife lived in the diplomatic Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 49 apartments on the other side of the city, as did all of our staff, not that far from Tiahanmen, several kilometers from Tiananmen in the diplomatic zone and on the side of the city closest to the airport, which if you need to pull everybody out, you pull everybody out. So I reported to someone in the regional front office that"! had just been on the phone with David Pearce, and David had told me this. And the regional vice president goes into the Board and announces, "We're pulling everybo_dy from China," a decision that I didn't know haci been made, except that I al"'._ays had the feeling that there were the people who were' saying, "Well, no, this will all pass," including Javed, who were horrified that the regional vice president, on the basis Qf what he had heard I had heard, decided to ·pull out. Now, I have no idea exactly what the cause and effect was, and it wasn't as ifl was .taken· out and shot like a student in the square. Butl did have the sense for a couple of months that there were some people who were deeply angry that we pulled everyHody out of China on the basis of my conversation with the number two at the office that had been judged by the RVP who was the one who had to make the call and the one that would have to be ultimately responsible in front of the Board. And the Chinese, of course, were acting as if everything was fine, no.need to pull back, because the ·Chinese really wanted the legitimacy of the Bank. And, alsc;:i, the Chinese--it wasn't just the matter of the major shareholders won't vote for the project. The Chinese said, "Well, excuse me, you promised to .lend· us this money." So theBank was, in a way, caught between a rich and powerful and important country--maybe not yet a major shareholder but a country everybody saw the World Bank is playing a huge role and the Chinese loved us and wanted to borrow scads of money from us~-and the shareholders, the major shareholders, the Europeans, Canadians, the Americans, you name it, Japanese, everybody is saying we're.not going to vote for anything you bring for China. · ZIEGLER: So there's a non-starter with the Board in terms of ... CADARIO: Well, that's right, but also the Chinese were furious. And then when we.pull out all our staff, there was--so Javed was, I think, under some--he was--this was not a good time for Javed. So a week after he and I had the little "come to Jesus moment" in his office, Javed announces that he's going ,to China to check things out-and it's still very uncertain--he's going to China to check things out now that flights resumed, or some--and he's taking me with him. Well, of course, this was--it ended up he never took me with him. He announced he was taking me with him if I would go, and because it was sort of hinting, "I'm taking the person who reflected your views with me." It ende,d up where he backed away from that and went by himself. But having announced he was prepared · to tak~ me, wanted me to come if I would come, and th~n it was, "Well, I've decided to go by myself, Paul." And I said, "No, I don't mind. I would have come with you, and I think I could have helped, but I completely understand that you want to have me~tings and you can go." And, of course, I think he was intending to repair his--his relations. So I made it clear that Javed--Ijust said, "Javed has decided to go by himself," and everybody read.that for what it was worth. So, anyway, Javed went and came back and none of the projects went to the Board. And so the Bank missed its lending targets, the China Department missed its funding targets and lending targets, the golden Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 50 shovel, you got to shovel that money out. And the Chinese were great because it approved its projects and when they were ready t~ declare it effective they would sign just before they were ready to declare it effective so they wouldn't have to pay commitment charges. And then they were ready to disperse. They were really well organized. And the projects in China, even the ones that were difficult, worked really well. The Chinese were good at project implementation, and it was a matter of not only capability but also face. If they signed a loan, then they were going to do what was fair. And so there was a lot of tough negotiating. Conditionality was not something you ·did in China. So time goes on. And in July it's worked out, "Well, maybe we can't make any new loans for China, but' we have a portfolio of 167 projects"--! think that was the number-"and we have to go check on them. The only way we'll ge(back in is if we can show the projects we're implementing are being implemented correctly, and we haven't been to see. Because we pulled all the missions out in early June, we don't know what's happened." So the Chinese received this wave of supervision missions to look at each and every one of our projects, and I \Yas leading one of the first ones for my Planning and Support Special Studies. Project. And then I was g0ing to hang out with some of the other missions in Beijing. So this is the fi.rst--I think I was,one of the first missions back into China, and I took a couple of colleagues. And you could tell things were different because the city had this very peaceful, eerie air about it and, of course, no evidence that there had been any trouble, even thoup there must have been. And the taxi drivers, when you asked, they would not take you to where some of the most awful things had happened. Some of the areas were actually where our Ministry of Finance colleagues lived, a place called Muxidi, which had been the intersection where the pubFc had, I think, ambushed and burned three policemen and strung them up on a bridge. So there were places where people we knew lived where ugly things had happened, and you didn't know what to do: And by being there, well, what signal are you sending? But you knew it was a little different because the Chinese were even more hospitable than usual. And I finally said, "I'm not doing two banquets a day. Tell them that's nice, but I'm going to have breakfast, and then if they want to have me to a banquet at night, that's fine. But I'm not having two banquets a day. It. just cuts into the day, and I come back looking like Porky Pig." This was before I knew the secret that the Chinese were all so skinny because you use chopsticks to push the stuff around your plate, you don't actually eat it. I like Chinese food. . · So wt'nvere being f~ted, and the hosts were people two levels above the people we normally were feted · by. So the State Planning Commission and Ministry of Finance, the fir~t banquet for my mission was by a deputy director of the State Planning Commission--the guy who was in charge of the project, his boss's boss, and a level above that. He was a very high official. So off we go to this restaurant to have dinner, and they have a young man who is our interpreter; there was only one other interpreter I can remember of his caliber the whole time I worked on China. He was so good (because by this time I knew enough Chinese, and I'm thinking he's yery good), a young guy; probably in his 20s, and--you never know--maybe he was in the square. .. ~ . . But the purpose of this banquet was to persuade me that nothing had happened, so it actually wasn't a big deal and so on. And I'm saying, "Well, the purpose of our mission, deputy director--thank you so much for the lovely meal--and the purpose of our mission is to see how the projects are going so that we can offer reassurances to our members in Management and the Board that the government of China is prepared to continue with the projects we've already lent for, and I'm happy to be involved w:ith SPC." ' . ' . Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 51 "Ah, but it's very important to understand," he kept saying. And so the interpreter is sweating bullets because he's got to interpret something, and I'm watching him as he's inteq)~eting, and I'm thinking, "I pity this poor kid," because his interpretation has got to be perfect because this guy--this is in English, but it was quite clear that the interpretation was really part of what 1 had to happen. And I was pretty sure the interpretation was correct and very accurate, but the kid was clearly ha~ng trouble. Impeccable translation, but he was having trouble. I'm trying to get back to why we had come to China while he's trying to get, "So the world really doesn't understand." · And I said, "Well, actually, I do think the world understands China's commitment to openness and so reform. That's why we've come to see whether the conditions for that are still in place." And I've upped the ante on our side. So the interpreter looks at me and he interprets that. · · "Ah." So it's not clear where the conversation was going, what's really important--and then we got into, well, stability. And as soon as you say "stability," that's a political word. And our host reverts to "nothing happened." So he, the director, is going on, trying to get me to engage on "nothing happened in the square and I'll take your word for it." And the interpreter is then becoming nervous again. So I.said, "Well, this is a very interesting conversation, completely," I said, ''in line of why the World Bank has sent this mission, me and iny colleagues. I'm not sure it's useful to continue this because," I said, looking at director straight and then looking at the interpreter, "we all know what happened." And I stopped. And the interpreter translated that exactly. My Chinese then was not bad. He translated it exactly and with the same tone, not tone as in Chinese words but with the same, "we all know what happened." ' I And the director looked at me, and he said, "Yes, we do." And I said, "Fine." And he said, "Fine." [Begin Tape 1, Side B] CADARIO: Virtually everything that we were doing to continue--there were delays because, frankly, people were worried about other things during June and July but also during May. Nonetheless, by the fall of 1989, the portfolio was as healthy as it had been, but we still couldn't do any new lending because the Board said, "Don't bring us anything."· And, ''Well, can we appraise things?" "Well, if you appraise things," the Chinese are saying--well, I think we all knew it would clear, but the question is how are we going to resume our lending? "Well," we said, "maybe only for health and maybe only for this." "Well," the Chinese said, "we just don't want health, just health, just education. No, no, no, no, we want big infrastructure." ZIEGLER: At this point in time, now, right today, they don't really need our money ... Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 52 CADARIO: No, they didn't need it then either. ZIEGLER: They didn't? That was my question. CADARIO: No, they didn't need it then either. What they were interested in is they were interested in technology and they were interested in international competitive bidding, for reasons that have only now become clear, because they became experts at it and that's why they win all these contracts all over the , world because they're good at ICB, and where did they learn that? Borrowing from the World Bank. So there are useful things to leaf!l from the World Bank. Also, if you look at reforms that the Chinese have done over the last twenty years, a lot of it is based on economic work that was done: housing reform, health reform, all sorts of things. And a lot of the things they're doing now to fix the safety net that they messed up were basically reacting today to things we told ·them then, that the downside of doing this is the following, that you have to be careful of moving to insurance, you have to be careful in getting rid of the social protections that are incorporated in the iron rice bowl. So there were a lot of things where if you dust off a lot of the early economic work for China, as the people who did the China 2030 report did, you find that the Bank helped China analyze and become co~ortable with its own ability to see problems and fix them. And then when things went wrong, not that the Bank would ever say "I told you so," it was because the Chinese looked at what the downside rriight be and maybe thought, "Well, no, we can avoid this." Well, they couldn't, or it was at a scale where it was hard to avoid. So that I think that, over the years, the usefulness of the Bank's knowledge work became more obvious. Now, whether it was the usefulness of the knowledge work we're doing today or whether it was the usefumess of the knowledge work we did with' blue ribbon teams in the past, I wouldn't w.ant to comment. We h~d some excellent, excellent country directors who were basically all in the same mold. They were all economists. And then you had number two; who was the project implementation person. That's what we had done in India, and I think probably; if you consider that the main advantage for the big middle income countries--well, for the BRICS [Brazil, Ru.ssia, India, China, South Africa]--is you have a dialogile, so they don't really don't need the money. And then you do projects to show them how .to do things'that they've not done before. · I think:; actually, that's a good model, and it might be a model and a reorganization of the Bank that might happen next. year or the year after to look at, well, whether you segnient the Bank's clients by complexity of their economy, rather than by region. That might be a way that would be a better way to mobilize the Bank's knowledge and apply it directly to needs of clients who vary, whether you're China or whether you're Somalia or whether you're China or you're Laos. Okay. So what do they have in common? They're both i~ East Asia. But China and Laos are quite. different. Where you get into trouble is where you've got pockets of a country that are not like the rest of the country, like Mindanao post-conflict. Well, if you're not going to put the Philippines with the failed states, you've got to put them with middle income countries. And then how do you deal with Mindanao? So you have those cross-cutting things of which I don't think there are very many. But, nonetheless, you've got to figure out how to do that, and the Bank has never done cross support very well. That's a subject for further conversation. . · So by '89, late '89, we-were stuck. We had this portfolio that was working. We couldn't do any new Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 53 lending. It wasn't clear what we could do it for. Then there was a little earthquake north of Beijing. Now the--actually west of Beijing, not very far from Beijing but near Datang, which was a small secondary city of like three million people, not so small, which was ... ZIEGLER: But small for China. CADARIO: For China. A city that w·as hard to get to, even though there was an overnight rail train, and I don't know whether we actually had a lot of pn~sence, but it was the manufacturing headquarters of the Ministry of Railways, so it was a town of some importance. There was coal in the area. So there was a little earthqrulke. And this, of course, given the context, had the heavens announced their disapproval of China by ... ZIEGLER: The mandate of heaven and all.that. CADARIO: So this iS an earthquake. Well, all right. Well, it's an earthquake. It's China. So Javed decides, "Well, inaybe we should see if could be helpful." So the country office persuades the Ministry of Financ'e that we should go and look at China, look at Datang. So the country office goes out, and a report is written back about devastation of North China, the northern China earthquake. So Javed says, "We're going to do an earthquake reconstruction project and, Paul, you're going to bethe TTL for this. You're actually going to be the TTL ofrecord though we're going to put the project advisor on." The project advisor was a good Pakistani gentleman just like Javed, who was, shall we say, more junior in the military so he did what he was told. Nice guy. Daoud Ahmed. So Daoud and 1--well, it-was China, so we hired somebody who was the expert in building earthquake-proof housing out of traditional materials, a Mexican engineer who lived over in Georgetown. So off we went to Beijing, end of November, to prepare and appraise the North China earthquake project. And I was the TTL of record, but there were engineers and all that as well. And also, I write well, so ' Javed figured, "We'll get a good.PAD out of Paul and we'll get it done quickly. And also we think we can go, because we can talk about the devastation." And the Chinese--the Chinese were good at showing all the mud huts. Well, basically, these were mud huts that have been knocked down. Mud huts with color televisions and mud huts with TV aerials and mud huts with microwave ovens, but they were mud huts. So off we went, took the overnight train to Datong with people from the country office and a couple of Chinese colleagues. Off we went to Datong, and then we went to the place that had been devastated, and so all the mud huts had fallen down. And really these were not rich people. They were poor people, but what's interesting about this area is you had all the government buildings made of brick and they cracked a bit, but they were there. And then you had the mud huts that had fallen down, and I can't remember how many people were killed. It was-'89 was also the Loma Prieta earthquake, so I think, in fact, I stopped in San Francisco on the way to Beijing. And San Francisco had had an earthquake, and I don't know how many people were killed and vast devastation and all this. Part of what we had to do in those days when you did an emergency reconstruction project is you had to do a prevention component. Nobody knew what they were. So I had to do a little component with-the China Earthquake Bureau, so we put that ,in and then we went off. Well, this place, the people were sort of back to normal and the military was there and there was teinpotary housing. The guy from Mexico said, "Okay, well, the way to reinforce mud huts is actually Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 54 very simple. You put chicken wire on the inside of the mud hut and then you put stucco over the chicken wire and then it's resilient!' Well, the Chinese earthquake people said, "No, no, no, no, we have to build brick houses for all these people. If these peasants weren't living in mud huts, then they'd be fine. Look at the schools." . And so the Mexican earthquake guy looked at the schools and says, "Well, you're lucky because these schools will fall down the next time there's an earthquake. Look at this. Look at this. Look at this," like they were good at building things they thought were earthquake-resistant, but the whole idea of what makes something earthquake-resistant--and you could tell that a little more shaking and all these brick buildings, low-level brick buildings, would have fallen. So we~re having a debate over the appropriate technology for this. And we would also go to villages. The deputy res rep in the Beijing office brought his wife. He was Dutch, his wife was Dutch, blond, long hair, and had a camera. And we were pretty sure that no one had ever seen a foreign woman before, and they h~d seen precious few foreigners, period, 200 kilometers from Beijing. So, anyway, we did all this debating over construction standards. And so one night our earthquake buddies disappeared, and the next morning they came back and they said to the Mexican earthquake guy, "Okay, we took your designs here and we sent word back to Beijing, and we went last night and we built a model of what you want to do, and we shook it on one of our shaking tables, and it was okay. So we're prepared to use this technology." But they were also desperate to get back into the Bank's good graces and resume borrowing. ·So we had a earthquake preparedness component, and it was done. So we had to go t9 the Board. So we wrote ~.lie PAD, went to the Board in February and it passed, so we'd broken the ice to resume our relationship with China. So that was how we got back in in early 1990, and it worked. And I think eventUally we got everything back to normal. It took a while. And the Chinese were also doing their own diplo~atic things, and I think they were also careful to suppress what had gone on. There was, apparently, a report written about the whole thing, which I have never seen. · I was not asked to contribute to the report. Whether it was, fault finding or blaming, I don't know. But I think by this point we were back to normal with China. ZIEGLER: Did the Dutch lady attract much attention? CADARIO: Oh, yes. ZIEGLER: You ... ' CADARIO: Oh, yes; the Dutch lady, people followed her around, And she, of course, touched all the · babies, and this was a good thing. It was very interesting. One of the members of the mission, a consultant," was somebody who collected fountain pens. And so he wanted to go to buy a Chinese fountain pen because he wanted one, a particular kind. So one of our guys from the country office and I arid this guy went to a department store in Datong, which was bleak, covered with dust, lights were not lighting. And we arrived, and nobody in there. "Oh, this is a very nice fountain pen. Oh, this is good. Well, how much is it?" and he said this all in Chinese. