Wolfowitz's Story Disputed By Ex-Official
Bank Board Kept in Dark, He Says

By Peter S. Goodman
Washington Post Staff Writer
Wednesday, May 2, 2007

The former chairman of the World Bank's ethics committee yesterday accused the institution's embattled president, Paul D. Wolfowitz, of misleading a panel investigating his role in granting his girlfriend a substantial pay raise.

In a written submission to the investigating committee, the former ethics chairman, Ad Melkert, contradicted Wolfowitz's assertion that he fully informed bank officers of his handling of his girlfriend's transfer to the State Department and that his actions had their blessing.

"I am deeply hurt by efforts to manipulate information," Melkert said in his statement, maintaining that his committee was never consulted on the details of a promotion-and-raise package for Wolfowitz's girlfriend. His comments to the committee were an elaboration on a statement he released late Monday.

Wolfowitz's attorney, Robert S. Bennett, said his client was being unfairly blamed for following the instructions of the ethics committee by finding another job for his companion, Shaha Riza, a senior World Bank official, to avoid an obvious conflict of interest when he arrived at the bank.

Melkert "did not ever say to Mr. Wolfowitz, 'I do not want you to be involved,' " Bennett said in an interview. "He told him: 'Take care of this. Get a practical result.' He didn't break the rules."

The bank's executive board began discussing Wolfowitz's fate late yesterday, while awaiting a full report from the investigating committee, said three bank officials who spoke on condition of anonymity because they were not authorized to discuss the matter publicly. The board canceled a meeting on climate change, clearing Thursday and Friday to deliberate on Wolfowitz.

Melkert is now a top administrator at the U.N. Development Program but worked at the World Bank and chaired its ethics committee when Wolfowitz took over as president in 2005. According to Melkert, Wolfowitz had been advised by the ethics committee that Riza, a Middle East expert, needed to be transferred to a job beyond his supervision and that she was entitled to compensation for the disruption to her career. But Melkert said his committee was never told the details of the raise Wolfowitz then approved -- a jump from about $133,000 a year to more than $190,000, with guaranteed promotions in later years.

"It is completely incomprehensible that subsequently Mr. Wolfowitz did exactly what he originally had proposed not to do: to engage directly in personnel matters concerning his partner," Melkert said.

Bennett said Riza came up with the salary numbers herself, basing them on the middle range for someone who had attained her status at the bank. An attorney for Riza declined to comment.

Melkert's words came a day after Roberto Dañino, a former general counsel for the bank, told the investigating committee that Wolfowitz had acted "incorrectly" in instructing the bank's vice president for human resources to extend "an extraordinary salary increase," according to his written submission.

Dañino excoriated Wolfowitz, saying he subsequently withheld information about the raise, "apparently trying to deceive the board, the staff, and the general public" and adding that Wolfowitz had "damaged the reputation of the bank and eroded his moral authority to lead."

In his appearance before the investigating committee on Monday, Wolfowitz cast himself as the victim of a "smear campaign." He told the committee that he had tried to fairly address the strain that his assumption of the presidency placed on his longtime companion while gaining the blessing of the ethics committee.

Wolfowitz's appearance did not impress the investigators, according to two senior bank officials briefed by committee members. His testimony did not appear to change the disposition of the bank's governing board to pursue an end to his tenure, ideally via his resignation, these sources said, speaking on condition of anonymity because they were not authorized to speak for the board.

Some members of the committee were irritated by the presence of Bennett, the high-profile defense attorney Wolfowitz has retained. The bank's board is not accustomed to having outsiders present during its proceedings and views itself as a consensus-driven arbiter, as opposed to a judicial panel.

But in one key regard, Bennett's involvement has had a significant effect on the proceedings: It has forced the investigating committee to slow down and absorb references to documents cited by Wolfowitz before it releases its report in coming days, bank officials said.

Wolfowitz has acknowledged that he mishandled the pay raise, asking for forgiveness from bank staff who have been campaigning for his resignation. But his hiring of Bennett, a combative attorney best known for defending President Bill Clinton in the Paula Jones sexual harassment case, has signaled a more aggressive approach.

"Wolfowitz and Bennett have successfully changed the focus," said Beatrice Edwards, international program director of the Government Accountability Project, a watchdog group that has advocated new leadership at the bank. "Bennett's strategy is to drag this out for as long as possible."

Sources previously told The Washington Post that the investigating committee had already concluded that Wolfowitz was guilty of three breaches of ethics rules, as laid out in a draft report completed last week. Those sources said yesterday that the report would need to be revised to reflect the testimony of Wolfowitz and Riza, lest the committee lend credence to Bennett's protests that it has not given his client fair hearing.

"We have to do this thing in a way that cannot put this in doubt for the future," said a staff member for one person on the committee. The source spoke on condition of anonymity because he was not authorized to speak to the public.

The board did dispense with another controversy connected to Wolfowitz's leadership, approving a new health strategy promoting family-planning services for women in poor countries. A Wolfowitz appointee, managing director Juan Jose Daboub, and the U.S. representative had both tried to amend the strategy to avoid endorsing access for safe and legal abortions.

In the end, the strategy was adopted without change, though the American representative added comments to the board's official minutes asserting that nothing in the document should be construed as support for promoting abortion.