World Bank directors to meet on Wolfowitz

WASHINGTON: World Bank directors were set on Thursday to debate the fate of their scandal-hit president Paul Wolfowitz, with Washington under pressure to jettison its support for the former deputy Pentagon chief.

The meeting of the 24 executive directors was previously scheduled to discuss the global lender's planned development projects, but now is likely to be dominated by a pay and favoritism scandal that has engulfed Wolfowitz.

The White House has continued to stand by its man.

"The effort of the World Bank board should be get to the facts, treat it with fairness, and think of the long-term effectiveness of the institution," presidential spokesman Tony Fratto said on Wednesday.

The facts, according to a sheaf of documents released by the board, are that Wolfowitz in 2005 personally ordered a hefty pay package worth nearly $200,000 and guaranteed promotions for his girlfriend at the bank.

On releasing the documents, which include detailed instructions from Wolfowitz to the bank's human resources division, the directors said last week they would 'move expeditiously' to decide on possible actions to take.

On Sunday, at the annual spring meeting of bank ministerial policymakers, governments expressed 'great concern' over the affair and supported the board's inquiry.

Wolfowitz, meanwhile, vowed to fight on.

The bank's five biggest shareholders, in descending order, the United States, Japan, Germany, Britain and France, appoint a director each.

The 19 other directors represent the rest of the bank's 185 member states.

Battle lines are drawn between European governments, which have long been suspicious of Wolfowitz, and a camp of supporters that includes the United States, Japan and some African countries.

While campaigning against corruption, Wolfowitz is also leading a drive to raise up to $25 billion from rich donors to sustain the World Bank's development funding for the poorest countries.

That has left some campaigners worried that governments in Europe could use his fate as a bargaining chip over the US government.

"We question whether the World Bank can surmount these difficulties to obtain new funding," German development minister Heidemarie Wieczorek-Zeul said over the weekend.

US Treasury Secretary Henry Paulson, ultimately the administration's pointman for World Bank affairs, has also lent his support to Wolfowitz.

But some observers suspect the former Wall Street banker may not share the White House's full confidence in the politician, who was one of the architects of the war in Iraq.

"As a former chief executive of Goldman Sachs, Paulson knows all about good corporate governance and it's extremely doubtful that he's happy with Wolfowitz at the World Bank," one former senior World Bank staffer said.

After Wolfowitz took over the World Bank in June 2005, his Libyan-born partner, Shaha Riza, was sent on assignment to the US State Department to prevent any conflicts of interest. But she has remained on the bank's payroll.

The then head of the bank's ethics committee, Ad Melkert, said on Tuesday he advised Wolfowitz on his broad options regarding Riza's employment but 'never' spelt out the generous terms and conditions that she then won.

It has also emerged that while Wolfowitz was still at the Pentagon, Riza visited Baghdad as a consultant for US military contractor Science Applications International Corp. (SAIC) in 2003, just after the US-led invasion of Iraq.

That has fueled the anger of World Bank staff, who have long been fuming at Wolfowitz's appointment of former White House aides to key jobs in his inner circle, and complained at his attempts to revive a bank presence in Iraq.