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited · 55 So China, at that point, used what were called foreign exchange certificates. If you were a foreigner, you had FECs. And they were the same, one FEC for one renminbi. But if you were in a luxury hotel, all you could use was an FEC. In fad, they devalued the renminbi one night and we got word, so we all went and paid our hotel bills, the night before. It got outside, but it didn't get back to Beijing. So we all paid our hotel bills in the renminbi before they had adjusted renminbi upwards. He gets out the FECs to pay, and the shopkeeper, the clerk, looks and says, in Chinese, "Oh, this must be a new kind of currency. I don't recognize this currency." And, of course, the FEC is English all over, in addition ~o Chinese. · So the guy from the country office says, "Oh, let me," and pulls out renminbi and pays. And if was fascinating to go to a country where they've never seen a blond Dutch woman and they had never seen the foreign'exchange certificates, which, of course, those of us who worked in Beijing, they ·_i ~ would take them anywhere. You'd get change in yuan, but you didn't particularly want that. · Q,, l But, nonetheless, it was a country of phenomenal paradoxes, as we were--and this is barely fifteen years after they've opened to the outside world, less than fifteen years after when the rural reforms began. . . . =&3 f;1;l =:: .E-< ::i:: Uu - i! CD <::) ('! en ~ So the Bank was very heavily involved in the reform period. A lot of very clever Chinese staff came from ~ ~ c::> ~ the country office to headquarters, But it was, it was, it was an exciting time. And ~ C!:l o=: s:: C"I CT> c:::> w ~ c= 0 :E ·& 0 Ji So I had to deliver a blunt email that said I would cut them a deal, that I will look over the list and I will decide what's suitable after you've returned the Baccarat and the Limog~s, but it was a china and it was--it was a <;:loisonne china that you could buy. They were like $300 a place setting. And I said, "After you've returned all of that, I'm happy to look over the list and decide what your successor might like, and then I'm prepared to pro-rate the cost of the shipping of the rest of it, should you choose not to cancel the orders your wife has made at the Paris furniture show." Well, the country rep was just mortified to get this' voice mail that made it clear that you will not do this. And then somebody said afterwards, "Well, if you had bought it, then people would have walked in and assumed it wa's your personal stuff." I said, "Yeah, except it would have been $85,000 when I gave him a budget for 30." So there were all these things. It was just phenomenal what went on, what people tried to get away with and the waste that they would have gotten away with because .there's urgency. And then dealing with landlords and saying, "Madam, this is a lovely house here in Tbilisi ,and when we were measuring the house" --because I had to be shown; we had local architects, but I would bring a tape measure, and we'd measure the'house-~I said, "but when we were measuring this, it turns out that the ... " This was where working on the earthquake back in China was good. It turns out that the columns on the second floor are not standing above the coluillns on the first floor. "And Natasha," I said--Natasha, she's a wom.all who wore black with a little gold cross; she looked like a babushka-"Natasha, I just co~d not sleep at night thinking that ten years from now, when our lease on your beautiful home has finished and when you have moved into this home, perhaps with your children, with your son's family and the grandchildren, and one day your grandchildren are playing right over there in front of that lovely fireplace, and there's an earthquake, and the whole place pancakes because I rented this place from you that is not seismically sound. So if you want to rent this to me, Natasha, so that I can sleep at night not worryjng about your grandchildren, this is what you're going to do and you're going to do it. I'm not changing what I'm going to give you for the rent. This is what you're going to do. I will sign the lease, but only when you've done this, all this, and my architect will come by to check. Do we have a deal?" But there are all these stories about .. ZIEGLER: Did you get a deal with Natasha? . Paul Cadario April 4, 17; 22 and 30; 2013 · Final Edited 71 CADARIO: Yeah, we did get a deal with Natasha. It was great. But it was a--it was a very interesting time. And working with Wilfried was wonderful because Wilfried was very strategic. And there were lots of things, like I would qave to read the CAS's; I would have to price them all. It was~- I remember sending a note. And the chief economist ran into my office and said, "Your suggestion to hand over all the 'stans' to South Asia is brilliant." · I said", "Well, of course, because the history of ECA is a history of conflict and about Europe, except Central Asia. What you do with the Caucasus is, I think, another question, but I'd leave them in ECA. But I don't--the 'stans,' I think that Tajikistan has more in common with Afghanistan because they're all rural. They're peasants. They've got hydroelectric power, but why would you ship it to Russia? Why wouldn't you ship the hydroelectric power to Pakistan?" Well, this was in the early '90s, and I'm saying--or '94-'95-"And why in the world are we saying to these people you have to have the links to the formal colonial oppressor when we could give them better serVice at the Bank by saying your history is different and it's closer to (although there are mountain ranges). We think that the skills that we need to serve you are the ones that are in South Asia and your part of the 'stans,' so give the 'stans' to South Asia." Well, Wilfried thought it was a great idea, but, no, he wasn't going to give the "stans" to South Asia. And I.don't think whoever was vice president wanted them either. ZIEGLER: Well, they became part of the Russian Empire in the 19th century, basically. CADARIO: Yeah. ZIEGLER: It wasn't that long ago, and they're basically colonies in a way ... CADARIO: That's right. If you're going to be a colony and you're going to set out, you might as well be, like, places you're like, with people you're like, not used as the place where the drilling industry and the hydroelectric power were. ZIEGLER: And nuclear testing ... CADARIO: And nuclear testing. Exactly. Kazakhstan was different because Kazakhstan had minerals, had energy, and the same with Turkmenistan, so how do you-you didn't put an office in Turkmenistan, but Ukraine, Russia. But the other thing I did, which I was "."ery proud of, is I said, "Well, you got all these local staff. Who's teaching them?" So as the CAO, I set up a 2-week introduction to Bank operations for the local staff, and we did one in Hungary and we did one in Ankara the next year. And they were two weeks, and I ran it and called in projects people that I thought were good, like Brad [William B.] Herbert and Judy [Judith] O'Corinor, who was a,project adVisor. So I had people come, and we'd talk to them about procurement and we talked about the project cycle. And some of them now are at headquarters, but nobody had thought to tell them, "This is how we deliver good work, this is how things work, and you're there and we're not going to just use you as interpreters. We're hiring you because you're going to help to appraise the projects and you're going to hdp supervise the projects. So you got to know what our standards ~e, and you've got to know how to fill out the forms · and all this stuff because you're there ail the time and know how to deal with the government." Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 72 So that was fun: that was part of full service from the CAO. We also, at that point, were dealing with trust funds, and Geoff had hired a trust fund coordinator, the - only CAO in the Bank to have one. And we got really good. We did trust funds in ECA because we ... ZIEGLER: And we'll hear more'about trust funds later on. CADARIO: Yeah. But I was in the cutting edge of issues. The CAO has got to worry about this, got to be strategic. We have to worry about quality assurance. So I would read all of the country departments' PHRD [policy and human resource development fund] requests, like I had done in the China Department where I was the person who coordinated all that. So I think that things were working pretty well. So then in June of 1995 Wilfried Thalwitz walks into my office, and he says, "Have you heard?" And I said, "No." And he says, "Well, you were in a meeting, and I wanted you to hear from me, but I've decided to retire because I'm not going to break in another President of the Bank." Jim Wolfensohn had just arrived. And he closed the door, and then he looked at my rock garden as ifhe was going to butt his cigarette in it. And I said, ":Wilfried, you don't smoke in my office. You're not supposed to smoke in your office, Wilfried, put that's your office. This is my office. So butt the cigarette outside." We alway~ joked about his breaking the rules, and I never enforced the rules . ·.. ZIEGLER: By that time, the smoking ban had been . ·.. CADARIO: Ban was there. And he--basically, I think that if you were a vice president and you were Wilfriecl Thalwitz then you got away with it. But he had those little silver thing where he put his cigarette butt. But you knew that he had been smoking in his office and all that. So, anyway, Wilfried said to me, um, "I've decided to retire. I'm not going to break in another Bank president." And because he's dead and it's a long time ago, I will say this. He said, "And you must not tell anyone this, but I've met the man and he is crude. Even if I had to break him in, I'm not sure he's trainable. And I don't feel that I have the stomach for this, so I'm leaving at the end of the year. Andi didn't want you to hear it from someone else because you weren't here when I summoned everyone a little while ago, you were away, but I want you to h~af it from me." So that was sad because I liked Wilfried. And I could understand, of course. Then Wolfensohn is arriving, and what does this mean? [End Tape 2, Side A] [End of session] Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 73 Session 3 April 22, 2013 Washington, D.C. [Begin Tape 1,, Side A] ZIEGLER: Today is April 22nd, 2013. My name is Chafles Ziegler, a consultant ~ith the World Bank Group Oral His_tory Program. I have with me at the World Bank Mr; Paul Cadario, and we will be conducting the third session of his oral history interview. Well, Paul, on June 1st, 1998, you became operations advisor in the Office of the Director and Head of Network Operational Core Services. How were you selected for that'position? CADARIO: Well, that relates, I think, to what was going on in ECA at the time; and so I'll back up a bit and then head into that question. The Bank went through various reorganizations starting in '961llld continuing into '97, including what was called ECA renewal. It was, every part of operations was re- doing itself, and the Bank was heading toward ha:ving six regions that were all organized slightly differently. Like, the principles were there .·. . ' ZIEGLER: Was this one more intense thah some of the others, given that countries from the former Soviet Union were joining the Bank? CADARIO: Well, not really. What happened was that Johannes Linn had replaced Wilfried Thalwitz in, I guess, January 1st, '96 when Wilfried left. And then waves of reform were sweeping the Bank because the '87 reorganization and then the '92 tweaking wasn't exactly working. There was a sense that there was a loss of technical focus, I think, a correct sense of loss of technical focus and that the highway engineers who worked on particular countries didn't really benefit, didn't really work across internal arrangements for cross support with a VPU [vice-presidential unit] within from the center were very onerous to organize. And not everybody was really following the rules. And then, as the CAO, I was in chargt? of that. I had also decided, as part of my mid-life crisis, to get a Master's degree in organization development and because what was going on with business process innovation, which we may talk about on another occasion. But, effectively,-thatwas the run-up to a fairly substantial reorganization of the Bank, which every region did differently. \___ I remember in, I think, the spring of '96 saying, "Well, Johannes, Jean-Michel Severino is about to join as our country director for Central Europe, and you look as if you're about to reorganize the region. Don't you thillk: you better tell him? Have you phoned him yet?" And I think Johannes did. We were getting along reasonably well then. ZIEGLER: ~ut not subsequently, I take it. CADARIO: Not subsequently. And Jean-Michel had replaced a very talented country director, Rachel Lomax, who had been suggested to Jim Wolfensohn as his chief of staff but then had been plucked to go and become the country director for Central Europe, where she brought her enthusiasm and, as an outsider, her view of how things should be done differently. ZIEGLER: Because she was British. CADARIO: She was British, and she went back to be the permanent secretary for Wales and Paul Cadario April 4, 17, 22 and 30, 2013 . Final Edited 74 subseq~ently had an extremely distinguished career as current secretary for a number of increasingly important ministries· .. ZIEGLER: And the Bank of England, too ... CADARIO: And the deputy governor of the Bank of England. So Rachel was a woman who had done, who had worked ~o correct some of the mistakes the Bank had made, bring in the former Yugoslavia, and also had, I think, a much better strategic sense of what we should be doing in these countries, what we should be offering or not. She left .. ( ZIEGLER: Which came first? She was chief of staff for Wolfensohn ... CADARIO: Yes, but she arrived--well, she was country director and then she was chief of staff, and · then she left. Jean-Michel arrived in '96, I think. Rachel was there from mid-'95 or when Wolfensohn arrived 9r just after he arrived, and I had been a CAO for a while. And Rachel was won"1erful to work with, even though I would be summoned down to her office and she · would complain about what people expected to be done, which she thought was just ridiculous, not only in tenl1s of Bank process but also in terms of some of the things that were not being left to her, as the · country director, to decide. She said, "Well, why do you have a country director if anything important is you're told about?" Jean-Michel arrived from the French government. I don't remember where: Cour de Comptes, maybe. Jean Michel was a wonderful man and a brilliant strategist who. set about working on the Central European countries very nicely. Jean-Michel_used to come up to visit on Friday afternoon. This was when AWS [~ltemate work schedules] had started, but I didn't do AWS because I came in every Friday for the Friday Morning Group. And Jean-Michel would come up on Friday afternoon and--and come to me becaus'e he was puzzled that the Bank did this or did that. And Jean-Michel and I became very good friends because I would listen to what he had to say, which generally I agreed with. And then I would interpret, why the Bank behaved in this often irrational and inefficient different way. Jean-Michel and I became good buddies, and Jean-Michel was looking at all this and say, "Well; the Bank needs to do more in all the countries that are going to join the European Union, and we need to.do infrastructure because they either do it now or they do it after they join the EU. And after they join the ·EU, it :Will be much more expensive, so they ought to get started on improving their links to Europe." And Jean-Michel had inherited countries that were in conflict because you had to break up the former Yugoslavia. And countries that had been thought to be too wealthy and, therefore, the Bank had done structural adjustment lending or done million dollar economic memoranda but really had decided, "Well, they're advanced, so we're going to ignore them." Jean-Michel had a very much more pragmatic view that the Bank could play quite a role in getting these countries ready for Europe. It was hard to move things around; and we were in the middle of a reorganization in ECA. ', The reorganization of ECA was massive, and I was, among all of the CAOs, the only one who said, "Right. We're going to make everybody move offices the day it takes effect because if we leave everybody where they're sitting now and then we move bit by bit by bit, we're going to find that we're never going to get the new organization in place." Well, this was quite disruptive in the short-term, but I think most people agreed that it was actually the right thing to do. There were great heady fights over furniture and size of offices and who was sitting where. And I took all . . . Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 75 the heat for things people generally didn't like, but I think that my impression is that, compared to other regions that have reorganized but had not moved people around, the disruption of the reorganization was a good deal shorter in ECA than it wa~ in other parts of the Bank. We got back to business fairly quickly. Relationships with Johannes Linn were tricky because, well, for a nm~ber of reasons. But I always thought the main one was that Johannes is a very smart ·man but had never really been a division chief. He had been made. a director, and then he was made a vice president, and then he was made another vice president. Johannes had never managed small groups of people and therefore he was not particularly good at dealing with a team and was very good at intellectualizing things, but he had a gosh, gee-whiz approach, so it didn't look like intellectualizing. Alld relationships with Johannes over the budget and other things became increasingly difficult because Johannes was ... ZIEGLER: Y Otµ" relationship .../ CADARIO: My relationship with Johannes became very difficult because Johannes didn't know why we weren't getting more budget. And I said, "Well, because we have to be more efficient." And then Johannes would say, "Well, how can we be more efficient?" And I'd say, "Well, you need to send the message we can be more efficient." -~ And he wasn't used to giving tough messages, and things were getting very ... 