Governance row casts shadow over Fund

19/10/2007 | Simon Pirani

EM learns of staff anger over appointment

A blazing row about governance at the IMF is clouding Rodrigo de Rato’s departure as managing director. De Rato – who suddenly announced his departure from the Fund in June, and leaves on October 31 – has come under fire, on the executive board and from the IMF staff association, for his role in a controversial staffing decision. The dispute, detailed in internal Fund correspondence seen by Emerging Markets, concerned the transfer of a young Spanish economist to a senior position in the Monetary and Capital Markets (MCM) department.

The economist, who came to the Fund in 2004 after three years in the Spanish civil service, will join the MCM department on November 1 as an adviser. He moves from a similar position in the managing director’s office, on an existing fixed-term contract that expires in two years’ time. Staff were incensed that many senior economists with decades of experience were effectively passed over by de Rato. Anger was exacerbated by the fact that the MCM department “just underwent a painful restructuring that led to the involuntary departure of several highly qualified and experienced B-level staff”, a staff association email pointed out.

The executive board discussed the transfer on October 3. Abbas Mirakhor, dean of the board, wrote to other directors, arguing that the economist’s transfer could erode staff confidence in rules governing appointments. Staff morale, “already at its lowest ebb seen in the past quarter century of my service at the IMF”, would be further undermined, he warned. Mirakhor’s letter said he knew of “no precedent” for the economist’s treatment.

The board concluded that the Fund’s human resources “policies and practices” had been followed in the case – but board members also urged that processes be strengthened and employment procedures be reviewed, de Rato said in an email to all Fund staff. The IMF Staff Association Committee responded in its own circular email, saying it wished “more thought had been given to perception and inclusiveness”.

The Committee added pointedly: “following all the rules is sometimes not enough”. The transfer process was “perceived by many as skirting a rules-based system and exposing the Fund to reputational risk”. Bernhard Fritz-Krockow, staff association chairman, told Emerging Markets it was unprecedented for the committee to comment on an individual case – but there had been a failure of communication, and “morale was affected.” Fritz-Krockow emphasised that staff had no personal quarrel with the individual who had been transferred.

An IMF spokesman declined to comment on staff morale. He said the economist had been transferred on his existing contract, at his existing grade and salary. There had been “initial confusion and ambiguity” about the transfer, which had been addressed in de Rato’s email.

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