By JEANNINE AVERSA
The Associated Press
Tuesday, May 1, 2007; 10:56 PM

WASHINGTON -- The World Bank's board expressed fresh concern Tuesday over bank president Paul Wolfowitz's handling of a hefty pay package for his girlfriend and promised a decision soon in a controversy that has led to calls for his resignation.

The 24-member board met several hours with a special bank panel that over the past two days had heard from Wolfowitz, his girlfriend and bank employee Shaha Riza and other present and former bank officials about Riza's promotion and pay raise to $193,590.

In a statement afterward, the directors said they "remain very concerned about the impact on the work of the bank group and are committed to the earliest possible resolution of the matter."

The board said the next step is for the special panel to "draw its conclusions from the information obtained from the documents and during the course of the interviews" and expeditiously submit a report to the directors.

Ultimately, the directors will decide what action should be taken, if any. The board could ask Wolfowitz to resign, signal it lacks confidence in his leadership, reprimand him or take no action. There might also be a compromise under which Wolfowitz would be found to have acted in good faith and he would resign later.

Earlier Tuesday, the special panel was told by the former chairman of the bank's ethics committee that his group wasn't consulted and didn't approve Riza's compensation package.

Ad Melkert, who was ethics chief when the arrangement was made but now works at the United Nations, said he rejects "any direct or indirect allegation or suggestion that the ethics committee was aware or should have been aware of the terms and conditions of Ms. Riza's contract."

Wolfowitz told the panel Monday that the bank's ethics committee had access to all the details surrounding the arrangement involving Riza "if they wanted it."

Melkert said the committee was not consulted, nor did it approve details of Riza's compensation package, including "the large initial pay increase, the stipulation for subsequent annual increases and the stipulations for subsequent promotions."

Laying out his defense on Monday, Wolfowitz pointed to a Feb. 28, 2006, letter by Melkert that Wolfowitz characterized as showing that the bank's ethics committee was aware of Riza's compensation arrangement because it referenced an anonymous whistle-blower's e-mail that complained about the size of her pay raise.

Melkert on Tuesday acknowledged that the anonymous e-mail "stated a salary figure but did not refer to other aspects of the terms and conditions in question."

Wolfowitz has led the bank _ whose mission is to fight global poverty _ for close to two years. Before he took over, he was the No. 2 official at the Pentagon, where he played a key role in mapping out the Iraq war.

Sen. Max Baucus, chairman of the Senate Finance Committee, urged Wolfowitz to step down.

"It would be my hope that Wolfowitz finds that discretion is the better part of valor and finds a way to no longer be a part of the bank," said Baucus, D-Mont.

Wolfowitz has maintained that he acted in good faith, and his attorney, Robert Bennett, said his client "is not going to resign in the face of this bogus conflict of interest charge."

Riza had been working at the bank for eight years when Wolfowitz arrived in 2005. She had earned close to $133,000 a year as a communications adviser in the bank's Middle East department. She was reassigned at the State Department to avoid a conflict of interest but remained on the bank's payroll. Her pay eventually rose to $193,590.

Riza, who also appeared before the special panel on Monday, said she didn't want to move in the first place, defended her pay as being within the same range as employees at the same grade level and said the ensuing "media circus" has hurt her career and her personal well being.

The U.S. is the bank's largest shareholder, and President Bush has said Wolfowitz should remain on the job. The European Parliament, many of the bank's staff, former bank officials and some Democratic politicians have called on him to resign.

For his part, Wolfowitz was trying to carry on with his duties. On Tuesday, he was still planning to fly to an education summit in Brussels, Belgium.

___

On the Net:

World Bank: http://www.worldbank.org/