4. I ~ ZIEGLER: What were the deficiencie~ in the efficiency, deficiencies ... - w C) ('.I CS") c:::> w e::: <( i:::: 0 ::E a u 0 ~ But I don't--and then, of course, we were going through great IT ~bulence, because in my capacity as a CAO, I was essentially going to be chairing the information technology services board, and I was also championing Lotus Notes, which our IT colleagues weren't particularly keen on because they wanted to do the upgrade of All-In-One, but that was not going to happen. But I was in the vanguard on all sorts of things for what is now IMT [information management and technology], and there were people in IMT, including people in--I don't think it was called ISG [Information Solutions Group] then. Well, it was the information ... ZIEGLER: ITF [Information Techno~ogy and Facilities Department], perhaps. CADARIO: ITF, yes. ZIEGLER: We called it "it takes forever." CADARIO: It takes forever. Anyway, ITF, and including a former CAO colleague of mine and then the de facto head ofITF, Mohamed Muhsin. Mohamed and I had been very good friends while we were CAOs. And there were many· stories about, like when we went off with Jim, when Jim Wolfensohn brought all the black books and said, "I can't imagine you need all these black books to run the Bank." Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 76 And running battles with the Programming and Budgeting Department, PBD. And Mohamed and I got on very well and to~d jokes about things, kept the thing very light. And Mohamed, along with Charlotte.Jones-Carroll and Richard Gregory and I were old variety of CAOs who were picked because we knew operations. We had been in operations. We had been loan officers. I had been a projects person, as we called them in those days. And the vice presidents actually wanted people who understood how the Bank did business, rather than just budget types. This, of course, meant that we could be, on the one hand, very useful in terms of explaining to people who did the work how they could be more efficient and why are your average size of missions so big and why, et cetera, et cetera, because we knew what went on on mission. But at the same time, our budget, central budget. colle~gues at PBD didn't always like the fact that w·e were saying, "Well, this·is going to be a real dramatic impact." They just said, "Well, just cut 5 percent or whatever." And the budgeting process went over--we tried a number of times to reform it, including what was called the CAM. Eventually--! can't remember what the CAM stood for, but I was in charge of it when I was in the Chl~a Department--but effectively it was cross support and very coefficient~driven budgeting. Well .. ZIEGLER: Could you just say something about the institutional role of the operational core services and what your primary responsibilities were? CADARIO: Okay, all right. Well, this is what happened because Johannes realized or Mohamed realized that things were getting worse and worse with Johannes. So Mohamed--and this was when we were starting systems renewal--Mohamed said to himself and spoke to Kathy Sierra, "I think I,know just the person to come over to OCS [Operational Core Services]," which was dealing with lending policy but also eI1vironment and fiduciary. But, basically, Kathy Sierra, at that point a director, was the owner of all the operational business processes and language that we subsequently adopted. So Mohamed organized that, since Kathy had positions, that Kathy would--and I knew Kathy from various change things that had been done. So Mohamed engineered that Kathy would get me over there becau~e he was in the process of starting systems renewal. And since I was one of the few people in the Bank who understood the Bank's work, understood the Bank's budget, and understood technology, and was increasingly, was having increasingly difficult relationship with Johannes Linn, which was on~ of the reasons I got a Master's degree, thinking I'm going to move out of here because he's the vice president, he's going to outlast me. The Master's degree from AU [American University] was a mid-life crisis that cost about the same as a sports car. Anyw11y, I moved over into OCS because Kathy needed two operations.advisors io deal with quality. She needed people that understood Bank business processes. So two of us were hired, and she got the operational services board to agree that we needed two. And I think she had the money. I never knew for sure. But, anyway, I moved over. And when I left Johannes may have gotten some peace because he didn't feel I was criticizing how he ran the region, And there were a lot of budget problems in the region At OCS, I arrived, and I'm busy, offering quality things. Robert Hindle and I worked on what's an Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 77 operational definition of quality and how do we assure it, which was interesting because I got to work with the OS people, the operational quality people, in all the regions and, indeed, the networks because the networks were involved in this, too. The whole Bank was reconfigl.lred, well, away from the country departments. So OCS had to realize, had to figure out, well, if one of our problems Hans [Willi W.A.] Wapenhans said was that we didn't get quality right, what do we do to make quality happen and where are the touch points . and are there ways that we can improve quality and simplify processes? So I was busy advising Kathy, working on things. I did continue to support the regions, like the ECA region, for example, on their quality training for staff in the field because, although I had gone over to the dark side of the CAO, I still had a sufficiently strong reputation as a quality person and as an operations person~ which had been--which had been recognized by my moving into OCS. As I say, once we got into the jargon of information systems renewal, which began in earnest in early '98- c -actually, no, when did it begin? Well, we we~t live in '99... ' ZiEGLER: My notes say in 1999 you led the information systems renewal. CADARIO: Right. So, so one of the first things I did was, '98, so information I had-saw--w.. I we're going to reconfigure the trust fund establishment, ·.::1 ~ -- u:::> C) c..... CF) c::::I J 0:::: s:: ~ 0 -~ (.) &j Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 89' "-f c:;,;;; ' =~ t:r:= u:i:: - c.o ~ <"! en ;~ c:i E-t< file:> 0::: l\JJ s:: ~~ <( :;:£ .:a fr u ;< CADARIO: And so the job wa.s f.'(I posted,, Like they posted all the jobs, including the new one for the dir~ctor for trust funds quality. It was a GH/Gljob for quality assurance and compliance. So, okay, it's been posted, and Kathy says, "You are going to apply." And at this point I was thinking, "Well, maybe I should just leave the Bank," because, okay, I wasn't really ... Kathy said, "You are going to apply." And I think I worked for Joanne at that point or Joanne was about to take over. So I said, "Yeah, I'm going to apply:" Sol applied. So I'm called to an interview, and of q_ourse I don't think that people in CFP or RMC, including Arif, were terribly happy that I might apply for this because I knew where all the skeletons were and I'd ·also done business process innovation and systems renewal for ISR and all that. Well, so I go to my interview, and I don't remember whether I was interviewed by a lot of people or not. I think there were a few people that interviewed me. I went for the final interview with Shengman Zhang, the managi~g director. And Mohamed had said, "Let .Shengman do the talking; don't come across as too pushy;" And I said, "Well, I know Shengman." · And he said, "Yeah, but he's a Managing Director now. He's not a peer." So I go in. I sit down, and Shengman says to me, "Paul, what I want you to do is I want you to send me a note." . He said, "I want you to decide what you're going to do in the first three months in your new job. Send me a note," i.e., you're going to have the job. "Okay. Well, thank you." So that was fine, and then it was formalized: I got a note very quickly saying you have been selected for this. And then since we were still doing trust funds to clean up the mess with the CTF donors, there were meetings, and I was asked to go to a meeting that Shengman was chairing about, well, what are we ·going to do about this mess with the consultant trust funds, how are we going to handle it? So I go into the meeting and sit by the side, and Shengman points at the table so I went and sat at the table. So Arif came in and Motoo came in, and they all sat down and I could see that they're wondering why I'm there. Paul Cadario April 4, 17, 22 and 30, 2013 ., Final Edited 90 So the meeting starts, and Shengman is, _of course, very unhappy that we're having to go through this and we had internal audit work out what's tainted, et cetera. "So there are two things--so we have to decide what to do. But let me first say that we've got to proceed with this reorganization." At this poinJ, Shengman's advisor, Margarita Bellinger, comes in and gives a piece of paper to Kusakabe, and Kusakabe looks at the piece of paper and looks at me and Kusakabe is visibly shaken and pale. And I'm thinking, "What's that?" ' So Shengman says, "Okay. Well, two things we're going to do. The first thing is Paul is here because he's in charge of trust fund quality assurance and compliance, and he's going to be overseeing what needs to · be done to sort this out. And, secondly, the CFO [Chief Financial Officer], Jeffrey Goldstein, and I have decided that Paul will report to the CFO, not to the Managing Director for Operations because, frankly, this is a finance and control issue. And, Paul, you go see Jeffrey after this meeting, and he and I agreed you need to start right away." Okay. So I leave the office, and I say to Margarita, "Did you run that past me?" And she said, "No, I didn't think I needed to run it past you. I thought the element of surprise at the meeting was quite necessary. Shengman wanted it that way." ZIEGLER: · What was her last name again? CADARIO: Margarita Bellinger. ZIEGLER: Oh, Bellinger. I remember ... CADARIO: Margarita was a wonderful advisor because she knew where ever)rthing was and who was connected to what. She was excellent. And I worked closely with Margarita. So I go out of Shengman's office, and there's Jeffrey. Jeffrey and I had never met, and Jeffrey says, "I'm so glad you've come on board. I understand you really know what's going on here and you're a straight- ' shooter. I'm looking forward to working with you." And Jeffrey was an absolute prince to work with, like "Just get on the job; let me know if you rieed help." I got--when I took that job, and it was a level H, and, "Well, do I get promoted now?" "Well, no, we can't do it right away." And I got promoted a year later to director, which was fine. And then Jeffrey said, "Well, you've been promoted. Do you care about your title?" And I said, "Well, what does it matter?" And he said, "Well, I have to go tq the Board if it's director, but senior manager I can just do." And I said, "Well, whatever is easier for you, because it's. the same grade and I get a 5-percent promotion increase, so that's fine." · So I took over in October of 2001. And it was a competitive managerial process, and there were only two of us on the short list. There was the annual portfolio review, which I had to pick up because RMC had dropped the ball on it. And they'd given it to someone that none of them liked, a woman named Aynur Sumer, whom I knew from West Africa days, we were both in Freetownin the summer of 1976. She was Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 91 the country economist, and she was great but had never been allowed to write what she really wanted to write. But I said, "Well, you're doing it for me now, Aynur, so write what you want." And then I recruited Caroline Harper, who had managed the analysis of how much were we going to pay back. And over the course of the fall the Bank decided, and I think we ended up, on account of three separa:e ~shaps, the CTF fraud, 1>HRD problems, and the third one ... ZIEGLER: PHRD? CADARIO: Japan Population Human Resources Development, PHRD. It was a trust fund that was used for project preparation. And then there was a third one. We ended up paying the donors back $30 million but ... ZIEGLER: Because there had been problems. CADARIO: Because there had been problems on account of these three things. And Jeffrey Goldstein took the view that we need to touch, we need to repay everything that these people touched under the CTF fraud because if we don't, the cost of looking at, of trying to decide should we repay, shouldn't we repay is going to be excessive, it's going to take forever, we need to put this behind us, so everything they touched we're going to repay. That was 10 million bucks to the six donors. PHRD, there was a number and, well, what did we already reimburse? We're going to pay that because want ~his to go away with the Japanese because the Japanese had not been; had not suffered under the consultant trust fund scandal, but the Japanese had a big consultant trust fund, but then there was another problem. And then there was a third one, so the total for the three situations was like $28 or $30 million reimbursed to the donors. What we wanted to avoid were two things. First, extrapolation. In other words, well, across these six, you repaid X percent. Then we need to' go to all the consultant trust funds, and we need to repay X percent of all of them. We did not want to extrapolate because that would lead to a second problem, which could be separate or it could be the same. Well, if you don't have control systems that prevent this, we should make reserves because every year you're going to have topay something back. And the Controller and the CFO said, "We are absolutely not making reserves because then we have to disclose the basis on which we're doing this, and we get into a whole kimono show or open the kimono or t~e seven veils about 'just how bad are your controls?' And we've got to fix them, and we should not either extrapolate, or we cannot allow· extrapolation. We're just going to repay all the donors all their money that these people touched. We think the Board will go along with that." So this was all in the fall, like October or November, and there was a lot going on. And then I think it was DeceJ;Uber. It was December. It was after Thanksgiving. It was decided by JoanneSalop, the trust fund worki)1.g group or trust fund action committee, which was chaired by Jeffrey Goldstein and had vice presiqents on it, and then there was a trust fund working group implemented, it was decided we're going to do .our "we're sorry we screwed up" tour. And Chuck [Charles A.] Mc:Oonough, who at thatpoint was the director of accounting, Chuck McDonough and I were going to join Motoo Kusakabe, and we were goingto go to Italy, France, Finland, and the Netherlands. And Chuck and I were there to make sure that everybody understood that the Bank meant business, and Motoo was then vice president. · A second group led by Joanne Salop went to Sweden, Detimark, anci I think Spain because they were the ones where the donors were really angry. And Caroline Harper, who was working for me by this point, had to accompany Joanne, and we flew around Europe for a week, like if this was Wednesday it must be Helsinki. Then we'd arrive in Helsinki in the morning, we'd have our meeting, and we'd go on to the next Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 92 place. And Chuck and I were traveling together. So Chuck and I would get on Lufthansa because the Bank had a · deal with Lufthansa, and we would sit in SA and SC, and the Scotch would be brought out. And Chuck and I cooked up the idea that we need to automate all this, we need to put this all into SAP so that there shouldn't be paper workflows. We need to put this all in SAP, and then we know who's approved it, et cetera. Can this be done? This, of course, fit very well with Chuck's vision that we could offshore it to the new center in Chennai, which had just opened. The center in Chennai, just to go back, the center in Chennai was something that I guess a lot of organizations were doing, where you put your back office in India. And they looked around and they picked India, and then they looked at some cities and they picked Chennai because I think the government of Tamil Nadu had offered some concessions, and the Bank was going to put a building that was going to have fotir or five hundred people in it. So it's this big deal, and it wasn't congested like Hyderabad. The idea of putting it in the capital made it a little too close to the New Delhi office and to the central government becaus~ this was a Bank installation. It wasn't to serve India. So we had acquired premises in Chennai. And offshoring a lot of the back office had been a big deal. And I remember one day--and this is moving back a bit--I think I was--1 was doing' my Master's degree in organization development, and I was doing change management. And I ran into Fayez Choudhury, who · was at that point the director of accounting working for Jules Muis, the Controller. Fayez said, "Paul, I'm working on this offshoring to Chennai, and I'm having a terrible time with my managers. They just aren't happy. They don't know what they're going to do. We're not getting any progress." And I said, "Well, I can understand that." And I said, "Well, let me suggest something because I know all your managers, and they're all great people. They're all wonderful. They're smart, they're committed. They're good managers. But look at it this way: you're asking them to man1;1ge people that are 8,000 miles away, and they're afraid that they won't be able to do it. I think they can do it because they're smart people; but you're going to have to support them, and they're going to have to figure out how to do it. But they're smart; they'll figure it out. But what you need to do, Fayez, is you need to make it safe for them to talk about the fact that theyire afraid. And if you make it safe, then they'll probably all find that they're all ill the same boat and some of them will have figured things out, and then, together, there may be things where they haven't, and none of them have figured out how to do it. But if you get them to talk about it, they'.ll say, 'Well, I'm afraid of that, too.; I would do that." Well, l:ie called me up two days later, and he said, "That was a brilliant suggestion, Paul, because that was exactly it, that they were afraid, and by saying it's okay to talk about why we're afraid, we all need to be afraid/' because I think Fayez had basically been told, "Jules Muis is leaving and if you want to be the Vice President and Controller you better pull off this offshoring." r Anyway, so in January of 2002 I was in Paris interviewing YPs, like I do every year, did every year. And then Chuck and Brian Quinn, who was the new manager for trust fund accounting, ari.d I were going to Cheimai. So we get off the plane in Chennai at 1:00 in the morning, and we are whisked to the Chennai center which, of course, is open because the day is just beginning, the time difference in Washington. They were just closing. Well, Chuck was received like visiting royalty, which he was. And he'd never been there before. And of course it's 5:30 in the morning. Brian and I said to Chuck or I said to Chuck, · "Well, it's been a lovely event, and you've done-a great town meeting, and we're having a lovely buffet here of samosas and everything, but it is S:30 in the morning. Given that you probably want to do some work today, could Brian and I go back to the hotel and maybe get some sleep because you'll want to . , ." I Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 93 "Oh, okay; fine." So we left, and Chuck continued to meet with people. But a lot of the work and the quality assurance in the whole trust fund business process, in the process excellence, in terms of everything is set up properly, 1 is because we set up Chennai because people in Chennai took great care with the process; for example, there was a sign up on the bulletin board,_ they're targeted at 95-percent accuracy, and last month they got 99 percent, so the sign, well, "We need to discuss how to improve our work, at 3:00 tomorrow afternoon."