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Wolfowitz Apologizes For 'Mistake'
At World Bank, Boos Over Pay for Girlfriend

By Karen DeYoung and Al Kamen
Washington Post Staff Writers
Friday, April 13, 2007

World Bank President Paul D. Wolfowitz publicly apologized yesterday for the "mistake" of personally orchestrating a high-paying job and guaranteed promotions for a bank employee with whom he is romantically involved, as new details of his role in the arrangement emerged and staff members angrily demanded his resignation.

Wolfowitz attempted to address about 200 staffers gathered in the bank's central atrium but left after some began hissing, booing, and chanting "Resign. . . . Resign." He had approached the gathering after holding a news conference in which he said, "I made a mistake for which I am sorry."

Bank insiders confirmed reports from the bank's staff association that Wolfowitz directed personnel officials to give Shaha Riza, his longtime companion, an automatic "outstanding" rating and the highest possible pay raises during an indefinite posting at the State Department, as well as a promotion upon her return to the bank. The Financial Times reported portions of the agreement yesterday.

When he took over as bank president in June 2005, Wolfowitz insisted not only that Riza -- then a senior communications officer at the bank -- retain her job but also that he maintain "ongoing professional contact" with her, according to a knowledgeable source who spoke on the condition of anonymity because of the legal issues involved.

But the bank ethics committee, citing conflict of interest regulations, ruled that she had to leave the institution. It agreed to give her a pre-departure promotion to compensate for the career disruption. Until yesterday, Wolfowitz and his aides had insisted that "all arrangements concerning Shaha Riza were made at the direction of the bank's board of directors." Bank sources said, however, that neither the board nor the ethics committee was aware of the terms of the final agreement.

"I take full responsibility for the details of the agreement and did not attempt to hide my actions or to make anyone else responsible," Wolfowitz said yesterday. He said that he had found himself in a "painful personal dilemma . . . trying to navigate in uncharted waters."

Riza left the State Department last year for a position at the U.S. government-funded Foundation for the Future. She remains on the bank payroll with a net salary of $193,590. Although the relationship between Wolfowitz and Riza -- a Tunisian-born British citizen -- and her eventual State Department posting were publicly known in 2005, the current controversy arose late last month after The Washington Post reported on her compensation package.

During a meeting yesterday morning with the board, Wolfowitz said: "I proposed to them that they establish some mechanism to judge whether the agreement reached was a reasonable outcome. I will accept any remedies they propose."

After meeting with Wolfowitz, the board spent the day considering the report of a committee investigating his actions and considering his future. One bank source said that Ana Palacio, the former Spanish foreign minister Wolfowitz appointed as general counsel after her predecessor resigned in late 2005 over the Riza issue, was asked to leave the room during the panel's deliberations.

As its discussions continued last night, the board received a letter from Wolfowitz asking, "in the interest of transparency," for the "immediate public release of all documents related to the Board's current review of the case involving myself and Ms. Riza," according to a senior bank official. The official said Wolfowitz believes that the documents support his statement in yesterday's news conference that he was the one who first raised the conflict of interest issue on his arrival at the bank two years ago and that he had also asked to be recused from consideration of the issue.

Wolfowitz said he had presented the question to the ethics committee and then taken its advice to "promote and relocate Ms. Shaha Riza."

Although few bank insiders suggested that Wolfowitz's job is in jeopardy, several speculated that his future will depend largely on continued support from the bank's leading contributor, the United States.

"Of course President Wolfowitz has our full confidence," White House spokesman Tony Fratto said. "His leadership is helping the bank accomplish its mission of raising living standards for poor people throughout the world. In dealing with this issue, he has taken full responsibility and is working with the executive board to resolve it."

But the Bush administration's point man on World Bank matters yesterday did not offer similar backing. "There is a mechanism in place, and I am going to allow that mechanism to work rather than inject myself into the middle of it," said Timothy D. Adams, Treasury undersecretary for international affairs.

One administration official, who spoke on the condition of anonymity, noted that other governments have remained publicly silent. "They're looking to see if it gets any worse and if we're going to really fight hard for him or let him fight for himself," the official said. But "his relationship with the staff is really bad, and I don't know if it's recoverable."

Wolfowitz bemoaned that the controversy threatens to overshadow the official agenda of the bank's annual spring meeting opening here today -- including ratification of a global anti-corruption strategy and funding to reduce poverty in Africa.

"In the larger scheme of things," he said, "we have much more important things to focus on." But as revelations and rumors swept the bank's corridors and the board remained huddled behind closed doors, there was little talk at the bank of anything else.

Bank staffers called to the atrium by the staff association -- which represents most of the World Bank's 7,000 Washington employees -- said that Wolfowitz appeared shaken when he stood before them. "There was not a warm and fuzzy feeling in the crowd," reported one staff member, who requested anonymity for fear of retribution.

Wolfowitz was passing near the gathering after his news conference as the association's president, Alison Cave, was reading a statement demanding that he "act honorably and resign."

Cave invited Wolfowitz to the microphone. He repeated his apology and said he would abide by the board's decision, and he left as staff members began hissing and chanting. Hundreds of comments criticizing Wolfowitz, posted on the organization's internal Web site, were released by the Government Accountability Project, a whistle-blower organization.

Cave asked that the board release all documents related to the issue, the same step that Wolfowitz requested last night. Among the documents, Cave said, is a 2005 memo from Wolfowitz to the vice president for human resources detailing the terms of Riza's outside assignment, including promotion upon her return to the bank from an upper-middle position to a level equal to bank vice president, "depending on the length of her external service." The agreement said the promotion would be subject to a performance review by a "panel whose membership would be mutually agreed" by human resources officials and Riza.

Staff writers Krissah Williams and Steven Mufson contributed to this report.

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