- The Washington Times - Friday, April 20, 2007

ASSOCIATED PRESS

The World Bank’s board yesterday ordered a special panel to discuss the fate of bank President Paul Wolfowitz, whose leadership has been jeopardized by revelations that he helped his girlfriend get a high-paying job.

The 24-member board expressed its “great concern” about the situation and instructed an ad hoc group to take up the matter immediately. Members of the group were not identified.

Mr. Wolfowitz, who said he had made a mistake and has apologized, said he welcomed “the decision of the board to move forward and resolve this very important issue.” He also said he looked forward to implementing the recommendations of the board.

The White House renewed its support for Mr. Wolfowitz yesterday.

“The president still has confidence in him,” said spokeswoman Dana Perino. “And, there is a review that’s ongoing by the board, and we’re leaving it with them to go ahead and complete that.”

It is not clear what action, if any, ultimately would be taken in the matter. Many of the bank’s employees, aid groups and some Democratic politicians want Mr. Wolfowitz to resign.

The Pentagon yesterday said a 2005 investigation by its inspector general determined that while he served as deputy secretary of defense, Mr. Wolfowitz may have recommended Shaha Riza be awarded a 2003 contract to study ways to set up a new government in Iraq.

The report said Mr. Wolfowitz acknowledged that he might have recommended her. “However a mere recommendation would not constitute a misuse of position” because she was “clearly qualified” for the work, the report said. References to the name of Mr. Wolfowitz’s companion were blacked out in the report released by the Pentagon.

His nearly two-year tenure at the World Bank, which fights global poverty, has been marked by trouble. The current problem — that he arranged a promotion and generous compensation for Ms. Riza, a bank employee whom he has dated — is calling into question his leadership and has put his job in jeopardy.

The World Bank board said yesterday that the situation should be dealt with “urgently, effectively and in an orderly manner.”

The ad hoc group will make recommendations to the board’s executive directors. No timetable was provided.

The board asked the group to look into Mr. Wolfowitz’s handling of Ms. Riza’s compensation package with regard to bank rules and “conflict of interest, ethical, reputational and other relevant standards.”

Other issues were identified that need to be addressed, including “the various public communications made by the bank on the matter and issues around employment contracts made in the Office of the President,” the board said. That was viewed as a reference to salaries paid to Mr. Wolfowitz’s close advisers, Kevin Kellems and Robin Cleveland. Each is paid more than $200,000 a year — compensation that has irked some bank staff.

The United States, the bank’s largest shareholder, is not on the ad hoc group, according to Bush administration officials.

Although they have not said so publicly, some European governments would like to see Mr. Wolfowitz go but do not want to provoke a fight with the United States.

At a finance meeting in Berlin, Dutch Finance Minister Wouter Bos weighed in, saying: “I think it’s crucial for the World Bank to have a credible and sound reputation, and I’m concerned about that reputation in view of everything we know now about what seems to have happened.”

Luxembourg Prime Minister Jean-Claude Juncker called the Wolfowitz matter a “serious problem.”

Under an informal agreement, the United States names the head of the 185-nation World Bank and the Europeans choose the leader of its sister institution, the International Monetary Fund.

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