· So it was really impressive because we had a great team of people, and a lot of the work that required absolute assurance that it was going to be done properly and itwas all coming to them through the .·system, it was done in Chennai, and it was done beautifully. We were very fortunate. I think we were among the first international companies to come to Chennai so we had some of the greatest staff. They we:re great. Managers, they were great.' Accountants, they were very . ., ZIEGLER: You were able to get the pick of the lot? CADARIO: . Yes, we had the pick of the lot because we were the first one, arid it worked that the World Bank was prestigious. And we had beautiful temporary space, and I think we moved into another temporary space, and then we built our own building in Chennai, and it was lovely and environmentally- appropriate building. And Chennai has now become, I understand, as congested as Hyderabad and the other places we had fooked. . · But I think that the fact that we had the process simplification and setting up everything in the system was all done offshore in Chennai wh~re it was all going to be done exactly by the book. Everything was work- flowed·because of SAP and everything was done there, and if you neede-d to change something you had to go to Chennai to change it and you had to explain why. And they were saying, "Well, yeah, we could change this if Paul C. allows it, you have to explain why, and this is where you have to put it. And once you've put it in, we will approve it. We will flip the switch and turn it on." So we had a succession of great' trust fund people and gi::eat, d~dicated business process actors in Chennai who have made it possible, at least in the back office on the accounting side. The trust funds got really mainstreamed into how the World Bank Group manages its money. ZIEGLER: For the benefit of future researchers, can you just explain briefly the role of trust funds in the Ballk, broadly speaking? .CADARIO: Well ... ZIEGLER: I'm not sure that I understand it completely. CADARIO: Well, basically, trust funds are a financial and administrative arrangement where somebody gives us the money to do certain things, and we agree to give it away in accordance with Bank policies and procedures. Over the course of the years, we had separate trust fund policies and procedures that weren't aligned with how we did loans and credits, and that was a problem. When we put them into the SAP that cleaned it up a bit. There are basically three kinds of trust funds. The biggest ones are the financial intermediary funds, which are real trust funds, but the Bank does not control the allocation process. We're the trustee, but Paul.Cadario April 4, 17, 22 and 30, 2013 Final Edited 94 we're not the administrator. The big ones are the Global Fund to fight AIDS, Tuberculosis and Malaria; the Global Environment Facility; the Montr~al Protocol; the new Global Partnership for Education. They're the big ones, and that . ZIEGLER: So the donor decides ... CADARIO: Well, there's a governing body outside the Bank that allocates the money, as opposed to Bank-executed trust funds and recipient-executed trust funds. Recipient-executed trust funds are just like· IDA, in that they have to be appraised and then we give them to the client, and the client uses Bank policies and procedures, environment, fiduciary, procurement, safeguards. And there's a PAD [project appraisal document] or.some--a project document that describes what's going to be done, and a grant agreement with the recipient about what's going to be done. Most of those recipient-executedtrust funds go to governments. There are some recipient executed trust funds that go to non-governmental organizations, but most of them go to government, just like IDA. They're sometimes. used to co-finance IDA. They're used in countries that are very poor and they're used in fragile states. Then we have Bank-executed trust funds. Bank-executed trust funds are supposed to be just like our budget. And in FY12, I think we used something like $670 million of Bank~executed trust funds. Some of that is, well, for various peculiar reasons, like if you have a recipient-executed trust fund that you supervise, you create a ,Sank-executed trust fund to pay for the supervision. Well, $670 million on a budget of $2 billion, and the budget of $2 billion includes all the back office, so . if you say the budget of operations is like $1.3 billion and you're adding $670 million, you've basically got 40 percent of the Bank's operational work paid for off budget through the kindness of others. And so. ZIEGLER: Now, where does the money come from? That comes from donors? CADARIO: It comes from donors, it comes from governments. Well, you've got--all of the money comes· from donors. There are various accounting rules that say the Bank can't put its own money into trust funds. IFC can, but the Bank can't for some reason. But you've taken that in as income and you've put it in a trust fund. You spent it yourself, well, why didn't you just spend the budget? So it's a very funny fiduciary role because the Bank can't be trustee for itself. So this is why we have a budget and we have trust funds separately, even though they should be used together. And when you're coming up with the cost of doing something or the budget for doing something or the cost for doing something, you should take into account all resources, all results and all resources . .And of course the Bank was very good--or some part~ of the Bank were very good--at saying, "Well, we've achieved all this stuff," and not mentioning that they actually achieved it with a budget subsidy from a trust fund of 20 or 30 percent or maybe even more. ' ' And you got into problems because we have to prepare a PAD and we're going to use trust funds, but we don't get any money to prepare the PAD until the project is agreed and then we can charge against the trust fund. But we've already spent $300,000 to write a PAD, but we had to pay that "nights and · weekends." Well, actu:ally, charge it to something else. · Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 95 So a lot of issues arise from a lack of transparency in what exactly they pay for. And the Board was also saying; "Well, we approred a work program and a budget of so much. And we know that these trust funds are there, too. We should approve those, too." Well, no, no, no, we don't want the Board approving Bank- executed trust funds. So there's been a constant struggle between the forces in inanagement that want efficiency and transparency and accountability because, remember, the trust fund is generally assigned to a TTL not to a manager. So the trust fund pays first fqr the TTL and her entourage. And a manager gives her a budget - and she says, "I'll take that and I'll get some trust fund, and we'll spend it," or the manager says, "I know you have lots of trust funds. I'm going to cut your budget." East Asia, for example, has a lot of trust funds, so we won't give them as much budget as they should otherwise get. So the trust fund business has led to a whole lot of distortion about staffing, about efficiency, about priorities, at the country level, at the regional level: Like, "Well, why are we doing this trust fund?" "Well, because the donors-gave it to us." ! "Do we kn~w anything about that? Is it in the CAS?'' "Well, yes, but the donors want to do it." "No, no, no, I asked you is it in the CAS?'' And the extreme example of the use of Bank-executed trust funds is the Indonesia office where I always joked that when Sri Mulyani Indrawati, the Minister of Finance of Indonesia, was the luckiest minister of finance in the whole world because she didn't have to manage a policy team. If she had a question, she'd call tlie World Bank office, and there were fifteen or twenty people who would answer her question and she wpuld get a little a two-pager by the end of the next day. So the whole issue of why do donors do trust funds and why does the Bank accept them became, with the size of the Bank-executed trust funds, quite a contentious political issue over the years. I would always say, "Look, there are two issues. The first is do our work program deliverables reflect what we've agreed with our owners and with our clients we were going to produce, or do we have like little pet things we do because the donors will pay for them? Do we end up at the end of a CAS having done all these nice things, but we didn't do what we started out to do because the donors waved money in front of us and we did something else? Is it fair to the countries that don't have trust funds, like the IBRD countries?" And then, of course, there are some trust funds that are run by the networks so they can have their own programming. And country directors see these people marching through, 'generally the fancy and touristic middle-income countries: "Well, why are they here?" "Well, they're here to give advice on privatization." "Well, yes, but we're doing work on privatization. Who are they? Well, but do we know what advice they gav~? Do we know whom they talked to?" And if you're in one of the big middle-income countries, staying on message is really important because these big middle-income countries know what they want. I remember once going to China'and go_ing to the ministry of finance and, "Well, Mr. Cadario, how ilice to see you. I remember when we worked together." - Paul Cadario April 4, 17, 22 and 30, 2(}13 Final Edited 96 "Yes, I remember yqu." Now, he would be like a deputy director, and I'd say, "w_ell, I'm here to talk about trust funds and get your point of view." And he says, "Well, trust funds are really interesting, but, you see, the ministry of finance only sees them at the very end because we have to sign the grant agreement on behalf of the governinent. And I get these m grant agreements, and I look at it, and I say I don't think I would have done this. Like, where is this the CAS, or, oh, my God, the technical people at the Bank have talked to the line ministries. And ministry of finance doesn't want this to happen, but am I going to say, no, no, no, no, take this away, I don't want it? Of course not. But 1 really wonder, Paul, you remember that the World Bank, department of ministry of finance and. the Bank always had agreements, this is what we're going to do?" And I said, "Yes, China told us what you wanted us to do, and we did it, and we did the best we could. We managed the money." And he says, "Well, but with trust funds that doesn't happen. There's all this stuff going on that we don't know about until it's just about to start or maybe we find out about it when it's done because we thirik there are all these people running around with Bank-executed trust funds here in China, and we look at their terms reference and we authorize the visas, but we're not quite sure why they're here because we don't know what project they're associated with, lik~ this ?ig program that we've agreed to do." So I think it leads to a lot of confusion. And, of course, as the perception of the budget being tighter and. tighter has increased and as the Bank's cost of doing business has increased because of decentralization and the cost of running country offices, staffing them, giving them security, doing the IT, all of that has increased. Budgets are under pressure. The other thing is that it's not respectable to be a rriember of a team anymore. You don't get promoted unless you're a TTL. Well, so who do we send? We send a level F and four consultants, two of whom are paid by trust funds because the level F wants to be a level G or the level G wants to be a level H, and we've fragmented om work program so that everybody can be a TTL. And because we've fragmented the work program, we've fragmented the budget. And because we've fragmented the budget, we have to have trust funds to support each and every little thing. · ZIEGLER: Like a circle almost. CADARIO: Yes. And shouldn't we do fewer bigger pieces, let's say? And does everybody, like I think I was reading one of the--like either Javed Burki or Johannes Linn's point that a client said, "You used to send us missions led by people with gray hair, and now you send us missions with young people who have all these consultants working for them, and we don't really know whether that's a good deal for us · the way it used to be, because the person who led the mission was excellent and that person brought experts with him." Well, .part of that is the "him" or part of that issue is the "him." But I think there is a question of whether the Bank is, still doing high-quality work because, effectively, we're lettirig anybody do it. And decentralization may not have improved that because there's a big push · to have country office staff leading activities. And many of our country office staff lack global experience, which is really necessary in order to be the World Bank. That's part of the license to operate, the global experience that we bring. It's also the ,way that the Bank's experience in one country moves to another because those people have led the missions in Burtmdi so that when they go to Laos they can say this is very similar or . . . . ZIEGLER: Well, you're a good person to ask this question of, given your experiences. I remember when I first caµie to the Bank, one of the questions, I forget who I asked, but we're the World Bank and Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 97 we just have a few of these little resident missions and these people come from, have to fly from Washington to wherever they're going. I mean, isn't that kind of expensive? But I was told, well, it would be much more expensive ,to put them in the field. Now, you just said the cost of doing business has increased due to decentralization, but has the decentra1ization, in your opinion, been a good idea? Has it improved quality of the Bank's work and the benefits for those client countries? CADARIO: Well; yes, it has, but to the detriment of something else. Yes, we're treating our clients like clients. We have an office there. Arid you've got people that are dedicated--country director, country manager.,.-andthey only work on that country. There are people who are senior in the big countries, and there are people who are ·quite experienced: the Indonesias, the Russias, the Vietnams, Kenya, not to cite just those four but that's the idea. You've got really good people in those big countries. And I think that's often true at the country manager level, as well. · But once you got a manager there, you have to put people around him and you have to have an office and you have to worry about this, that, and the other thing, and then, oh, well, we should have agricultural speciailsts there. Well,. that's fine. Well, okay, what agricultural specialist should we have? Well, if we could move people around; that's fine; that's a good thing. But what also I see happening is we have people who work only in country offic.es. They move from one country office to another, including · directors sometimes. They don't do anything corporate. And so we've got people who might know the country very well, including local staff, because that's what they know mostly, but do we have people who understand global issues? Well, yes, we can have these confabs for one or two or three weeks where they all come and party and go to workshops, selected I don't know quite how. · But there's a World Bank global way of doing things, bringing global experience. How does it get transmitted? I'm not ~ure, like I don't think just that there's something special about going through Dulles Airport means that you're a global expert. But, similarly, I don't think that sitting iii a country office means that you're necessarily more client-focused because the client doesn't just want you able to come over at the drop of a hat. Frankly, if I were a minister of finance, I basically don't want the World Bank calling me all the time. And I can pick up the phone and call whoever is in charge of my country at any time. I don't really need to have them drive over. · I'm not absolutely sure that our.clients are better served, but I'm npt sure that they're getting the full benefit of everything the Bank knows or ought to know because we've created these large installations in country offices where we have to have local people doing supervision or doing preparation. We have to. have locally-based staff, but somebody who's an internationally-recruited staff member who's sitting in a country and has worked in other countries is more likely know exactly who to call if they have a question.. But they're there by themselves. And, okay, they might be able to get somebody from headquarters to phone·ihem back, but, frankly, the Bank's experience, despite all the hundreds of millions of dollars we spent on knowledge management, is not that we have created the practices in the way we should have. And the FPD [finance and private sector development] pilot, which was intended to create these global practices, seems to be lost and somewhere banished in the shadows as we're talking about change management, at least I haven't heard anybody mention the FPD pilot where you had practices as well as global things, b&sically a 3-dimensional matrix. I haven't really seen anybody, I haven't heard anybody talking that that's improved how we're dealing with FPD matters. · So, on balance, yes, I think that decentralization had to happen and was the way things ne~ded to go. But I'm not sure that.we've necessarily given every.country the right team that it needs. And I'm also not ·clear that we're extracting what we know. and using all our experience and, indeed, listeriing to people in Paul Cadario April 4, 17, 22 and 30, 2013 Finql Edited 98 country offices about what they want to the extent that we ought to be the way we've configured ourselves today. [Begin Tape 2, Side A] CADARIO: One of the things that was always in the background and moved into the foregrolind toward the end of my time at the Bank was trust funds. As I mentioned, Chuck McDonough and I had thought abput it when.we were flying around on the famous "we're sorry we screwed up tour" in 2001. And Chuck was keen to take full advantage of process improvement!! for the control