Wolfowitz Dictated Girlfriend's Pay Deal

But the documents also revealed that Wolfowitz's description of events has been less than candid. In a May 25, 2005, letter to Wolfowitz's personal lawyer negotiating his contract, Roberto Dañino, then the bank's general counsel, acknowledged that Wolfowitz had disclosed "a pre-existing relationship with a Bank staffer" and had proposed to resolve it "by recusing himself from all personnel matters and professional contact related to the staff member."

Wolfowitz lawyer Robert Barnett responded two days later with an e-mail stating that the proposal "WOULD NOT -- I REPEAT, NOT -- INVOLVE RECUSAL FROM PROFESSIONAL CONTACT" with Riza. "THIS MATTER," Barnett wrote, "MUST BE RESOLVED" before Wolfowitz would sign his contract.

The board eventually ruled that "professional contact" between the two violated bank policy and instructed Wolfowitz to order the personnel department to arrange her departure and compensation.

But the board insisted yesterday that it neither "commented on" nor "reviewed or approved" the agreement that Wolfowitz ordered his human resources department to make with her.

In a memo to the bank's vice president for human resources dated Aug. 11, 2005, Wolfowitz wrote, "I now direct you to agree to a proposal which includes the following terms and conditions." Riza was to be "detailed to an outside institution of her choosing while retaining Bank salary and benefits." She was to receive an immediate raise with approximate annual increases of 8 percent.

By 2010, when Wolfowitz's five-year term expired, she would reach a salary of $244,960, significantly above the maximum of $226,650 allowable for her pay grade. On her return to the bank, she would be automatically promoted to the level of senior country director; if her return were delayed another five years by a second Wolfowitz term, she would be elevated to the level of bank vice president.

In a memo dated Sept. 9, 2005, Wolfowitz aide Robin Cleveland, a former White House official he brought with him to the bank, wrote that Wolfowitz had hired an outside counsel to review the agreement since Dañino, the general counsel, worked for the bank and thus had a conflict of interest. Wolfowitz, the memo said, had selected the Washington firm Gibson, Dunn & Crutcher, "based on their ability to present a strong team within 24 hours which included, among others, the former U.S. solicitor General and Eugene Scalia, a personnel policy expert."

In a letter to Wolfowitz after its review, the firm judged the pact "a reasonable resolution . . . that avoids, among other things, the risks of protracted legal proceedings."