Bank May Vote No Confidence In Wolfowitz

Demonstrators held a
Demonstrators held a "farewell party" for World Bank President Paul Wolfowitz outside the bank building in Washington on Wednesday. (By Win Mcnamee -- Getty Images)

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By Peter S. Goodman
Washington Post Staff Writer
Saturday, May 12, 2007

The World Bank executive board has concluded that the bank's president, Paul D. Wolfowitz, broke ethics rules in engineering a hefty pay raise for his girlfriend, and plans to try to end his tenure next week, senior bank officials said yesterday.

Board members do not want to vote to fire Wolfowitz, the officials said, since that might provoke a rupture with the bank's largest shareholder, the United States. Instead, they are inclined to adopt a resolution saying they have lost confidence in him, hoping that will persuade him to resign.

Wolfowitz has said he granted his companion, Shaha Riza, a pay raise and promotion on advice from an ethics board at the bank. His attorney, Robert S. Bennett, declined yesterday to say what Wolfowitz would do if the board voted to express no confidence in him.

Wolfowitz yesterday was completing a written response to the accusations against him. He has been invited to appear before the board Tuesday, and the no-confidence vote could come soon after, the bank officials said.

They said the resolution will probably assert that Wolfowitz's continued tenure jeopardizes the bank's ability to raise funds for its campaign to eradicate poverty. Board members are betting that a strong expression of dissatisfaction will persuade the Bush administration to withdraw its support and urge Wolfowitz to step down, ending the leadership crisis that has engulfed the bank for seven weeks.

"There is a general sense that that would be enough," said a senior bank official briefed by members of the board, who spoke on condition of anonymity, citing diplomatic sensitivities. "They agree that he definitely broke the rules and they have no confidence in him. What they are doing now, informally, is figuring out what to do, what language to use."

Another official, who also spoke on condition of anonymity because of the sensitivity of the matter, described the proposed resolution as something like a parliamentary vote of no confidence. "In most parliamentary settings, that's the end," he said. "You step down."

While it has been clear for two weeks that a special investigative committee within the board had concluded that Wolfowitz breached ethics rules, only this week have deliberations revealed that most of the 24-member executive board has embraced those findings and is working to remove him, the officials said.

The White House remained firm in calling for Wolfowitz to stay, with Vice President Cheney counseling him to fight on, said a senior administration official, who did not want to be named because he is not authorized to discuss the matter publicly.

Treasury Secretary Henry M. Paulson Jr. has in recent weeks lobbied finance ministers in Europe to support Wolfowitz, though he has "gotten little traction," the administration official said. On Thursday, Paulson called Wolfowitz "a dedicated and committed public servant" in an interview with Bloomberg News, expressing admiration for "what he has done at the World Bank." Wolfowitz has made fighting corruption in poor countries a major focus of his two years at the bank.

Though prominent officials from Europe to Latin America have publicly called for Wolfowitz to go, and though the board has the power to fire him, a decisive vote would break sharply with the bank's consensus-minded culture, while presenting nettlesome questions of procedure and diplomacy. Never in the six decades of the World Bank's existence has the board removed the institution's leader, who, by tradition, is selected by the U.S. president.

In pursuing an expression of no confidence in place of a decisive vote, board members were working under instructions from the governments they represent, with major European countries intent on avoiding a fresh imbroglio with the Bush administration, senior officials said. European governments fear they could lose their right to name the head of the World Bank's sister institution, the International Monetary Fund.

But one of the bank officials said board members were also feeling pressure from bank staff members to end the crisis, which has effectively paralyzed the institution. "Bank staff sees them as far too beholden to their capitals," the bank official said.

Board members were carefully parsing recent statements from the Bush administration, noting that Paulson and President Bush have emphasized that they want Wolfowitz to be given a fair hearing on the ethics controversy. Some board members have taken that to mean the White House will accept the board's final judgment if Wolfowitz has been given a full opportunity to make his case.

Late Sunday, a seven-member executive-board committee completed a report described by those who have seen it as highly critical of Wolfowitz's conduct. It asserts that he breached his contract, undermined the reputation of the bank and broke ethics rules in arranging a job transfer and pay raise for Riza.

Wolfowitz has argued that he sought and followed the advice of the bank's ethics committee in finding another job for Riza so as to avoid supervising her, while assenting to the pay raise as compensation for the disruption to her career.

Both the chairman of the ethics committee and a former bank general counsel told the committee that Wolfowitz did not disclose details of the raise.

Bennett, who represented President Bill Clinton in the Paula Jones sexual-harassment case, has said repeatedly that Wolfowitz will not resign under an ethics cloud.


© 2007 The Washington Post Company

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