possibilities that · were possible, that could be done by automating the whole system. CFP was a little less convinced, even though--or, rather, RMC were a little less convinced because they thought they were business owners. And Chuck's view was, "Well, excuse me, this has to do with money, getting the money, allocating the money, spending the money, returning the money, so it's controller's, so. we're going to do this." So the team was set up basically under Controller's authority. The learning and accreditation program which had been imposed had done a lot of good because you I' ) couldn'.t run trust funds unless you were prepared to get accredited. And that had been rather a big institutional step because I had chainpioned it, but there was someone in CFP who--Dale Hill--who came up with a module. And we tested them, and because we decided it was going to be mandatory, we had to make sure it actually worked. So I had insisted, and brought in WBI [World Bank Institute] to do a validation of the questions so that they would be considered valid and reliable for then being the basis for tests which decided whether you could tun trust funds or not. · ZIEGLER: How did the World Bank Institute ... CADARIO: World Bank Institute hadan evaluation group in there. ZIEGLER: Oh, okay. CADARIO: And I had, in doing the work on the learning board and knowledge management, met some of them and I said, "Could you come in and advise us about how to make sure these questions are valid and reliable and do they measure what they're supposed to measure?" They were happy to do it. And, in fact, a. year later they came in and did an evaluation, a level 2 evaluation, of the whole trust fund learning and accreditation program and concluded that it actually had been a big improvement. And they looked at the statistics of mistakes and errors that had been made, and there was actually a report that said, "Based on a year's experience, this was a good idea." And th.ere had been a lot ofresistance. The most famous part was the Vice President for East Asia, Jemal Kassum, called Jeffrey Goldstein or, rather, he let it be known that while there was this July 1st deadline for the accreditation, it was really difficult, it was bunching season, and his people would not be accredited at the time . . So I went to Jeffrey, the CFO, and said, "Jemal said that he's not planning to get his staff accredited by the deadline and muttering that the trust funds better not stop and that he's basically tol.d his people just to ignore the July.1st deadline." And Jeffrey said, "Well, why did he do that?" Paul Cadario c April 4, 17, 22 and 30, 2013 Final Edited 99 And I said, "I don't know, but he's certainly been told it was a July 1st deadline and that was what your instruction--you and Shengman signed this note that said it wilfbe July the 1st and that's the deadline and the trust funds will be frozen if the TTL isn't accredited and that there will be no shadow TTLs. The TTL of record has got to be accredited, and the system is now hardwired to make sure that that happens. And if . the TTL is not accredited, then the system won't process trust fund transactions." So.Jeffrey says, "Thank you." And Jeffrey called Jemal Kassum and said, "I understand you have not read my memo. I'm telling you, Jemal, I'm telling you, there is no Plan B. If your TTLs are.not accredited by the 1st of July, the trust funds in East Asia will freeze. There is not another option. As we told you six months ago, this is it. That's .the way it'.s going to be. And I expect you, in case I've not been correctly informed, but if you . believe that there's any misunderstanding about the fact that this July 1st deadline applies to East Asia as it applies to the rest of the Bank, I would invite you to make,whatever clarifications are important or necessary today, tomorrow morning at the latest, but I'd do it today because they'll be opening for business in East Asia in a few hours. We wouldn't want them to lose a day to stud_Y to get accredited." So Jemal, of course, became the biggest supporter of the learning and ac.creditation program. But the trust funds, it's standardized, it's simplified. We were able to identify what processes were leading to blockages. It was a marvelous opportunity to do things, but to basically get everything in one place and sort ou.t the accountability so it was all very clear. Some people filled out the forms better than others did, and w~ probably asked for too much. And, of course, as we did more and more trust funds, the whole issue of, well, we have to put everything in these trust funds and then we have to write a PAD, too. That led to the final move that had to be engineered, basically starting, I guess, a little over a year ago. Like early 2012 was the final step on trust funds. I decided--and Jeffrey, by this time, had gone. John Wilton had become the acting CFO, and then Vince'nzo La Via became the CFO. Vincenzo was also wonderful to work with, a consummate professional, truly committed to integrity, committed to good risk management, sound risk management practices, and also somebody who said, "Just go and do whatever needs to be done." I should parenthetically say that, as I was in charge ofTQC [Trust Fund Quality Assurance and Compliance] for all those years, when I started I got a very good piece of advice from Mohamed Muhsin, who said, "You should write an email to Jeffrey every week telling him what's going on, and you'll find that it will be tremendous discipline in terms of what you're working on." So I did that, and I wrote those emails every weekend, every Friday, sometimes Saturday, sometimes Sunday, every week for that whole . period, and they were only for the CFO. And then Caroline Harper got a copy, and my assistant got a copy fo put in a binder for the record. They didn't go into the files because they had--it was always, well, events this week, issues, and then on the agenda for next week. And they were detailed and often very candid descriptions of what was going on and what I was going to do about it. And the understanding I had with Jeffrey and then with John and then with Vincenzo was that I would just, if they had a:ny comments, suggestions, or advice, they were free to call, but ifl didn't hear from them I would be proceeding with what I said I was going to do. And I didn't expect them to follow-up on anything unless I came and asked for it. In other words, "Don't get alamied about something I've written, I'm dealing with it. If you have questions or if you want to, if something is troubling to you, then let me know." Well, of course, that worked very well because all three of them were people--and I think they treated all of their managers this way--that once you've established that you knew what you were doing, they were just there to be supportive and they knew you were reporting on what was happening so that they knew Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 100 what was going on if anybody complained, as, eventually, it is said one or two of the Managing Directors complained about things that I had done to people who were working under them. And the CFO, Vincenzo, and I think Jeffrey before him, I don't remember hearing any stories from Jeffrey, but Vincenzo wol}.ld listen and would say, "Well, actually, that's what I pay him to do, and the fact that you've come to complain _shows that my trust in his judgment 1s correct. Thank you for letting me know what a good job he's doing." And then there would be the "but, but, but, but," and Vincenzo would say, "No. I'm sorry you don'tlike what he .did, but he did what he's supposed to do and he did what I expect whoever complained to you is going to do." So it was always good to have bosses like that. We had SAP; it was working. We had shown that offshoring the back office was possible. But as the Bank-executed trust funds, in particular, got very big and they were being mixed--not mixed hut they were being used in parallel and sometimes in substitution for Bank budget. And you got into issues about people being hired,· and they were paid for entirely by trust funds. But we had different rules. "Well,' excuse me, this person works for the Bank. They have a contract with the Bank, not a contract with the trust fund. The trust.fund is just this pot of money." And then, of course, the donornometimes said, "Well, why are you treating--like, you're supposed to do this with our trust funds." ' · And I would· say, "Where does it say that?" "Well, we want this." And I said, "Well, we have an.agreement, an administration agreement, and this is what it says in Bank policies and procedures. What part of Bank policies and procedures isn't clear to you? We're not doing separate reports for you. That would be very expensive. You wouldn't want to do that because then we'd have to charge you." ' . But the noise level was rising because donors were getting a little pushy. They wanted extra reporting. TTLs were saying, "Well, we have to fill out this trust fund proposal, and we have to fill out a PAD, and we have to fill out both, and then there are two different approval processes." Managers were saying--and they got a trust fund proposal to approve it--they' d say, "Well, didn't I just approve that?" or "Well, this was before the PAD." So there were all sorts oflittle disconnects where there was duplicate work going on or work that shouldn't be going on because trust funds, it's just an account in the Bank's books, as I kept saying. · " So the time has come to say, "Look, if recipient-executed trust funds are like IDA, and Bank-executed trust funds are like Bank budget, why are we treating them differently? You've got to approve them. You've got to get the money into the Bank. But in tehns of how they're used and how they're dispersed and how they're accounted for and how they're supervised and how they're.reported on, they're like IDA or the}"re like BB [Bank budget]. They shouldil't be different." So what we had to do, having said to the donors that your money is very special and different, we had to then say, "Actually, it's so valuable we're going to treat it like our very own," which, in fact, had been what we weren't doing when the consultant trust fund s.candal happened back in 2000. So having told them for a decade your money is different, we had to now say, "No, your money is so special we're going to treat it like our very own". That messaging had to be managed, so how do we do that? Well, that took a lot of coffee and a lot of drawing sketches on napkins in the atrium there because you had a whole trust fund industry that's been built up: the hunt for trust funds. And people complaining, on the one hand, that the donors were demanding things an4, on the other hand, giving them special reports. And I said, "No, no, no, no, we are Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 101 not giving the donors special reports because we can't validate if those reports are correct. We can't--they have to come out of the information systems, and that's why they, the donors, h_?ve access. In the donor portal that goes into E-trust funds, they can see tht?ir money being spent. They also can see things - consistent with our disclosure regulations and privacy. They know we can't show them staff costs. But as soon as we have people, TTLs, taking on themselves to prepare special reports, first, that's extra work; secondly, that's a control problem because we don't know whether those reports are right and for all we know we could get into a problem where the Bankdid not comply with reporting if you asked for something special. So, effectively, we need a completely standard process." Well, of course, you've got this whole industry of people that has been built up saying, "Well, trust funds are special~ we're the trust fund priestesses." You've got a whole part of the legal department saying, "Oh, no, no, no, they must--they're all tailored made." No, they're not. The only thing that's tailored made is what they're going to be used for, and you should be able to put that on one page. So we need to simplify it so that ~ffectively we should use the operational system to describe all the qualitative stuff,_ including the results and the risks. And the only thing that's really e-trust funds or the trust fupd system should be what the Controller net;:ds to set up the account, how much is it, who's paying it in, how am.I dispersing it, how do I give the money back at the end, how do I have it audited? And that's all the Controller's business. The rest of the stuff needs to be mainstreamed into operations. So that required a lot of doing, but effectively all the ducks were lined up. And in the trust fund portfolio review:for FYl 1, I outlined what we needed to do and had already arranged that Caroline Anstey's office had ah;eady seen the draft and had sensitized her, and Caroline and I had coffee. So Managing Director Carolme Anstey endorsed the part about we need to make recipient-ex~cuted like IDA and follow operational policies, and we need to make Bank-executed like the Bank budget. We need to- follow how we do Bank budget, how we oversee it; and ~e need to leave the Controller stuff but, basically, pull back, integrate trust funds into the operational and business systems, rather than have their own system. ' The reason that we had two systems is because at the beginning the e-trust funds was more robust than the operations portal. But in the years, OPCS had built an operations portal. The operations portal is glitchy and overbuilt and complicated and needs fixing. But if you're going to have to fix it, you might as well put the trust fund bit in at the same time. It's not a inatter of cutting and pasting from one system. It's a niatter:ofthis one decision-maker, this one workflow, and it all happens at the same time using the,exact same information. And then: "Am I supervising a trust for a recipient-executed trust fund?" "Yes." "How do I do it?" "Just like you supervise IDA." The adyantage in the field is you can say to the donors, "You're welcome to join the supervision mission of this trust fund," or, rather, implementation of support, whatever we're calling it now. But that simplifies life for staff because, as I always like to say, it's better just to have to remember one set of rules so you 'can't get confused. · I'm not quite sure where it stands now. I hear that s9mebody has laid hands on the money and wants to use it for something else, and I've retired so I don't have a dog in that-fight anymore, and ifthe money is going somewhere else, that's unfortunate. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 102 But we then proceeded, and then last--a year ago in March, March of 2012, "How are we going to do this?" Well, I created a three-week team that had a deadline. They were told~ "Three weeks and you've got to come up with the architecture for a solution"--which hadn't been done, basically, since we did business process innovation in the mid-'90s--and set up a team and tell them come up with a process (I mean, full- time) "and here's your room that you're going to work in." We hadn't done that, and thex came up with a team and a proposal that was endorsed by Caroline Anstey and by Vincenzo just before he left and by Chuck McDonough, the acting CFO. And it was also endorsed by the business process ow,ners and the vice presidents involved. So they should have started to work on that, which, I think, if they proceeded with it, would have improved both results and controls in the management of risk. ·Some of the other issues that came up ·over the course of the time l was a TTL got to the heart of how we do business and what is our business. As the Bank got more and more decentralized, like we had--we have a lot of staff who don't understand what's, our work and what's the government's work. And so we would. find people were preparing projects, like using a Bank-executed trust fund to prepare a project, which then we would go and supervise or we'd go and appraise, like we were appraising our own work. Well, that's a blatant conflict of interest. . There was an incident where somebody had hired one of his neighbor's children. And we would find that there were examples of impaired objectivity, where we would get somebody to do a study that would mysteriously start off as AAA [analytic and advisory activities] and would end up looking like a large part of'a PAD, which was supposed to be based in large part on the preparation report the government gave us to be the basis for our loan or credit. Well, you can't really objectively appraise something that somebody . in the I Bank, maybe you even, had hired and paid a consultant to prepare. One year in June we whacked the regions for $1.1 million after we did an analysis of people that they ' on the appraisal mission. used, they'd hired using trust funds and consultants that were then brought along So they prepared the project, and then they brought them on the appraisal mission or--and, in fact, what was really egregious is a Bank-executed trust fund to do recipient work, like Bank execution of recipient work, and then they hired those consultants to come on our appraisal mission to just copy and paste what they had already written. I said, "We can't tolerate this," and, "This is absolutely forbidden in the staff rule, it's forbidden in the procurement guidelines, and this is non-compliance, and we're going to take that money back. And we're sorry it's June, but either you tell us what budgets to whack or we're just going to go to the regional vice president's budget. If you don't tell us by June the 20th which budget to charge it to, we're going to take it out of the RVP's budget." ZIEGLER: Which he would appreciate very much. CADAruO: ·Well, it was June the 20th, yes. But this was the way, occasionally, we had to act. One of the most serious issues we had was a TTL who had hired a whole lot of junior consultants and. then b.roke all the rules about 150 days. =~ ~> - co c::> ua ('o.I en - ·~~ c::::I Ct:: ~ ~~ <[ :E -~ fr 0 ~ R.:i Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 103 :..t;:. ~ U'.l f:l "-' ...... f.C) ~ ~~ ('.! C.) :I: c:r.i ;i~ c::> e---< 0:::: {\JJ .