Wolfowitz put bank's interests last: World Bank panel

Updated on May 15, 2007 08:52 AM IST
An investigating panel found that Paul Wolfowitz broke ethics rules and put his own interest above the bank's when he ordered a promotion for his girlfriend.
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IANS | By, Washington

World Bank President Paul Wolfowitz broke ethics rules and put his own interest above the bank's when he ordered a promotion for his girlfriend, an investigating panel found in a report that could cost him his job.

The damning, detailed 52-page report on Monday blamed the former US deputy defence secretary for triggering a "crisis in the leadership" at the development lender, provoking a conflict of interest he should have known to avoid and denigrating the World Bank in public statements.

The panel of seven World Bank directors reached no conclusions, but urged the board to consider its findings: a broad "lack of confidence in the present leadership," that Wolfowitz "violated" the bank's code of conduct and staff rules and that he failed to observe "important provisions" of his contract as bank president.

It was the bank's fullest public accounting yet of Wolfowitz's conduct, which has prompted mounting criticism from European governments and left US President George W Bush - who nominated Wolfowitz in 2005 - as his main defender.

Wolfowitz was to have a chance to respond to the charges Tuesday before the World Bank's 24-member board of directors takes up the report. That could mean a decision on the fate of Wolfowitz, a co-architect of the Iraq war who has made many foes among bank staff and managers, is imminent.

At issue is a promotion and hefty pay raise for Wolfowitz's girlfriend Shaha Riza, three months after Wolfowitz became bank president in June 2005. She was loaned out to the US State Department to avoid a potential conflict of interest, but remained on the World Bank payroll.

Wolfowitz, 63, denies wrongdoing and says he was broadly following suggestions by the bank's ethics committee. The ethics panel's ex-head, former Dutch Labour Party politician Ad Melkert, has disputed Wolfowitz's account in a statement to the World Bank investigators.

Wolfowitz has accused his foes of a smear campaign and insisted he will not quit under an ethics cloud.

But the panel expressed concern that the scandal was hurting the bank's reputation, hampering its mission of fighting poverty and disease and undermining a global anti-corruption drive that Wolfowitz has made the hallmark of his tenure.

The panel's report repeatedly called Wolfowitz's conduct and attitude "troubling," saying he was trying to blame the bank for a conflict of his own making. Riza could have stayed at the bank at her pay grade if Wolfowitz had agreed to place her in a job outside his direct line of influence, the panel said.

Wolfowitz refused to accept the bank's policy on conflict of interest "from the outset" and sought special treatment for himself and Riza, the report said.

"Mr Wolfowitz saw himself as the outsider to whom the established rules and standards did not apply," it said. "It evidences questionable judgment and a preoccupation with self interest over institutional best interest."

Germany, France, the Netherlands and Norway have been among Wolfowitz's sharpest critics, calling for quick resolution of a scandal that has gripped the 185-nation bank for a month. Dutch director Herman Wijffels heads the investigation.

Before the World Bank released the report, the White House reitereated Monday that Wolfowitz should keep his job. But Treasury Secretary Henry Paulson, the direct US representative to the bank, has tended to be more cautious in his support.

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