US rushes to save Wolfowitz after panel’s damning report

World Bank board could sack him or ask him to quit for breach of conduct.

THE Bush administration was fighting to save World Bank President Paul Wolfowitz’s job before he met the bank’s board yesterday, following a damning internal report on his conduct.

Declaring that Mr Wolfowitz had caused a “crisis in leadership” at the bank, its 24-member executive board was mulling over a range of disciplinary options that included sacking him or asking him to resign.

A special bank panel had said his involvement in securing an improper pay and promotion deal for his Libyan-born girlfriend Shaha Riza, a fellow bank employee, represented a conflict of interest. It broke bank rules and the ethical obligations in his contract.

It also noted that he had tried to hide the salary and promotion package offered to Ms Riza from top bank officials in the months after he became bank president in 2005.

“Mr Wolfowitz’s contract requiring that he adhere to the code of conduct for board officials and that he avoid any conflict of interest, real or apparent, was violated,” it said.

And in what the panel described as the “central theme” of the matter, it said Mr Wolfowitz “saw himself as the outsider to whom the established rules and standards did not apply”.

But the man at the centre of the storm appeared to be digging in a bitter fight to the end, accusing his adversaries of carrying out a “smear campaign”.

In a response to the panel’s report, he said: “It is highly unfair and unwarranted to now find that I engaged in a conflict of interest because I relied on the advice of the ethics committee as best as I understood it.”

The affair has dragged on for more than a month and has divided the bank’s 185 member states, with the US standing by one of its key architects in the Iraq war, and European governments pushing for his early exit.

The White House yesterday acknowledged that Mr Wolfowitz had made mistakes in his handling of the affair, but insisted that it was no reason to fire him.

“We’ve made clear that we support Paul Wolfowitz,” spokesman Tony Snow told reporters. “He has said – and we agree – that certainly, a lot of mistakes were made in the personnel process. But it’s not a firing offence.”

Meanwhile, Treasury Secretary Henry Paulson and other senior officials continued to lobby key finance ministers to support
Mr Wolfowitz, blaming the controversy on missteps “on all sides”.

A senior board official said yesterday that Mr Wolfowitz still had a chance of rescuing his job, depending on whether he could present a clear plan for rebuilding his credibility when he appears before the executive board later in the day.

It is unlikely to make a final decision before today as it weighs the panel’s findings.

But speculation as to who might succeed Mr Wolfowitz has already begun.

Media reports put former US trade representative and deputy secretary of state Robert Zoellick at the top of the list.

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