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Wolfowitz violated ethics rules, says panel

business Updated: May 08, 2007 11:21 IST
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A panel investigating World Bank president Paul Wolfowitz has found that he violated ethics rules when he secured a promotion and pay-raise for his girlfriend who worked at the bank, say media reports.

The conclusion will likely raise pressure on Wolfowitz who had already lost the support of agency staff and accused his foes of leading a "smear campaign" against him to resign.

Wolfowitz has received a copy of the seven-member panel's report and will be given a chance to respond.

The panel has yet to present its report to the bank's 24-member board of directors, which could force Wolfowitz out of his post.

A top aide to Wolfowitz, strategy director Kevin Kellems, has handed in his resignation amid the scandal, the bank said on Monday.

Kellems, a former spokesman for US Vice President Dick Cheney, came to the bank with Wolfowitz in 2005. He has drawn the ire of bank staffers who are upset with Wolfowitz's appointments.

Kellems plans to quit next week, a World Bank statement said.

European governments, including Germany, France and Norway, have led public criticism of Wolfowitz, a former US deputy defence secretary who played a major role in planning the war in Iraq.

At issue is a $60,000 salary hike and promotion for Wolfowitz's companion Shaha Riza, who was loaned to the US State Department to avoid a potential conflict of interest when he became World Bank chief in June 2005. Wolfowitz has argued that the ethics committee and the bank's board were aware of the arrangement.

The power struggle has sowed turmoil and paralysed the bank's work over the past month. The board, which represents the 185 member countries, is also looking into Wolfowitz's choices for senior posts.

These include Kellems and Wolfowitz's counsellor Robin Cleveland, previously a senior official at the White House Office of Management and Budget.

Wolfowitz, who was nominated by US President George W Bush, has denied wrong doing and insisted he will not quit under an ethics cloud.