White House Renews Support for Wolfowitz, Calls Controversy 'Bruising Episode' for World Bank

The White House acknowledged Wednesday that the controversy embroiling World Bank President Paul Wolfowitz has been a "bruising episode" for the institution that could affect its integrity.

Even as the White House reaffirmed support for Wolfowitz, the bank's board met to resume deliberations over his fate. Wolfowitz has been accused of breaking bank rules when he arranged a generous pay package for his girlfriend.

"This has certainly been a bruising episode for the bank, and what you have to do is figure out a way forward to maintain the integrity of the institution," White House press secretary Tony Snow said. "And, therefore, when you do it, you're going to discuss everything. That's what you would normally do," he added.

The White House's fresh comments come one day after it shifted its stance, with Snow saying "all options are on the table" about who should lead the bank. It was the first time the White House had indicated it would be open to Wolfowitz's departure.

On Wednesday, Snow suggested his "all options on the table" comment on Tuesday did not signal diminishing White House support for Wolfowitz.

"We support him. We have confidence in him," Snow said.

Wolfowitz, accused by a special bank panel of breaking conflict-of-interest rules in his handling of the 2005 pay package of bank employee Shaha Riza, maintains that he acted in good faith.

The board ultimately will decide what actions to take against him. A signal of no confidence has been discussed among possible disciplinary options.

Defending himself before the board Tuesday, Wolfowitz said his handling of the Riza matter "does not justify taking any action against me or warrant a finding that you lack confidence in my leadership."

A special bank panel on Monday said the board must consider whether Wolfowitz "will be able to provide the leadership" to ensure that the bank achieves its mission of fighting poverty around the world.

Wolfowitz told the board, "You still have the opportunity to avoid long-term damage by resolving this matter in a fair and equitable way that recognizes that we all tried to do the right thing, however imperfectly we went about it."

Riza worked for the bank before Wolfowitz took over as president in June 2005. She was moved to the State Department to avoid a conflict of interest, but stayed on the bank's payroll. Her salary went from close to $133,000 to $180,000. With subsequent raises, it eventually rose to $193,590. The panel concluded that the salary increase Riza received "at Mr. Wolfowitz's direction was in excess of the range" allowed under bank rules.

Before taking over the bank nearly two years ago, Wolfowitz was the No. 2 official at the Pentagon and played a lead role in mapping out the U.S.-led war in Iraq.

European members are pushing for Wolfowitz to resign. The United States is the bank's largest shareholder. President Bush tapped Wolfowitz for the job, a move that was approved by the bank's board even though Europeans didn't like him because of his role in the Iraq war.

By tradition, the World Bank has been run by an American. The Bush administration wants to keep that decades-old practice firmly intact in any discussions about the bank's future leadership.