World Bank chief says sorry, but his future is uncertain

SCANDAL OVER FAVOURITISM SHOWN TO GIRLFRIEND.

THE fate of World Bank President Paul Wolfowitz hung precariously yesterday amid mounting speculation that he could be forced to quit in a favouritism scam.

Mr Wolfowitz is alleged to have helped his Libya-born girlfriend at the institution move to a high-paying government job.

The bank’s 24-member executive board, the body that elected him two years ago, yesterday delivered a stinging rebuke of his actions that left the former deputy defence secretary isolated amid vociferous calls for his resignation.

Mr Wolfowitz’s humiliating apology earlier on Thursday did little to defuse the row as the board deliberated the sordid affair in a a drawn-out emergency meeting.

“The executive directors will move expeditiously to reach a conclusion on possible actions to take,” it said in a statement.

More than 100 pages of documents released with the statement revealed that on his personal direction, his partner Shaha Ali Riza received a hefty pay rise and transfer to the US State Department without a review by an ethics committee or the board’s chairman.

It took her annual salary from US$132,660 (S$202,970) to US$193,590 – higher than even what Secretary of State Condoleeza Rice or any other Cabinet member makes.

The response of the bank employees to these revelations stood short of an open revolt. “The President must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank Group and has destroyed the staff’s trust in his leadership,” the staff association said in a statement.

“He must act honourably and resign.”

Lingering distrust among many staff members and suspicion over his close ties to the Bush administration and his pivotal role in the Iraq war had overshadowed his first two years at the bank. Many questioned his controversial policies, especially those cracking down on corruption where he cancelled aid to several countries.

Ironically, he appeared to be a victim of his own declaration that he would bring a new era of accountability to the bank.

Fresh impetus to challenge his leadership presented itself a week ago after the staff association and the Government Accountability Project, an independent watchdog group, disclosed that he had bent the rules on Ms Riza’s promotion and violated staff rules.

He fuelled even greater anger by suggesting that he had consulted senior officials about her salary increase – a fact that was dismissed immediately by these officials.

A visibly nervous Mr Wolfowitz told a packed news conference on Thursday: “I made a mistake for which I am sorry.”

“I will accept any remedies they propose. In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations.”

The controversy threatens to overshadow talks this weekend among finance ministers from the wealthy Group of Seven nations.

Any move to replace Mr Wolfowitz would involve leaders of the bank’s main donor countries – Japan, Germany, France and Britain – in discussions with US President George W. Bush. The US, which has the largest shares in the bank and correspondingly voting power, has traditionally nominated the bank president.

The White House voiced its support for him. “The President has confidence in Paul Wolfowitz and his work” at the World Bank, White House spokesman Dana Perino said.

“I made a mistake for which I am sorry. I will accept any remedies they propose. In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations.”
MR PAUL WOLFOWITZ (left), on allegations that he helped his Libya-born girlfriend Shaha Ali Riza (right) move to a high-paying government job.

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