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Wolfowitz pleads to keep World Bank job

WB President Paul Wolfowitz begged the board to let him keep his job, promising changes in his management style.

business Updated: May 16, 2007 12:11 IST

World Bank President Paul Wolfowitz on Tuesday begged the lender's board to let him keep his job, promising changes in his management style in the wake of a damaging favoritism scandal.

The board of executive directors was to continue deliberations on his fate on Wednesday, after the United States reiterated its support for the embattled bank chief.

However, a White House spokesman entertained "all options," an opening interpreted by the US media as a sign of his imminent departure.

According to a hearing transcript released by his lawyer, Wolfowitz, 63, answered allegations he had put his "personal interests" above the rules, risking the very mission of the development lender.

The World Bank chief refuted point by point a scathing report by a bank investigatory panel published Monday concluding he had breached bank ethics rules in arranging a lucrative pay-and-promotion package and transfer to the State Department for his companion and fellow bank employee, Shaha Riza.

"I implore each of you to be fair in making your decision, because your decision will not only affect my life, it will affect how this institution is viewed in the United States and the world," Wolfowitz told the executive directors.

The month-old scandal has riven the 185-country bank — most European members are calling for Wolfowitz's resignation — and threatens to undermine the bank's ability to fulfill its mission to combat poverty.

"I fear that the way this recent inquiry is handled has the potential to do greater long-term damage to the institution than the alleged underlying ethics issue that was, in point of fact, put to rest over a year ago," he said.

The former US deputy defense secretary, an architect of the Iraq war nominated to head the World Bank by President George W. Bush's administration, acknowledged he had relied too much on advisers he had brought in with him when he became bank president in June 2005.

He pledged to change his management style "to regain the trust of the staff," whose association had called for his resignation after the scandal surfaced in the US media.

"If you want to have a discussion about my leadership, my management style and the policies I support, let's do it," he said. "That's fair. That's legitimate. But let's get past this conflict-of-interest matter."

Wolfowitz also reaffirmed that the salary increases and promotions he arranged for Riza were part of a "reasonable" agreement to resolve a "difficult set of circumstances" in the conflict of interest regarding his supervisory role in their relationship.

He asked the board to acknowledge that mistakes were made on all sides, including by the bank's ethics committee.

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

"You still have the opportunity to avoid long-term damage by resolving this matter in a fair and equitable way that recognizes that we all tried to do the right thing, however imperfectly we went about it," he told the board.

"My conduct with respect to Ms Riza's external placement does not justify taking any action against me or warrant a finding that you lack confidence in my leadership," he said, implying the board should not vote to remove him from office.

The White House earlier 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.

The New York Times, citing various unnamed government and World Bank officials, reported late 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 staff now is basically in open revolt," a former World Bank employee said, speaking on condition of anonymity.

"If the board would drop the charges and then he didn't go, the board would have an unmanageable situation."

The executive directors "would have to reach a private agreement that he is going to go," he added.