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Wolfowitz Panel Finds Ethics Breach, Officials Say
World Bank Board Could Act on Monday

By Peter S. Goodman
Washington Post Staff Writer
Saturday, April 28, 2007

NEW YORK, April 27 -- A World Bank committee investigating president Paul D. Wolfowitz has nearly completed a report that it plans to give the institution's governing board, concluding that he breached ethics rules when he engineered a pay raise for his girlfriend, three senior bank officials said Friday.

Friday evening, the committee was debating whether to explicitly recommend that Wolfowitz resign, according to the sources, who spoke on condition they not be named, citing an ongoing probe into leaks.

Wolfowitz is scheduled to appear before the committee with his attorney on Monday morning and mount his defense, and the bank's 24-member board of directors will convene that afternoon to discuss the report. The sources suggested that a vote by the board could come that day.

Through his attorney, Wolfowitz vowed to continue the fight to keep his job. "He will not resign under this cloud," said his attorney, Robert S. Bennett, when told of the imminent completion of the committee's report. "He's not going to give in to these coercive tactics."

Bennett excoriated the panel for reaching conclusions before giving Wolfowitz the chance to defend himself. "If this is true, this is really unconscionable, and it just reflects that he's not having his day in court," Bennett said. "Is this invitation to him a sham?"

Bennett said Wolfowitz planned to submit documents to the committee on Monday that make clear that the pay raise he arranged for his girlfriend, Shaha Riza, had the full understanding and assent of the institution's ethics committee. It was not clear whether the investigating committee would revise its report after Wolfowitz's appearance.

The committee is composed of members of the bank's governing board. According to bank officials, the timing of the committee's report and its conclusions have been choreographed for maximum impact in what has become a full-blown campaign to persuade Wolfowitz to go.

The White House has so far remained resolutely supportive of Wolfowitz, even as his staff has staged an open revolt aimed at persuading him to leave and European officials have lobbied for his ouster. Already unpopular because of his role as a chief architect of the Iraq war, Wolfowitz's management style has antagonized both bank staff and European financial contributors.

On Monday, as Washington hosts a U.S.-European Union summit, President Bush is to hold a joint press conference with Chancellor Angela Merkel of Germany, which is leading the charge for Wolfowitz's dismissal. As the bank officials described it, the board is betting that a rebuke from the committee and a call for his resignation will persuade Wolfowitz to depart voluntarily before the summit and perhaps encourage the White House to pressure him to do so.

Wolfowitz has been under increasing pressure to step down since acknowledging his role in securing a job change and salary increase for Riza, his longtime companion. Shortly before Wolfowitz assumed the World Bank presidency in June 2005, Riza, a World Bank employee, was transferred to the State Department at an annual salary of $193,000.

A draft of the report reviewed by the committee late Friday declared Wolfowitz had violated World Bank regulations in three areas: breach of contract, breach of ethics rules and undermining the reputation of the bank.

One source said that if Wolfowitz refuses to relinquish his post, the committee could take further action against him. While this report deals only with his handling of the pay raise for Riza, the source said, the committee is prepared to investigate a range of other alleged breaches of ethics and internal governance rules, including contracts for his senior staff.

"This ties up the board for an extended period of time while they get to the bottom of this," one official said.

But Bennett, Wolfowitz's attorney, asserted that that strategy would ultimately backfire. "The board, through these unreasonable and unfair actions, can't create a fake crisis and say he has to leave because he's hurting the bank," Bennett said. "They're the ones who are hurting the bank. Even those people opposed to Mr. Wolfowitz will see how outrageous this is."

Monday was also shaping up as a test of the board's will on a controversial new bank strategy on health, nutrition and population.

In recent months, World Bank employees have shaped the strategy, which directs the institution's lending, to include the ready availability of "sexual and reproductive health services" for women in poor countries. That bit of jargon is widely known in some countries to refer, among other things, to access to safe and legal abortions.

But in recent weeks, Juan José Daboub, a conservative Christian whom Wolfowitz appointed managing director at the bank, directed the staff to delete that reference, effectively eliminating the endorsement for access to safe abortions, according to two bank officials. Daboub did not return calls.

In a letter sent last week to the bank vice president overseeing the strategy, several members of the governing board, including those representing Germany, France and Britain, demanded that the original language be restored, asserting that the bank would otherwise be breaking with a 1994 consensus embracing family planning.

This week, the American representative on the board, Eli Whitney Debevoise II, pressed again to remove the reference to "services" and replace it with "care," to eliminate any potential endorsement for abortion, the officials said. Debevoise did not return phone calls.

On Monday, as the committee huddles with Wolfowitz to discuss his leadership, the board is scheduled to vote on the final health strategy, officials said.

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