~O < and Chris [Christopher J.] Redfern, the chair of the Staff Association, again had a shouting match in the r.Il elevator where Chris Redfern t o l d - that, "You, of all people, • shouldn't be behaving in this bigoted and homophobic way, and you're not going to get away with this. The Staff Association will see to it that we're not going to test people. If they want to go, they want to go. They're like anybody else going to the field. They know what the medical issues are in going to the field." So again the Staff Association prevailed. There was no testing. But it required--in the early days there were a lot of shouting matches about things that were related to gay people doing this or doing that, even thougl:i I think socially the Bank has always been very liberal in terms of--tolerant at least but also liberal, because I think that we all are known around h,ere by the quality of our work and our work relationships. And people didn't tend to judge, at least most people. I don't think I've ever been the object of a homophobic act in my whole time at the Bank. The agitation about benefits continued, and the Staff Association and HR taiked about this, but there were other issues in the benefits review, like that we were able to make sexual orientation neutral, like, well, for example, if you were married, you got a bigger funeral expense than if you were single. And I remember saying to the people from HR, "Well, as far as I know, there's only oiie body to be buried, whether you're married or single, so I can't Understand why there would be discrimination against single . people, gay people, as well, and unmarried people who might have partners." Okay. So that was. fixed. But there are certain things that go along with marriage, and nobody was really moving. Again, it got into the whole spouse points argument that we don't want, like' the thing that's so obviously heterosexist is spouse points. Nobody wanted to go down that road because the Board will get rid of spouse points and it's been an issue for succeeding people in HR, which has only recently been 'changed. So oil the Staff Association's side, there were a lot of things that were done to make the benefits more marriage neutral and, at the same time, to make them more cost effective and also tailored to what people needed. There were a lot of improvements that ~ent on, ·and we might talk about them later. In the Staff Association, a lot of things were cashed out. Well, of course, if you got money for an airline ticket, generally, you could probably buy two tickets if you had to. And our colleagues, who were U.K. nationals, would buy about six with the amount of cash they got. But that was fine, and it cost the Bank less money, and they didn't have to administer it. So there were little work-arounds for people that had partners to take their home leave and even take their partner with them. So this continued, and we were working with great people in HR, including Peter Karp and others. Peter retireq, and the next thing the Staff.Association finds out is that a think piece has been written about modernizing the Bank benefits, written by Peter Karp, former deputy director of HR and now consultant. Okay. So could we come to meet his successor? So his successor arrived at the Staff Association office. Basically, what they're saying is we will extend all benefits to married people to people with domestic partners. The Bank already had domestic partner registration. It didn't get you much good. Like, you . could use the gym and get an ID card, but it didn't get you much. So everybody went to the Credit Union to get something ·notarized and then you became a domestic partner, but it didn't get you anything except Paul Cadario April 4, 17, 22 and}O, 2013 Final Edited 118 a limited building pass. Anyway, HR came in and said, "Okay, this is what we're going to do," and effectively they were extending everything; including pension plan survivor rights and the MIP. They were extending it to people with domestic partners. They weren't doing spouse points. And there's another benefit: tax equivalency allowances, which wouldn't go because there was ·different jurisdictions didn't really recognize domestic partners--and that's a tax equivalency, so most jurisdictions didn't recogmze gay marriage, so if you don't recognize gay marriage, you don't have tax equivalency; therefore, you're not eligible for it. So,. anyway, the HR people left, and I said, "Well, I think ~e should just read this and say thank you and then discuss with the HR management what we could do to make this happen, like if it has to go to the Board .." ZIEGLER: · So this is among your staff ... CADARIO: Among the Staff Association because the benefits review people, and I said, "I'll deal with World Bank GLOBE because they're going to want the spouse points, but I'm going to say, 'Look, we've got 95 percent; we're treated equivalent to married people if you have a domestic partner, so register your domestic partner and get on with it."' •· Domestic partner registration was easy if you did it at the beginning, but there were occasionally problems where the woman in HR who was managing it would get a little stroppy about whether people had lived together for a year and what evidence did they have, and then a call would neep to be made from S,taff Association saying, "We've had a complaint. I'm sure you'll look at this carefully." And in this regard;, Bill [William S.] Silverman in HR was always very helpful at going over things to accept this. If it were not gay people, we'd have no problems with this at all. And, in fact, in the whole evolution of this there were all sorts of surprising things, like in the discussion of the Bank's anti-harassment policy, which had been done under Shahid Husain's time and Robert Calderisi was his special advisor. Robert was asked to leave the meeting where it was being discussed with the President and the senior people and couldn't understand why--or it had been, "Well, when is Robert· supposed to join the meeting?" but, "Oh, that item on the agenda happened," and Robert was still sitting outside waiting to join. Anyway, in the· course of that meeting, sexual orientation was put into the rang~ of things that you could not discriminate against at the Bank, and it was li_sted as among those issues for harassment. ' ZIEGLER: So this would be what ... CAD ARIO: Well, Shahid Husain was the vice president, senior vice president of personnel and administration. This would have been '94, '95, or '96, somewhere when the Bank was doing business process innovatio~, and it was, I;think, before they, before Dorothy Berry was brought in: So that would . ZIEGLER: That was under Wolfensohn. CADARIO: Under Wolfensohn. Or maybe the late Preston period. And by this time the gay people all knew who we were all over the Bank. Some people were a little more open than others, and GLOBE was there and GLOBE was interested in benefits and GLOBE had happy hours and there was an annual party off premises. .Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 119 But it's fair to say that the expansion of benefits came basically because the Bank offered them, not because GLOBE agitated for them. And although this is not politically correct to say, I think the Staff Association had more to do--and the benefits review working group, which I chaired--had more to do with the benefits being expanded than GLOBE did because GLOBE didn't see its role that way. That ... ZIEGLER: Hmm, how did it see its role? CADARIO: I think the GLOBE at that time saw its role then as mainly social. And it's only with the last couple of presidents where there's been a political role, with Fabrice Houdart in particular. But the politics of GLOBE changed over the years as more and more people wanted more and more things. And then, of course, at the same time, society was changing very quickly. In the Wolfensohn period, and I don't know the exact date, but Kathy Sierra was the vice president and the ... ZIEGLER: For Human Resources. CADARIO: For human resources. And Kathy was a supporter. I worked for her, so Kathy was very cool with having gay staff and is a woman of tremendous integrity when it came down to treating people fairly. I think that was one of the hallmarks of her career in the Barik that she thought everyone had to be treated fairly and fair is important and pretty standard. So Kathy was the vice president, and there was--there was always stuff going on in the background. Not everybody was as tolerant as others. Paul Cadario April 4, 17, 22 and 30, 12013 Final Edited 120 when it came down to "we're,not going to stand for bad behavior." Well, that was also the year that they actually took all of the benefits for domestic partners to the Board for approval. And I was chairing another meeting, and it had been agreed that I would get a text message- -and l was not a text message kind of person--but I would get a text message on my phone when it was okay, when it was about to go on the agenda. So I got the text message on my phone, and I closed the meeting and trotted over to the Board room ·and walked in and sat down. Shengman Zhang was the Managing Director, and Kathy was the vice president of Human Resoilrces. -~ ~ ~ a~ fmj Uu !;I) s:: - jt to c:::> ~ c:n a~ ®O c:::> e:::: ~ ?J1 ei::::: vJ i:I ~~ ;,: CADARIO: Indeed. But Robert McNamara had also been the president of Ford, so he knew how to j ~age large orgaitlzations, and that could neve~ be said about Paul Wolfowitz. . CJ:) .;:: t.:l ro ._ C> ~ ~i:; Okay.~Wolfowitz came in and Wolfowitz brought this c;J ::c: C"'-1 en 'J that w:~s, but Robin Cleveland and Kevin Kellems. Robin Cleveland ran the place. She ~~ Cl}~ a:: C) 0::: 1VJ gave other people in the Bank, who were primarily motivated by < c =a~ :"E ~~ ambition, the sense that if you could do something that would please Robin Cleveland, however stupid it was, however badly formulated it was, then this was good for your career. ~ I remember the matter of the rapid respon~e, the OP8 [Operational Policy 8.00 Rapid response to crises and emergencies]. And I remember one of the people who was currying favor to Robin Cleveland and was proposing something that basically would have allowed the Bank to execute our own projects, I sat there with this woman's minions, and she walked in just at the time that I said in a meeting with 25 people there, "I don't give a flying fuck what Robin Cleveland wants, and I'll tell her that to her face. This is not Paul Cadario April 4, 17,.22 and 30, 2013 Final Edited 136 going to happen because it's the wrong thing to do. And if I need to go to explain that to Robin, I'm happy to do it." ·_i: And to be fair, Robin, I think, realized at some point that she basically had made a lot of enemies. ~ ~~ - U!> -~ So Wolfowitz was there, and I think I was only in one or two meetings with hirn. I remember the one ·~> ua ~- ~~ c:::::I ('.! C') c:::::I ooo e:::: J ~ . i: ~~ .s: < r.-~ But, nonetheless, Wolfowitz was there, and Wolfowitz was getting rid of people. And Wolfowitz--I eventually decided that I had been very wrong about Wolfowitz. Wolfowitz had interfered in Uzbekistan and the trust funds. I liked what I was doing. I didn't have anything to do with Paul Wolfowitz and we had, fortunately, Vincenzo La Via. Vincenzo overlapped with Wolfowitz. So I remember it was early May--sorry, early April 2007, and 'Y"olfowitz had been here, and I had my little fight about Robin Cleveland. We'd all heard the stories about Robin and her SUV in the parking garage. She didn't realize the SUV in the space that it was too tall, and she scraped the top off. And Robin was an object 'of humor in some circumstances. Why does he keep her around? She does him no good. And, of course, Wolfowitz brings in his neocon buddies, [Juan Jose] Daboub, others that were not very strong. Why? I think there were people who decided they were going to leave because they didn't want to work with Wolfowitz. I can't think of who they were that left in that period, well, 2005-2007. Anyway, early April 2007 I did the EXT course for how to deal with the media. It was a two-day course and they had directors, level H, level I staff, who had to deal with the media. Well, of course," this was about the time that all hell was breaking loose. This was just before the Spring Meetings. And in fact I think the morning the course began--and I'm having trouble piecing this all together because I was telling this story to somebody else a couple of days ago, because the Wolfowitz thing was already breaking and.I remember being in the atrium when it happened--Alison Cave, the chair of the Staff Association, sent an email that the chair of the Staff Association would be having coffee at 10:00 in the morning and there would be an important announcement. And I think someone had phoned me and said, "Paul, you need to be there." And I said, "Fine. What's the important announcement?" "Well, it will be fairly clear." So I arrived. I'm standing in the line for the barista, and Alison is getting ready to speak and the podium has been set up, microphone. Oh, this is interesting. And somebody was handing out the announcement that she was about to read. I think it was Morallina who was handing it out. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 137 So Morallina gives it to me and gives it to the person ahead of me. So we're reading this, and we tum the page over and the two of us say at the same time, "Holy shit," because it was about Wolfowitz and Shaha [Riza]. Oh, my God. So we got our coffee; and we all went downstairs where Alison was going to speak. And Alison read this statement, and Alison said, "This is absolutely unacceptable. The President has to explain why his girlfriend has been given these outrageous, outrageous benefits, and why no one stepped up to,stop him because it's just not allowed." So then there were questions. Now, of course, this is all during the Spring Meetings. So Wolfowitz was somewhere else in the building, and in the course of the Spring Meetings, in the course of Alison's statement where we were all _having coffee .with the chair, Wolfowitz is seen over in the corner of the atrium:,underneath that middle mezzanine thing and he's standing behind a pillar· watching. So Alison says, "I see that Mr. Wolfowitz has joined us, and I would welcome him tb come to the platform, come to the stage to explain these rather serious issues." At thafpoint, someone in the front row said, "Resign, resigil." And a number of us were standing there and we all went, "Ah," and nobody thought it was going to go that way. Well, of course, at this point, there was a din, like the noise level went up. Nobody was shouting "Resign, resign" because it had already been said. But everyone, "Oh, my God." So .. ·, ZIEGLER: And this is so contrary to the normal institutional culture where there's a great deal of deference given to the president. CAD.ARIO: Righi. But there was no deference here. And the Spring Meeting was here. Well, I think at that point I went back to my "dealing with the media" session, and whoever was supposed to come and talk about something in the afternoon, 'substitutes were sent. The Board members came. No, jo~alists from other places and Board members, atid they all said the Bank leaks like a sieve. And, of course, meanwhile all this was going on and the word is coming out. So the fact that it was happening was out, and I got a call in the afternoon from a friend of mine at the Washington Post who said, "I understand there was a little incident." This was maybe a little later in the week, ·PY which point the whole thing had gotten an external visibility because it was during the Spring Meetings and. whenever Mr. [Augustin] Carstens got up to a press conference, all the press wanted to know ~bout was this' scandal with Mr. Wolfowitz and his girlfriend. That was.all people wanted to talk about. · Now, I don't remember whether there was a cosmic global issue because this was before there were crises. This was 2007. Nonetheless, the whole' Spring Meetings narrative had been taken over by Wolfowitz and his girlfriend. Wolfowitz is sitting there, and of course it's starting out on the news. So I get a call from a friend at the Washington Post, "Um, were you there?" And I said, "Well, actually, I was there." "Well, what was it like?" "Well, okay, what are the rules here? Like, I do not want my name attached to this." And she said, "Fine." Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited -\ 138 And I said, "Because it's extremely sensitive and frankly, knowing Wolfowitz, there could be retaliation to anybody who speaks. In fact, I worry about the chair of the Staff Association having done this." · So I was the one who was quoted as saying, describing this. And then someone who was there said, "Everyone was quite in shock, but it certainly was not a warm and fuzzy moment for Paul Wolfowitz," said a senior staff member who declined to be identified for fear of retaliation and given the sensitivity of the matter. ' . ' So that was fine. So we were going on on this. And Alison is busy, "Well, so how are we going to carry through to carry out, this?" [Begin Tape 2, Side A] CADARIO: Okay. So I had gone, and Morallina George, Alison's predecessor, was the one who was handing out things. So clearly she and Morallina were working together, and I was a friend and great advocate, suppgrter, and counselor to both of them. So I don't remember when exactly we had our first meeting, but I had an office up on the 11th floor, the 11th floor of MC [main complex], and, "We need to borrow your conference room. We kno~ you have a small conference room, very out of the way. Can we use your conference room? And, of course, you need to be there." "Fine." I So they had come up to my conference rooni, and it was Alison and Moralina and Edie [Edith] Wilson, who, at that point, I think had worked in EXT, but she might have been previously working in [Department of Institutional] Integrity for Suzanne Rich Folsom, who was part ofWolfowitz's nest of cronies that was brought in. Suzanne Rich Folsom, who was known as rich and fulsome Suzanne in some . circles. · So, Wt?ll, what are we going to do? Well, the man has got to go. And of course there was concern that now that he's been exposed this way that there would be havoc and he and his cronies would get rid of everybody that was opposed to him. But as far as I was concerned, this was a serious corporate governance. issue, and I was part of the compliance community, so we need to do something. So a little group of us--and there were five--agreed we're going to help Alison, and we're going to do everything we can to make sure that the press is involved. Well, how do yoµ do that? And I often laugh that I did the EXT course in how to deal with the media, and then the practicum was getting rid of Paul Wolfowitz, your graduation project. So ... ZIEGLER: Your senior thesis. CADARIO: Senior thesis, exactly. So we decided we were going to work, and Edie knew a lot of peop~e on the Hill, Edie Wilson. And Morallina knew people. And of course nobody quite knew who knew whom. But this was becoming a celebrated incident because not on1y did you have this scandal at the World Bank, but of course there were lots of people who had their knives out for Wolfowitz outside the World Bank and the international financial community. So this became not exactly a sport, which was aided by a number of things. First, social media were taking off, and we didn't have Twitter and we didn't have Facebook, but blogging was the big thing. