Girlfriend promoted, WB chief blasted

Washington: Pressure for World Bank President Paul Wolfowitz to resign intensified on Friday as the bank's board wrangled over whether his approval of a high-paying promotion for his girlfriend bent staff rules.

The controversy over the promotion overshadowed the start of meetings in Washington of finance and aid ministers from rich and developing countries.

World Bank staff and global development organisations called for Wolfowitz to step down as anger increased after his public apology and acknowledgment on Thursday that he erred in the handling of the promotion of Shaha Riza, a former senior communications officer in the bank's Middle East Department.

Bank staff have expressed their outrage on internal Internet bulletin boards, which included calls for Wolfowitz to resign. The outpouring showed lingering distrust by many staff and resentment over his close ties to the Bush administration and his role as an architect of the Iraq war while he was US deputy defense secretary.

But a day after Wolfowitz was booed in a meeting with World Bank staff, President George W Bush stood firm behind an old colleague, who was nominated for the job despite objections by some member countries.

"The president fully supports Wolfowitz and wants him to continue his service as World Bank president," White House spokesman Tony Fratto said.

After a meeting of Group of Seven (G7) finance ministers, US Treasury Secretary Henry Paulson expressed his "very high regard" for Wolfowitz, calling him "a very dedicated public servant."

Paulson declined to comment in detail pending more information from the World Bank's executive board on what it intends to do about the affair, following the release by the board of damaging findings into Wolfowitz's personal involvement in awarding Riza a pay deal worth nearly $2,00,000.

"But let me add though that this should not call into question or be read as any lessening of US support for Paul Wolfowitz," he said.

The case has been an embarrassment to Wolfowitz, who has campaigned for sound governance and against corruption since taking up the post in 2005.

Finance ministers in Washington for the meetings refused to prejudge Wolfowitz's actions or say whether he should stay or go, saying it was a matter for the World Bank's board.

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"We must just allow the process to work through," South African Finance Minister Trevor Manuel told Reuters.

The World Bank's board, made up of representatives of the bank's 185 member countries, failed to reach a final decision on the issue overnight as it focused on the question of whether Wolfowitz, 63, gave preferential treatment to Riza.

Riza was assigned outside the bank to work with the U.S. State Department, but remained on the bank's payroll after Wolfowitz took office.

"The executive directors will move expeditiously to reach a conclusion on possible actions to take," the board said in a statement issued in the early hours of Friday morning, adding directors would consider "all relevant governance implications for the bank."

The board also said that Wolfowitz signed off on the promotion and salary increase for Riza without prior approval by the board's ethics committee.

A board source told Reuters that directors were buying time as they clarified bank rules in an unprecedented situation.

Conflict of interest

The board released documents that gave new insight into the communications between Wolfowitz and the board's ethics committee, which advised him to transfer Riza outside the bank to avoid conflict of interest issues.

The board said Wolfowitz revealed his relationship with Riza while he was negotiating his own job contract and, at the directors' request, sought guidance from the board's ethics committee.

An August 11, 2005, memo shows that Wolfowitz directed Xavier Coll, the bank's vice president for human resources, to accept Riza's proposal to be assigned outside the bank, with a promotion and pay increase.

A board source told Reuters if Wolfowitz "guided" the salary negotiation process, it would then be considered a breach of the board's ethics code.

World Bank staff sought to keep the public focus on the bank's mission to end global poverty.

"What is being discussed in media and within the bank has no interference with the efficacy of the institution," Francois Bourguignon, the bank's chief economist, told a news conference on global development trends.

European anti-poverty groups said Wolfowitz's position was untenable.

"European governments must join others to demand Wolfowitz's resignation and institute real changes," said Nuria Molina, policy and advocacy officer for Eurodad, a network of European development organisations.