World Bank Panel to Discuss Wolfowitz

World Bank President Paul Wolfowitz, speaks with reporters during a news conference at the conclusion of the 2007 Spring meetings at International Finance Fund headquarters in Washington, Sunday, April 15, 2007. The World Bank's board met privately Thursday to discuss President Paul Wolfowitz, whose leadership has been thrown into turmoil by revelations that he helped his girlfriend get a high-paying job. It was unclear what action, if any, the 24-member board would take in the matter. (AP Photo/Manuel Balce Ceneta) (Manuel Balce Ceneta - AP)

WASHINGTON -- 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.

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.

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."

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.