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 139 And of course if you had a blog, you had your comments section. And the Bank had introduced comments on the intranet in February, just a few months previously. And the woman who ran it, Michele Egan, had had a problem with the rollout. A couple of days after it got started there were comments on the blog that basically didn't like whatever, like there were people who didn'tlike whatever was on the intranet that was being commented on. And there was a code of conduct, but then there were things that set the code of conduct, that complied with the code of conduct th_at were clearly quite negative to management. And Michele Egan had said, "We cannot take this down. If we take this down because it's saying things that are unpopular that do not break the code of conduct, then we have a problem, our credibility, like why dtd we do this, because we've introduced something that's very common." Now, of course inany organizations do not allow you to post anonymously, and that was the default on this. That didn't get changed; but we're not going to take down the comments section on the intranet on the things we want comments on. So we had a tool internally called the intranet, and various things went up, and of course the intranet all of a sudden turned into what do we know, what have we heard, what do we think about Paul Wolfowitz on virtually any story. Not virtually any story, but there were some stories where there was comment, and people would start the commentary so that it would start on the story, but then it would turn into Paul Wolfowitz. This meant that there were people--somebody set up a website outside the.Bank which mirrored a whole lot of ;what was on the internal stuff. And there was no way to stop somebody from copying and pasting, which' was very useful because that got the word about what do World Bank staff think, which, of course, $Ot the press all excited. So over the next seven weeks, I think it was, every morning the five of us, including a friend of Edie's who was a public relations professional between jobs who was going down to Richmond to look--he was going:to have a gig in Richmond or he was going to volunteer to help somebody's political campaign. So Edie calls him when he's driving down I-95 and says, "I need your help. You need to come to get rid of Paul Wolfowitz. So, well, I can't pay you, but you're between jobs now anyway, and it would be good." So he called his wife and explained it, and she said, "You turn the car around and you come back to Washington because you will never have an opportunity to get rid of Paul Wolfowitz again. It's a golden opporti.mity." So the progressives in the city were all mobilized, and Paul Wolfowitz is riot exactly a sympathetic figure. He was noodgey but not sympathetic. So every morning at 5:30 we would all get up in our respective residences to look and see what was on the web about W olfowitz. And one of the roles I played is I would collect articles, and I would put them in a big email and I would send them to people all over the Bank, generally people in the field. And then I would get emails back, "Well, we just got a copy of your email, Paul, out here in Jakarta. We got it from such and such. Could we be put on. your list?" So there were like several hundred people, and I would do this twice a day, what the press is saying. I did not editorialize. I just said, "Meanwhile, meanwhile, meanwhile," but I sent this around and there were links to the stuff. · In the morning we would see what was going on. And then the message of the day about·what needed to be done would be agreed. That would be X, and Alison, of course, was the public face of this. The rest of us all had our press contacts that we would call in the. course of the day. · So there were four of us supporting Alison and making sure her stuff got out and then amplifying what she said. Ap.d I was, of course, shipping some of it off to a website called worldbankpresident. org, which . Paul Cadario April 4, 17, 22 and 30, 2013 · Final Edited 140 was run by the Bretton Woods Project. So eventually Bretton Woods Project wrote back to me and said, "Your stuff is so good, we'd like to give you access. Will you post it directly? And we'll give you a name, so what would you like to be?" And I told them. And they said, "Fine}' ZIEGLER: What wa:s it? CAD~O: Deep Insider. So Deep Insider blogged on worldbankpresident.org, and then we had a hierarchy: what goes on worldbankpresident, what do we share with the press but not worldbankpresident.organd then we put it on worldbankpresident.orgthe next day but, basically, very opinionated pieces. · Well, Jike everybody spent hours every day commenting on ~he internal blog sites. It was just amazing. And Michele Egan would take down the stuff that was libelous, but a whole lot of it was expressing opinion about the president has got to go, et cetera. Most of it was unsigned, but I said, "Well," I said to myself, "Paul, anything you put up there, you've got other fora where you can be anonymous, but. . somebody has to sign their name. And what are they going to do? Fire me?" This was five years ago; five · and a half, nearly six. Yeah, it was around this time six years ago. , · So whenever I decided I want to comment on something, I would sign my name. That, of course, was rare: there weren't a lot of senior staff who signed their name. And then there would be people who agreeg or people who disagreed, and I would go back and forth. But that was something where it struck me that,, if somebody said to me, "Well, you're in a position, Paul, that if they decide you've got to go, you'vt! been at the Bank long enough that you're risking getting fired, and you haven't broken any rule, you'r(not using any non-public information. But at the same time, some people have to be there with Alison as public faces of 'this man has to go.' There have to be other people who are prepared to sign their name." And r,iwould defend the INT people because. Suzanne Folsom's role was coming out and were they reading our email, et cetera. And I would say, "Look, our INT colleagues are not like that and so what if peopl~ have some specific examples of their having broken the staff rules, which they should, of course, go to the ethics office and report them. I think we need to asslime that our colleagues in INT are with us. We should not assume that they're doing things that are against the staff rules." So I would defend INT from time to time. But I was prepared to defend ·people, but on anything on the intranet I'd sign my name. And I hope that the Bank hl!s archived that whole discussion that was going on because they started one, and then they had to move, it because it got so full. So they started another topic. But it :was just amazing to watch, the Bank learning about social media. And, again, this was before Twitter or Facebook I don't think Wolfowit'.{would have lasted so long ifthere had been Twitter. I think that there just would have been more commentary and more leaks. =~ ~·=:: Well, the Board ·finally had to do something because the Bc;ink was not operating. So they set up a special ~ ~ c:::> committee, and Mr. [Herman] Wijffels, I think it was, the Dutch ED, chaired it. And it had various people 000 'OJ a:: who were supporting Wolfowitz, and the Canadians_ were there. Samy Watson, who was - ~~ J (\IJ Ci::: s:: Anyw1;1y, so I go up. And it was grip and grin, and I was introduced: 30 years. And it sort of--well, I t;s= - (J:) c:::> <"I CT) J ~ .. ~ ..s; Actually, was this Wolfowitz? Yeah, it was Wolfowitz. No, it was--because he was replaced very quickly -c.-1 by--because Samy Watson was the Executive Director when the Wolfowitz affair Cl.lo ~~ C::> 0::: w happened. He had a Ph.D. in leadership from some religious school in Michigan. < ·1c ~~ :E t ( t Paul Cadario ~ f,J; April 4, 17, 22 and 30, 2013 Final'Edited 151 ~ ~I from some religious school in Michigan, Ph.D.s in leadership ··- e~ CZl - (.0 C) J C'.I Bill [William J.] Cosgrove s.erved in many capacities. And I remember Bill was, I think, in charge of E-;- facilities or some part of ... u?J en ~~ Cllr;:i c:::> a=: i).,J s:: ZIEGLER: He was my department director at one time. Yeah, .. < ~~ ~ ·i 0 CADARIO: Well, we ..·. ~ ZIEGLER: .. admin services, I think. CADARIO: Admin services when the J building was done, and there was a big fight about the J building about carpeting. We were going to use carpet tiles. So we're sitting in a room, and he is--he's the head of search for the services. And the carpet tile is being .. ZIEGLER: So your capacity is? · CADARIO: Staff Association services working group and also~ person who was moving to J building. So this piece of carpet tile with speckles .was presented, and they were passing it around. People in the room hated it. And I said, "Excuse me. That's not generally the way you decide if you like carpet, at least I don't look at carpet by holding it i:µ. front of my nose. Bill, why don't you put the carpet down on the floor, and then we can all see what it looks like? Because I don't think we should be wasting our time talking about carpet, but let's put if on the floor and then maybe people will be less upset." So lie put it on the floor. It's got speckles and lo~oks just fine, like the carpet down here. So Bill was, in a way, ahead of his time because we had raised floors and we had carpet tile and all this modem facilities design. And I remember Bill saying, "Th~re will come a time when everything will come to us electronically. And then when we go on missions, but we won't necessarily have to go because someo!le will go and they will photograph things or, if something needs to be looked at." And everybody looked'.at him and said he was a nut. Well, it's not a lot different, everything comes to us electronically, as we prefer things to come to us electronically. Everything, between smartphones and geocoding and people reporting corruption or people saying this building isn't going well or send us the pictures. You usecl .to: say send pi<;:tures, oh, my God, they've got to be printed and they've got to be put in a book and they've got to be air freighted. Well, now the pictures get put in, the whole thing is PDF-ed, and the picture~ can actually be sent in an email attachment. Bill in many ways was ahead of his time, though at the time we were all saying, "Bill, what have you been,smoking?" or "Bill, why are we talking about that and not something that's in the here and now?" ZIEGLER: He just had an unsuccessful run in the Canadian parliament, as I understand it. CADARIO: I remember, yes. I remember that because I remember getting a call from Anh Hammond the next morning saying, "What's going on with Bill Cosgrove?" And I sai~, "What do you mean?" And she said, "He's running for parliament." And I said, "Can you run for parliament if you'r~ still an employee of the Bank?" · Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited . 152 And she said, "No, that's exactly the point." So I thiµk he was an employee for the rest of that day, but--and she wrote a fairly strong memo to somebody saying, "Mr. Cosgrove needs reminded of staff rufo whatever," which made it pretty clear that if you want to run for public office you have to resign first. And l3iJl wasn't prepared to do that. In the latter days of Jim Wolfensohn, who was larger than life, Jim figured out hpw to run the place. It took him like a year and a half into his second term. I remember coming back from mission and I'm in-- where was I? Was I in Toronto? No, I was going somewhere. I was at National. There's the Financial Times with the leaked note from Jean-Louis Sarbib's management team about Wolfensohn and how he · was SQ egotistical. And of cour1?e Wolfensohn, had he seen this in the Financial Times, would have been furious .. And is he going to last and does he get a second term? And he was doing strategic compact, and the management of the Bank really didn't like Jim because he shouted at them all the time. And Bank staff doesn't like to be shouted at, particularly senior staff. Well, Wolfensohn survived that, but still he had trouble clicking because he had a vision and people didn't like it and there was all this whining. And Jim, of course, was an investment banker, and he made deals. Some of them worked and some of them didn't. But he went on to do the next deal, and he'd shout and scream if he didn't get his way, but then he'd go on to do something else. And Jim was charming when he needed to be, and he was angry when he needed to be. But what really, I think, turned the Bank around--because, despite Jim Wolfensohn's chami and vision, the Bank was just drifting. And he just couldn't get things right--it was 9/11. And what that did, and I don't know what it was exactly, here we are in the middle of downtown Washington and the plan~ might have gone for our atrium or hit the White House or whatever, but there a memorial service, not exactly a memotjal service but an event in the atrium, I think, on Friday afternoon. And the U.S. ED was there, and it was a: time where, yes, things were going to change because the world had changed in that terrible terroristact. And Jim Wolfensohn said, "Well, I think.what we're going to do is we all need to hold hands,"' so everybody looked around arid this is not something that's ever happened in the atrium. But I think that was a time, and whatever he said, everybody stood there and thought, "There are more important things to do than argue about how the Bank is run. There's work to do." And I think he did make the point that .if you don't deal with the things that cause people to lose hope, then people tum to do things lj.ke this. And that, I think, was, in his re-branding o.f the Bank as "our dream is a world free of poverj:y," which he got away with, I think that was what was missing. You had to basically say, "The consequences of poverty go beyond what we all know about and what Robert McNamara spoke of in 1973, the human conditions that are ]ust beyond imaginable and really go outside what is ethical and what is moral." But by saying that "here are the consequences if you ignore that," that is a message. And although it did not have anything to do with the hijackers, it is still a point that in places where people have no hope, people are prepared to do things and they elect governments or they have governments that-don't improve their situation, so people, particularly young men, become hopeless and violent. And that, I think, turned the Bank arpund because we all said we have to stop sniping about what's going on in here, we have to deal with what's needed in the world and, frankly, we're uniquely placed to do so. We positioned ourselves artd organized ourselves to do a better job on what the Bank's real mission is. So from that.point of view, I think Jim Wolfensohn, along with Robert McNamara, are the two great presidents. And they both basically talked-about the same message: about poverty. Certainly, Robert McNamara had been here for a few years before he made the Nairobi speech in 1973. \ Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 153 ZIEGLER: Yeah. He cam'e in '68. CADARIO: Yeah, and reorganized the place ... ZIEGLER: Just as an aside, I would vote for Eugene Black, though, as the greatest president the Bank had. I'm a big fan of his. · CADAIUO: I don't know Mr. Black. . ZIEGLER: It used to be called "Black's Bank" before it was "McNamara's Bank." CADARIO: Hmm. I'll stop with the outstanding personnel because I could talk about everybody I \ worked with. The most important lessons learned from an institutional point of view during your career at the World Bank? Well, the World Bank was a worthy institution long before people coined that term. It was an institution that stood for something, and when I joined the Bank, the Bank was looked at as very technocratic, which was a good thing. And indeed, analysis of_things--the place was run by engineers and then the economists took over, and they all had physics envy so they wanted to be like engineers, which sort of worked. Nonetli~less,the fact that the Bank stood for something, and then when the Bank didn't stand for either technocracy or a mission, which was the Preston period where it wasn't quite clear what the Bank did, mission sprawl, problems emerging from nliddle-income countries like the Mexico crisis and the Argentma crisis, so, well, what's the Bank role? And the Bank and the Fund were both sort of fuzzy. But on ,the other hand, when the Bank has known what it wants to do, it's gone out and done it pretty well. And I think that at the end of the Wolfensohn period, "our dream is a world free of poverty," that was pretty good, and everybody knew what that meant and everybody said, "Well, this is what I do, and this is how I contribute to this." Things ,got a little fuzzier again under the Zoellick regime, and then I think part of it is we had brought in environment and climate change as things the Bank has to work on. AndJ remember being in a meeting' when they were talking about, l think, the environment strategy. Maybe it was the beginning of climate change1and environmental strategy, and all the poverty people were coming and they were outraged, and they said, "Well, the Bank has to focus on poverty, the Bank has to focus on poverty." And somebody says, "Well, what in the world does climate change have to do with poverty?" And I said in a loud voice, "What doesn't it have to do?" · And I think that reconciling all of these things that have to be seen as combilling, they'll either come up with solutions for climate change or, boy, their problems with poverty are going to be even worse, is ~omething that the Bank ought to be very good at. But we've silo-ed ourselves so that everybody is "It's all about me" rather than "It's all about us." And it really shouldn't be all about us. It should be, despite our use of the term '.'clients," we don't really mean clients because if we meant clients we'd be more worried about their being good at being clients, and we don't really worry about that. As I was saying earlier, when I look at all these junior people leading missions with consultants, and I say, "Well, how do we learn and how does a junior person know the consultant is the right ·person, and are we serving our clients the way we ought to?" Because, frankly, I think even if you go to our poor country Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 154 clients; a lot of them are very capable and we should be ~pending more time learning what are they good at, what would they like to do better, what do they need to scale up, what do they know how to do? From that perspective, we've looked at clients very te9hnocratically, and then we looked at clients generically, and we probably need to look at clients in terms of people that are, countries that are capable. Over the period--and this is something that I've also talked about a lot in my post-Bank life--th,e Bank, when I joined, was a big player and a lot of the money that went for development came from the Bank. And we're not a big player anymore. Even donors aren't big players anymore. BetWeen private investments and remittance,s are really the bulk of flows to the poorest countries. We also have do-gooders doing people-to-people ... ZIEGLER: Bill Gates. CADARIO: Well, we have Bill Gates. We have the foundations who are a big and fairly impressive amount of money, but they'.re also people that come up with new ways of doing things and are prepared to experiment. So social philanthropy the way that Mr. and Mrs. Gates do it is something that has raised, I believe; ·has ;really raised the bar in teims of evaluation and testing things to see if they're going to work. The Bapk has generally not been terribly good at it. I think the Gates Foundation is one of the big players in 21st centuryrdevelopment because they believe in pilots and they believe in evidence-based development, which the Bank has sort of missed until lately; well, I think we've.come to it now, but I don't thillk: we embrace it the way we should. We're not as disciplined as we should be, as the Gates Foundation would be. But also you've got the Global Givers and the Kivas where individuals can put money of their own down, a rather. small amount, which is a great thing because you're stimulating the private sector, the very small private ~ector. You're also creating civil society at both the receiving end and the giving end that says development is important. · . The risk to doing that, in my view, is that they-all think that all development works that way, and from that pofu.t of view whatever Dr. Kim is going to do to end the mission sprawl or get us out of this sprawl we shouldn't be in and whether that's the General Electric approach I don't know. I think that's welcome because I think.there are other actors, but the Bank is so into embracing other actors and pretending they're our own. Well, I don't know where that's going to go. But I think that the world of development has changed and maybe there's not enough corporate thinking by staff about, well, if the world of devefopment has changed, we need to do more than say "My client wants me to come and do X arid Y." Internal trends. I think we've empowered--well, the fact that we have all these ACS people and all these IT people, and I think if you look at the people in those .two networks, like 2,000 people who work here in one of those networks, 2,000 people out of 13,000 are either ACS staff or IT. There's something I'm missing here about why we need that ma.lly. The fact that we've decentralized is a huge improvement in unqerstanding clients and serving them is also a problem that we don't necessarily field our A team in all of our country offices nor are you going to get the A team to relocate there. So decentralization has cut both ways. It was necessary, but I wonder now if you're going to get out of doing things, whether we need to look at a different organizational geography, geographic model. