Wolfowitz faces WB board on ethics accusations

WASHINGTON: Embattled World Bank President Paul Wolfowitz faced the bank's board on Tuesday to answer allegations he put his 'personal interests' above rules, risking the very mission of the development lender. 

The former US deputy defense secretary is accused of personally arranging a lucrative pay-and-promotion package and transfer to the State Department for his companion and fellow bank employee, Shaha Riza.

The White House reiterated its support for Wolfowitz, but opened the door for whatever action the World Bank board might take.

"All options are on the table," spokesman Tony Snow said, a day after the release of a damning World Bank internal report.

'The New York Times', citing various unnamed government and World Bank officials, reported late on Tuesday that the Bush administration was floating the idea of Wolfowitz resigning voluntarily if the bank board drops its drive to declare him unfit to remain in office. 

The administration's approach was outlined in a telephone conference call between the Treasury Department and economic ministries in Japan, Canada and Europe, but 'appeared to gain few immediate supporters,' the newspaper said in its online edition.

The pressure on Wolfowitz mounted after an investigatory panel named by the board to examine the affair issued a scathing 52-page report late on Monday concluding he had violated the terms of his contract, the bank's code of professional conduct and three staff rules. 

"By involving himself in the specific terms of Ms Riza external assignment, Mr Wolfowitz acted in a manner that was inconsistent with his obligations to the bank," the report said.

Shortly after Wolfowitz took the helm of the bank in June 2005, Riza, who worked as a bank communications specialist, was transferred to the US State Department and received a generous pay increase while still on the bank's payroll.

The bank's ethics committee had recommended the transfer of Riza but in supervising it and arranging for salary hikes and promotions Wolfowitz violated rules, the ad hoc panel found.

"The ad hoc group concludes that the president placed himself in a conflict of interest situation," they wrote.

However, the panel recognized one of Wolfowitz's arguments in his defense, the ethics committee had failed to provide him clear guidance.

"The ad hoc group acknowledges that the informal advice as provided by the ethics committee was not a model of clarity."

"It should have been drafted in language that would not leave open the possibility of misinterpretation."

But the overall conclusions of the report were scathing, "The current situation has generated a crisis not only in the management ranks, but across the institution," where the staff association has openly called for Wolfowitz's resignation.