A crucial meeting of the World Bank’s executive board adjourned on Wednesday night without a decision on Paul Wolfowitz’s future as president — while outside the boardroom the parties manoeuvred to resolve the controversy.
Wolfowitz, his position under threat after he was found to have violated bank rules by concealing a hefty pay rise for his girlfriend, is striving to negotiate a deal that will allow him to resign while passing some of the blame on to the bank.
The bank’s board spent the day discussing a report by an ad hoc panel that investigated the lucrative contract awarded to Shaha Riza, a bank employee who was romantically involved with Wolfowitz when he was first appointed president in 2005.
“The executive directors of the World Bank group continued their deliberations on issues raised by the report of the ad hoc group and in their meetings with Mr Wolfowitz yesterday [Wednesday]. They will continue their deliberations tomorrow morning,” the board said in a statement after the meeting broke up.
The committee is expected to endorse the report — effectively calling for Wolfowitz’s resignation — and censure Wolfowitz for circumventing bank procedures. The ad hoc group concluded he had violated ethical rules and the terms of his own contract.
Wolfowitz’s lawyer, Robert Bennett, suggested Wolfowitz was happy to force the board into a showdown. “Mr Wolfowitz will not resign under this ethical cloud and he will rather put this matter to a full vote,” he said.
The stand-off shows Wolfowitz is willing to negotiate in private — through US administration officials — while maintaining his public posture that he has done little wrong. Wolfowitz is demanding the bank publicly accept some responsibility for the conflicts of interest that the investigation found he had committed, and state that he had acted in good faith.
The former Bush administration official — a chief architect of the United States invasion of Iraq — is also insisting that tribute be paid to his work as president, such as fighting poverty in Africa.
But Wolfowitz’s stipulation that he be cleared of accusations of breaking bank rules before resigning may backfire, with European governments hardening their stance against him in the light of his aggressive response.
Wolfowitz’s move to start negotiations came after the US government backed away from its support for the embattled president, in the face of hostile opposition from Latin American and European governments, including Germany, The Netherlands and Denmark.
Canada, which had previously backed the US, dramatically switched camps on Tuesday when the US urged a softer treatment of Wolfowitz’s failings. Japan, another former supporter, also distanced itself from Wolfowitz. When US representatives realised that opposition was growing, the White House prepared to do a u-turn.
The controversy stems from the contract for Riza negotiated by Wolfowitz. The investigation by the ad hoc bank panel found that he had withheld details from senior colleagues, including the bank’s top legal officer. Wolfowitz claimed that he done everything by the book, but those claims were directly contradicted by bank officials in testimony to the panel.
The panel’s findings were released on Monday evening, concluding that the president had violated bank rules and broken the terms of his own contract.
Riza worked for the bank before Wolfowitz was appointed by US President George Bush. She was seconded to the US State Department to avoid bank rules forbidding those with a romantic involvement from working together. She now works for a foundation based in Washington, but remains on the World Bank’s payroll, with a clause in her contract allowing her to return to the bank should Wolfowitz leave.
An Oxford-educated British citizen, Riza’s salary rose from under $133Â 000 to more than $193Â 000, thanks to her secondment. The panel concluded that the salary increase she received “at Mr Wolfowitz’s direction was in excess of the range” allowed by the bank’s regulations.
The details of Riza’s secondment and Wolfowitz’s involvement came to light in early April when a whistleblower inside the bank sent confidential documents to the watchdog Government Accountability Project.
A string of government ministers from around the world have endorsed Wolfowitz’s resignation, making his position untenable. Germany’s Development Minister Heidemarie Wieczorek-Zeul said that he “would do the bank and himself a great service if he resigned. That would be the best for all involved.” – Guardian Unlimited Â