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited · - 155 a That said, our processes are all still very Washington centric, and I think that there weren't lot of us who were prepared to say that. A lot of that was we didn't really Jake advantage of what we got by having information systems renewal, and we acted, like, okay, we'll do a video conference, but it's at a time ·convenient for Washington. Well, that's not how a global organization works. ZIEGLER: .What did you like most about your career at the Bank, and what did you like least? CADARIO: Well, I don't know. I had a great time inthe Bank. I never worked for a jerk, at least not for very long. I liked the younger people I worked with, I liked the people I worked with, although I was-- I have a reputation for being fairly blunt and not suffering fools gladly. And I've mellowed over. the years, I think. I think that everybody here is, at some level, smart. And everybody here works hard. I never ·. worked with people that were slackers, and I guess there are slackers around here. There are slackers everywhere. · I worked with some,people that were a little too driven, and I look at them all who kept their G-4 because they did their jobs from the minute they retired until they got cooled out and then they had to get lawyers because they couldn't get green cards anymore. I think that was a bad idea,, and we got too dependent on retirees, anci retirees on their successors as managers. I found the Bank always very accommodating to all the things that I wanted to do while I was at the Bank, like I've been a volunteer at the University of Toronto for thirty years and flying back on my own dime. I think Bank staff have a lot of flexibility in when ~ou travel and how long you travel for. I've never gone on a mission where I was away too long, and I hear these, "Oh, I have to go on 6-week missions." No, you don't. What is it that you need to go on a 6-~eek. mission to do? I've never heard, I've never had that constraint, and I don't believe it's true. What did I like least? I think there are a lot of people that get away with very shoddy short-term thinking, generally aided and abetted by other people's money that "I can't do this; they won't give me budget to do it; I'll get a trust fund~" And we were doing an awful lot of crummy work with other people's money. And it wasn't integrated, and managers didn't have any way to check or managers didn't want to know. And we would take credit for the results, but we would never disclose how much money we actually spent, which I think is dishonest. And if you're dishonest about those things, well,, what else are you being dishonest about?· I also didn't like the situations where there was clearly a need for accountability that heads had to roll. The two that I'm thinking of are the India DIR [detailed implementation review] where, clearly, there . were nianager.s who weren't doing their jobs and people should have been forced out. You need to leave. I think tl:iere were a couple of people who were blocked whose ambitions were that they should be vice president, and they've been blocked. They're never going to be more than they are, and they're maybe never going to work anywhere other than they're working now. But for what went on with the India DIR and with the cover-up of Albania, there should have been heads chopped off. '• On the Albania thing, where you sent a statement to the Board and then you don't tell the Board .. ZIEGLER: The Board was flat-out lied to, from what I've been ... CADARIO: The Board was flat-out lied to, and then the region tried to cover up the fact they'd been lied to and then they tried to cover up the cover up. And then the Bank sloppily demoted and fired people, so the guilty parties went to the Tribunal, and they all got money instead of just being marched out the door for lying to the Board. But what was interesting on Albania is that I was interviewing YPs, and a lot was going on. And we're there, and one of the principals was supposed to be with us interviewing YPs, and unfortunately, someone ) Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 156 said, "Well, she won't be able to join us because she's got other preoccupations," so somebody else in the room said, "Oh, good, we cail talk about her." And we asked two ethics questions; there are two ethics scenarios that you ask one of when you're interviewing Young Professionals. And so I said to the two people who were interviewing with me, "Can I do an ethics scenario based on lying to the Board?" And they said, "Sure." So I got permission. So we asked the sixteen people that we interviewed that week, two in the morning, two in the afternoon, four days. Sixteen people we asked. We did a scenario about "Something is wrong, you find that out. You then agree you're going to tell the Board. You're sitting in the Board, and that statement that this is wrong is not'read. What do you do?" All sixteen of them got it right. And Bank management didn't know what to do and spent a year and a half trying to cover it up. There's something wrong :with that when we've forgotten that you don't lie to your authorizing environment. And I think that . it sends a signal when nobody really got in trouble over that, and some of the people that should have got . in trouble got paid large amounts of money because the Bank didn't fire them right. Now, that's . an issue. The other thing I disliked about--the whole management succession and talent management had just been badly rim, people hiring their cronies up to the management level, a lot of gossiping going on short listing committees, because I've always felt when I've been on short listing committees or an interview committee you had to basically look at the file, you had to do reference checks, but_the reference checks shouldii't have the checkers trying to put words in the interview, in the referee's mouths, which I think was altogether too common. . But at the end of the day, the World Bank is a wonderful place to work and it does wo~derful work. It's not uniformly wonderful. If we stopped acting like a university the way we're run, I think we'd do far better Work if there were more accountability for getting results and also if we stopped trying to make everything so complicated. · There's a wonderful book, The Knowing-Doing Gap, written by two professors at Stanford. And, you know, it's about the Bank. The Bank only gets mentioned once, but the examples they used ~ere clearly based on the time one of them spent consulting at the Bank. And you read it, and the premise of their book i~ .that if you make a hundred decisions and twenty percent of them are wrong, you've made eighty decisions that are right and achieved something. If you took the same amount of time and you polished and you analyzed and you made ten decisions and only ten percent is wrong, you would have made only one mistake, but only nine right decisions. But by doing your decision-making quickly, you would have 71 mor~ right decisions. Yes, you'd have 19 wrong ones, but you'd have 71 right ones. And everybody . looks at the wrong ones around here: "Oh, we can't have this happen~" So we all persuade ourselves to just analyze and analyze. It's analysis paralysis. One ofthe·authors went on to write another book called The No Asshole Rule, which is a very good book. And a couple of us, in dealing with a colleague who will remain unnamed, pointedly left a copy of this book out on our desks whenever we knew he was going to come to visit. Hint, hint. And you read it and you could describe, probably, a third of senior management at the Bank by these dysfunctional behaviors. And, again, I think that, well, people don't call each other on bad behavior and those of us that do are not considered good sports or corporate or whatever. ZIEGLER: Not collegial. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 157 CADARIO: Not collegial. I was only threatened once in terms of, "Well, I need you to do this, and you would not be considered a team player." And I went and reported that threat--because it was clearly a threat--1 reported that threat to the man I was working for at the time, Jeffrey Goldstein, who said, "Okay, I'll take it from here, and you don't need to use him as a feedback provider. Although he's worked with you on many things, we will not use him as one of your referees to get you promoted to director, which, if anybody says, 'Well, what about,' I'm just going to say no." And the fact that people could get away with that--l'm referring to the scandal in ISG and Mohamed Muhsin. At the same time, you see abuses of power, like when INT went looking for something in a colleagiie's computer and they couldn't find what they were looking for but they found something else and they fired him for that. And he went to the Tribunal, and the Tribunal came back and said, "Dismissal was not the appropriate punishment and the way you handled it was egregious, so the Bank is going to reinstate him. And you can punish him however you want, but)'ou can't fire him. What he did didn't rise to a ;level of being dismissed, and you're going to pay all his legal fees:" And I think they gave him--they gave him a year's s~laiy and said we're going to give him compensation because-well, actually, no, they didn't; he was on; admin leave. But, "You're going to pay his legal fees and you're going to reinstate him and then. you can.decide what you want to do." But the interesting thing was when they decided to fire him, they waited until the day before he would have qualified for early retirement, and they fired him that day. And, of course, when he went to the Tribunal. The Tribunal said, "Management is· not going to do that." And that was because Bob Zoellick had been embarrassed by what had leaked out, not tpat this guy had leaked what--Iiot that this guy had leaked that had caused Mr. Zoellick to be embarrassed but they found something else on his computer that they couldn't exactly prove but they went after him anyway. And, in: fact, what was interesting was that I was a witness in that because he had forwarded a document to me, and I read the document. But, of course, you forward something, and they broke into his personal email account when they found this. And when I left the interview with INT, the head interviewer said to me quietly, "I don't really think we've got a case, and you've helped confirm that~ put thank you," and then they fired him anyway becauseMr. Zoellick wanted him out. . So you've got a lack of checks and balances on what's appropriate behavior. At the same time, lack of checks ·and balances when people are punished inappropriately and then you have people getting off scot- free and sometimes getting promoted after doing things that in another organization would get you fired. So the whole issue of, well, what do you have to do to get fired around here, the answer seems to be you need to. be a serial sexual-harasser, you need to steal a lot of money if ;you're senior or a small amount of money _if you're junior. I'm not sure that's a healthy corporate ethics culture, which is why I'm a big - believer--l'm going to a farewell party for Nicola Dyer is moving on from the Ethics Office to something else and there's a party.this aftemoon--l'm a great fan of the Ethics Office because I think they do good work and they try real hard against managers who really don't understand. Greatest 'success. I don't know. Greatest success being a matter of what you talk about-most? It's hard to say. Well, the fact that I was the TTL for the first project in Guinea-Bissau and the first two projects in Mongolia. That's something that I'm proud of, that those projects worked well, and ifwas--it was a challenge and something very rewarding to be involved with people who didn't know much about the Bank. And they--we did the projects, and they worked well through their own devices. ' I guess the same is--1 told the story about Bengali Camara who was the highway, head of the highway project in -Guinea who was the same age as me and then he became the head of the port authority, and it was very exciting when Tom Clausen, the president of the Bank, came to Guinea to open the new port. Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 158 And Mr. Camara, who greeted me with a political diatribe when I first arrived in Conakry a decade· earlier, Mr. Camera is now the head of the port authority and a man of integrity who denounced his minister for stealing things, and you didn't do that to Sekou Toure, but the minister got in trouble and Bengali got made the head of the port authority. So that's exciting. I think that the work that I did for systems renewal, if you frame it in a broader context, was very important. And, again, historians may write about this someday because, although it was in one level an IT projed, it was also the platform for which the Ballk could become transparent and accountable because everything worked the same way everywhere and it was all documented and we had a platform for people . to communicate outside Washington that we didn't have before. So from that point of view, if you look on the worldwide trend in organizations to be transparent and accountable, having done the change management for systems renewal is probably, despite all the things I did in trust funds, that's probably what I would see as being in at the ground floor of something that was actually quite important for the Bank. So I think that in terms of the trend, the way organizations worked, decentralization, that systems renewal was the beginning or laid the platform for transparency and accountability, disclosure and efficiency that we could not do what we're doing today in terms of open data, all the other things that if we hadn't actually done all that work and gotten people used to working at a distance with tools that were appropriate. We probably could have done a better job. I guess in terms of what would I have liked to have done .better, well, I wish we had done a better job on knowledge management. And while I was involved at the beginning, and it would have been nice to stay involved longer because I think we went down a lot of rat holes and maybe some of us who thought we were going in rat holes.should have spoken up more, but ... ZIEG~ER: Any examples of a rat hole? CADAJUO: Well, I don't think we did the thematic groups right. You look at QAG evaluating tlie thematic groups--the reports weren't very positive because we didn't have a template. In a way, it's the university culture of the place that nobody said, "When you set up a thematic group or a'sector board, this . is how it's got to be." And people were allowed to do whatever they wanted, which in some cases was expensive rather than effective . . , So there were certain things maybe I could have, since I had a--1 knew a fair bit about that, I could have maybe spoken-up. But the Bank doesn't always like people who--they don't like Cassandras. And ifl look back at things where I bucked the prevailing wisdom, whether it was on China or whatever,- ! think I had a pretty good track record. My intuition was often very good. And other people said, "Oh, no, no; we don't want to do that." Well, my intuition is better than your preference or your opinion. So maybe I should have been more intuitive. I should have said thank you to more people earlier and more often. · Anyway, so I think that about sums it up, unless you have a last question. ZIEGLER: No, that's quite thorough, I think. And I think, in due course, this will be one of the more popular oral histories for reference purposes. So I thank you very much, Paul, for participating in the World Bank Group Oral History Program. CADARIO: It was my pleasure. And I, as I think history of organizations is really important, so I'm happy to have done this and I'm delighted that the Bank does this for senior staff because I think it's really Paul Cadario April 4, 1], 22 and 30, 2013 Final Edited \ '. 159 important. ZIEGLER: Well, thank you, Paul. [End of Tape 2, Side B] [End of session] · [End of interview] Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited 160 Postscript The third pass and edit brought back a number of other memories about how the Bank does its best work in teams, and under pressure. It's not just a matter of "it's better to go to a bad one act play than a bad three act play," as Jeremy Lane, my highway engineer colleague said about why we should do a short first project in Guinea-Bissau. Nor is it about rushing a project through because the IDA allocation period is coming to an end, as we did in China for two of the TA projects I worked on, or, with greater internal and external consequences, for the Western China Project with its "Tibetans." And it's certainly not about cutting a comer just because you think no one will notice, as happened time and time again in various IT projects, and seems to have been at the bottom of some cC>rporate issues like the India DIR and Albania Coastal Development. · · I might have talked more about change, because there was a time when change was done well-.with consultation, transparency and speed, so everyone could get on with work in the new organizational configliration. Because when the Bank.did change well, and it worked, it followed the rules. Rules and theories are important, as the Bank seems to have forgotten. In the two years since I did this oral history, many unpleasant and unfortunate things should have not happen,ed. Senior women were fired. People of integrity and experience saw no future and decided to .. leave. Armies of inexperienced young STCs came on board, and cooled-off elderly retiree STCs still roam the hallways. Many of my friends have said to me, "Paul, you retired at the right time." Yes, that's certainly true, and I was wrong about Jim Kim. Although I was a big supporter of his on Facebook and in the blogosphere when he was nominated and after he arrived and I faced down Bill Easterly in his opposition to Dr. Kim, he was' merely the least dreadful of three bad choices, which gets to the Bank's old-fashloned and dysfunctional corporate governance. VP and Controller Jules Muis was right when he spoke about "tone atthe top.'' It's too bad that's no longer fashionable in the Bank and that the Bank's concern about its external ll:nage is so narrow. I hope that by the time this is released, the Bank's owners will have sorted that out. Washington, DC, July 14, 2015 '\ Paul Cadario April 4, 17, 22 and 30, 2013 Final Edited