Paul Wolfowitz
Manuel Balce Ceneta  /  AP
The future career of World Bank President Paul Wolfowitz has been in doubt since revelations that he helped arrange a promotion for his girlfriend.
updated 4/20/2007 11:56:33 PM ET 2007-04-21T03:56:33

The World Bank’s board on Friday 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.

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.

White House stands by Wolfowitz
The White House and Treasury Secretary Henry Paulson renewed their support for the embattled president on Friday.

“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.” Paulson, in an interview on “The Charlie Rose Show,” called Wolfowitz “a dedicated, committed public servant.”

It remained unclear what action, if any, would ultimately be taken in the matter. Many of the bank’s employees, aid groups and some Democratic politicians want Wolfowitz to resign.

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

The report, released late Friday, said Wolfowitz admitted 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 Wolfowitz’s companion were blacked out in the report released by the Pentagon.

Pay raise for girlfriend at issue
Wolfowitz’s nearly two-year tenure at the World Bank, which fights global poverty, has been marked by trouble. The current controversy — that he arranged a promotion and generous compensation for 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 Friday 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 Wolfowitz’s handling of Riza’s compensation package with regard to bank rules and “conflict of interest, ethical, reputational and other relevant standards.”

More pay deals under scrutiny
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 Wolfowitz’s close advisers, Kevin Kellems and Robin Cleveland. Each are paid more than $200,000 a year — compensation that also 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 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.”

Stall tactic?
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.

“It sounds like the board is stalling while the higher-level politicians do the necessary horse trading to draw up a list and figure out a succession process,” said Bea Edwards, international director for the Government Accountability Project, a watchdog group.

Documents released last week showed that Wolfowitz had a direct hand in securing a State Department job for Riza in September 2005 that pays her $193,590. Before the transfer, Riza was earning close to $133,000 as a communications adviser in the bank’s Middle East department.

Riza remains on the World Bank’s payroll even though she left the State Department job in 2006 and now works for Foundation for the Future, an international organization that gets some money from the department. “I have now been victimized” for agreeing to the arrangement, Riza said in a memo to the bank last week.

Science Applications International Corp., a large defense contractor, said it was directed to hire Riza. Under the contract, which ran from April 25 to May 31, 2003, Riza studied ways to help set up a new government in Iraq and was paid expenses but no salary while in the country.

Defense Department spokesman Bryan Whitman said he didn’t know how much Riza was paid; SAIC spokeswoman Melissa Koskovich said she didn’t know either.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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