Europeans Increase Pressure on Wolfowitz to Resign From World Bank

Europeans stepped up pressure on World Bank President Paul Wolfowitz to resign as they expressed fresh concerns Tuesday about his leadership amid revelations that he broke bank rules in arranging a pay package for his girlfriend.

As questions mounted about Wolfowitz' ability to continue to run the poverty-fighting institution, the White House appeared to take a bit of a hands-off approach, with presidential spokesman Tony Snow directing most questions about Wolfowitz to the World Bank.

Snow reaffirmed President Bush's support for Wolfowitz, but would not say whether he is insisting to allies or others that Wolfowitz remain on the job.

Critics — including many European countries, many on the bank's staff, aid groups and others — want Wolfowitz to resign. They contend the controversy has tarnished the institution's reputation and could hobble its ability to raise billions of dollars from countries around the world to bankroll a bank program to provide financial help to poor nations.

"What we need is a president with a good reputation and integrity," Dutch Finance Minister Wouter Bos said at a meeting of European finance officials in Brussels, Belgium. Bos went on to say that he has "serious doubts" about the integrity of Wolfowitz.

Belgium's Finance Minister Didier Reynders struck a similar chord, saying: "It is impossible to go around the world speaking about good governance without good governance at the World Bank."

By tradition, the World Bank has been run by an American. President Bush tapped Wolfowitz, a move that was approved by the bank's board. The United States keenly wants to keep that tradition firmly intact.

"We still support President Wolfowitz," Snow said Tuesday. But he added that Bush "is not getting directly, personally involved to my knowledge. ... The conversations right now are not between the administration and the World Bank. I think it's proper to let the process work itself out rather than trying to insinuate ourselves in it."

While acknowledging the Bush administration's continued support for Wolfowitz, "the focus here really should be on poverty alleviation and the core mission of the bank," said State Department spokesman Sean McCormack. "The issue of development and poverty alleviation around the world is too important to allow us to be distracted by these proceedings that are ongoing internal to the World Bank. Everybody's focus should be on how best to do this and let the World Bank internal processes play out," he added.

A special panel at the World Bank, which has been investigating the matter for a month, has found that Wolfowitz ran afoul of bank rules in securing the 2005 promotion and pay package for bank employee Shaha Riza.

The report was not made public, but a person familiar with its findings confirmed that violations were cited but did not provide any details. The person spoke on the condition of anonymity because the report has not yet been released.

Among the things the special panel has been looking at is whether Wolfowitz violated bank rules, including conflict-of-interest rules, in getting involved in Riza's promotion and compensation package.

The bank's 24-member board will decide what action should be taken, if any. A decision is expected soon.

A range of disciplinary options has been discussed. The board could fire Wolfowitz, ask him to resign, signal that it lacks confidence in his leadership or reprimand him. It seemed unlikely that no action would be taken.

Wolfowitz has maintained that he was open about his relationship with Riza from the beginning and that he acted in good faith in arranging her pay package. Wolfowitz has accused his critics of launching a "smear campaign" against him.

The bank's executive directors, however, have said the terms and conditions of the package had not been "commented on, reviewed or approved" by the bank's ethics committee, its chairman or the bank's board.

A person close to the investigation said there was a recognition in the special panel's report that some of the ethics committee's direction concerning the matter wasn't clear.

Riza worked for the bank before Wolfowitz took over 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.

Before he took over the bank, Wolfowitz was the No. 2 official at the Pentagon. He helped mapped the U.S.-led war in Iraq.