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Wolfowitz Says Won't Resign; Bank Says Concerned

By Karen DeYoung
Washington Post Staff Writer
Monday, April 16, 2007

World Bank President Paul D. Wolfowitz said yesterday that he intends to continue in his job despite the controversy over his role in arranging pay raises and promotions for his girlfriend, a bank employee forced by conflict-of-interest rules to take an outside job during his tenure.

"Look, I believe in the mission of this organization, and I believe I can carry it out," Wolfowitz said at a news conference called to discuss a meeting of the bank's development committee. "I have had many expressions of support. . . . We need to work our way through this. The board is looking into the matter, and we'll let them complete their work."

The bank, he said, "has important work to do, and I will continue to do it."

The furor over Wolfowitz appeared to overshadow the agenda of the World Bank's annual spring meeting of finance and development ministers this weekend.

"The current situation is of great concern to us," said Agustin Carstens, the Development Committee chairman and Mexican finance minister, reading a committee statement as Wolfowitz sat beside him on a dais. "We endorse the board's actions in looking into this matter and ask it to complete its work. We expect the bank to adhere to the high standards of international governance."

Reporters asked Wolfowitz to "explain the sort of circumstances in which you would feel obliged to resign" and whether it would be better "for the good of the bank and better for you . . . to just leave"?

Wolfowitz did not respond, repeating that he would not impede "the board's deliberations." The board suspended its consideration of the issue during the annual meeting.

A number of ministers from developing countries, particularly in Africa, have praised Wolfowitz's presidency. His defenders have charged that he is being vilified because he, as deputy defense secretary in President Bush's first term, was an architect of the unpopular Iraq war.

But representatives from major donor nations, particularly in Europe, have long been dissatisfied with his leadership and have clashed with him over a range of issues. The bank's staff association has criticized his management and last week called for his resignation.

Sources close to the executive directors, speaking on the condition of anonymity while the matter remains undecided, said the board is reluctant to appear to cave to the staff and take the unprecedented step of firing a president. But a majority believes it would be "best if he decided on his own" to resign, one source said.

The board has "clear support from political authorities" -- the finance ministers who make up the bank's governing body -- "to go ahead and define whether a violation has taken place" and what the consequences should be, the source said. But the board has set no timetable for a decision. "For one thing, the United States has to find someone as a replacement. It's not something you decide overnight."

The U.S. president traditionally names the World Bank head. Bush said last week that he strongly supports Wolfowitz and expects him to continue in the job.

One problem the board faces in considering Wolfowitz's case is its own role. While negotiating his contract, Wolfowitz declared the conflict of interest and offered to recuse himself from all personnel dealings with the woman the bank has since called his "domestic partner," Shaha Riza. The board's ethics committee determined that bank rules required her to leave, while remaining on the bank payroll, and instructed Wolfowitz to arrange a compensation package through the human resources department.

The package Wolfowitz dictated resulted in an increased pay grade, substantial raises -- from $132,660 when Riza left the bank to a current $193,590 -- and promotions upon her eventual return, but the board showed no further interest in learning the terms of the deal.

"I'm amazed that the ethics committee had a lot of views, but then stepped back from their implementation," said Ruth Wedgwood, a professor of international law at Johns Hopkins University. Turning the matter over to Wolfowitz to resolve in the first place, she noted, was "sort of oxymoronic: 'You can't recuse yourself enough to suit us, but we want you to be formally in the chain of command to resolve this.' "

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

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