The late World Bank president James Wolfensohn in Washington, the US, April 22 2004. Picture: REUTERS/STEPHEN BOITANO
The late World Bank president James Wolfensohn in Washington, the US, April 22 2004. Picture: REUTERS/STEPHEN BOITANO

 James Wolfensohn, the former  Salomon Brothers partner who was appointed by US president Bill Clinton to head the World Bank and became one of its longest-serving leaders, has died. He was 86.

Wolfensohn died on Tuesday, according to the Institute for Advanced Study, where he served as a past board chair. No cause was cited.

The Australian-born financier rose to prominence in the 1970s as head of investment banking at Salomon Brothers. He piqued the interest of Washington power brokers when the New York-based firm helped Federal Reserve chair Paul Volcker arrange a $1.5bn loan package for the 1979 bailout of Chrysler  in the then-biggest corporate rescue in US history. In 1995, Volcker became chair  of Wolfensohn’s New York-based investment firm, Wolfensohn & Co. Volcker died in 2019.

Mentioned as a possible successor to World Bank president Robert McNamara in the early 1980s, Wolfensohn gave up his Australian citizenship to become an American so that he would be eligible for the job. Overlooked on that occasion, he began the first of his two five-year terms in 1995 and became the third leader in the institution’s history to be reappointed. Only McNamara and Eugene Black served longer in the post.

The World Bank was created in 1944 and has been traditionally headed by a US citizen.

‘Global leader’

“Jim Wolfensohn is not only a hero to the world’s poor, but a pre-eminent global leader in politics, philanthropy, business and finance, the arts, international security, and even sports,” Michael Beschloss, an author of books about American presidents, said in a review of Wolfensohn’s 2010 autobiography, A Global Life.

Under Wolfensohn’s leadership, the Washington-based organisation focused on poverty reduction through education and on reconstruction efforts in war-torn countries such as Rwanda and Bosnia. The World Bank also became one of the largest financiers of primary education, basic health, HIV/AIDS programmes and the environment, according to its website.

He shook up the institution’s bureaucracy, accelerated the shift away from infrastructure projects such as hydroelectric dams — which are difficult for poorer nations to maintain — to more social-sector lending programs and fighting poverty. He also moved some staff out of Washington to work in the field on World Bank programmes, according to a 1997 New York Times article.

A 1996 initiative by the World Bank and International Monetary Fund (IMF) erased at least $53bn in debt for 27 countries, according to figures compiled a year before he left office in 2005.

“Tens of billions of dollars of debt were forgiven and then the money that was going to these countries was able to be used for education, health care and real, proper development,” Wolfensohn said in a 2010 interview with Charlie Rose. “It was a very, very important change in the development cycle.”

Early life

James David Wolfensohn was born December 1 1933, in Sydney, the second of two children to immigrant parents. His father, Hyman Wolfensohn, was English and had worked for the Rothschild banking family in London before emigrating to Australia. Dora, his Belgian-born mother, was a singer and kindergarten teacher who exposed her son to music. Wolfensohn later became an accomplished cellist.

Raised in an affluent suburb of Sydney, Wolfensohn’s family struggled financially during the Great Depression. His father, who worked in advertising and business consulting in Australia, had accrued debts and failed to adapt to life in their new country, Wolfensohn said in his autobiography.

“The money problem made me terribly upset,” he said. “I grew up knowing we didn’t have much of it and hating the fact that it was such a dominating problem.”

Wolfensohn attended Woollahra Public School and Sydney Boys High School before earning degrees in arts and law at the University of Sydney. He worked for the Sydney law firm Allen Allen & Hemsley, was an officer in the Royal Australian Air Force and represented Australia in fencing at the 1956 Olympics.

After enrolling at Harvard Business School in 1957, where he became friends with billionaire David Rockefeller Jr, he graduated with a master’s in business administration. Wolfensohn credited Rockefeller — the grandson of oil baron John D Rockefeller — with the opportunities he found in his adopted country. He later became a Rockefeller Foundation director.

After his studies, Wolfensohn returned to Sydney and was a MD at Darling & Co before joining investment bank Schroders  in London in 1970. Six years later, he moved to Salomon Brothers in New York and became an executive partner.

“Once the Chrysler deal had ended, everything had come to a head for me,” he said. “I’d realised that I’d worked for other people my entire life.”

Passed over

Overlooked for the post of World Bank president in 1981, he set up his own investment firm in New York. He sold his stake when he moved to the World Bank and the firm was bought by Bankers Trust New York for about $210m in 1996, according to a New York Times story at the time.

After leaving the World Bank in 2005, Wolfensohn was appointed US special envoy to mediate the Israeli disengagement from Gaza. He held the job for about a year before starting a private-equity firm, Wolfensohn Fund Management, focusing on emerging-market investments.

Wolfensohn was chair of Carnegie Hall, where he gave cello performances, and oversaw the restoration of its landmark building in New York. He also headed the board of trustees at the John F Kennedy Center for the Performing Arts in Washington and was chairman of the Institute for Advanced Study in Princeton, New Jersey.

He and his wife, Elaine, an education specialist who died in 2020, had three children: Sara, Naomi, and Adam. Naomi is partner at Wolfensohn Fund Management; Adam is co-managing partner at Encourage Capital; Sara, a concert pianist, is director of the Wolfensohn Family Foundation.

Bloomberg

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