Wolfowitz To Defend Himself on Pay Raise

By Peter S. Goodman
Washington Post Staff Writer
Friday, April 27, 2007

NEW YORK, April 26 -- Embattled World Bank President Paul D. Wolfowitz learned Thursday that he will be allowed to argue for his job in front of a bank committee investigating him for engineering a generous pay raise for his girlfriend, a fellow employee at the institution.

The crisis surrounding his tenure continued to deepen as members of a team drafting a strategy to root out corruption in bank lending, an initiative pressed aggressively by Wolfowitz, sent a letter to the bank board on Thursday complaining that the scandal was jeopardizing their work.

"We are deeply concerned by the impact of the current leadership crisis on the Bank's credibility," said the letter, which was signed by 46 members of the team of professional staff from around the world who are drafting the bank's Governance and Anticorruption Strategy. "The credibility of our front line staff is eroding in the face of legitimate questions from our clients about the Bank's ability to 'practice what it preaches.' "

Though the letter did not advocate Wolfowitz's ouster, it called for "clear and decisive actions to resolve this crisis quickly."

Wolfowitz's handling of the pay raise for his longtime companion, Shaha Riza, is being investigated by a committee of members of the bank's governing board. In a letter sent Thursday to Robert S. Bennett, the prominent Washington attorney Wolfowitz has retained, the committee called the bank president to appear on Monday morning. The committee agreed that Bennett could also attend -- a move heatedly debated inside the bank -- although he will not be allowed to speak on his client's behalf.

"We are pleased that our request has been granted to continue this matter until next week, and that counsel can attend," said Bennett, whose high-profile roles include representing President Bill Clinton in the Paula Jones sexual harassment case. "We look forward to the opportunity to show that Mr. Wolfowitz acted in completely good faith and sought recusal in the matter, with the recusal request denied by the ethics committee."

But even as the committee prepared to allow Wolfowitz to make his case, a senior bank official, who spoke on condition of anonymity, suggested that members of the committee had already decided to recommend Wolfowitz's ouster, casting Monday's appearance as a last-ditch appeal before the panel pronounces judgment.

Committee members were circulating a draft of the document they planned to release next week outlining Wolfowitz's ethical breaches and formally recommending his expulsion, the official said.

Such a move would substantially weaken Wolfowitz's hand, though it would not end his tenure. Rather, it would leave his fate to the full, 24-member board of governors.

Under the bank's articles, the governing board has unqualified power to decide by majority vote whether and under what circumstances the bank president must go. But the political reality is more complex. Under a diplomatic arrangement in effect since the creation of the World Bank in 1944, the U.S. president has the right to appoint the chief of the institution. Europe has the power to appoint the head of the bank's affiliate, the International Monetary Fund.

Wolfowitz's defenders have cast the scandal as a European power play, led by France and Germany, to diminish U.S. influence. Hardly lost in this analysis is the fact that Wolfowitz was a key proponent and architect of the Iraq war, which has severely strained relations between the United States and much of Europe.

If the board ultimately votes to remove Wolfowitz, a Bush administration official said it would jeopardize the governing arrangements of other international financial institutions, including Europe's right to appoint the leader of the IMF and Japan's authority to name the head of the Asian Development Bank.

On Thursday, a White House spokesman reaffirmed President Bush's support for Wolfowitz.

"The president continues to have full confidence in him," said the spokesman, Tony Fratto.

Elsewhere, more voices joined a chorus of complaints that the scandal is disrupting the work of the global poverty-fighting institution.

"The situation is creating internal problems within the World Bank," Swiss Economics Minister Doris Leuthard told reporters in Geneva, according to the Associated Press. "We told Mr. Wolfowitz he should reflect whether he really is still the right person to have as president of this organization."

Switzerland has a seat on the governing board that will determine Wolfowitz's fate. Leuthard stopped short of calling for his removal, but she added that "the credibility of the institution" may hinge on the outcome.

© 2007 The Washington Post Company