World Bank panel finds Wolfowitz violated rules

May 15, 2007, 0:59 GMT

World Bank President Paul Wolfowitz. EPA/OLIVIER HOSLET

Washington - The World Bank's embattled President Paul Wolfowitz violated bank rules and ethics codes and put his own interest above those of the bank, according to a report from a special panel released Monday.

The bank is also in the midst of a 'crisis in leadership,' a board committee reported to the full governing board.

Wolfowitz, a co-architect of the Iraq war who has made many foes among bank staff and managers, is fighting for his job after the committee found he broke ethics rules by arranging a pay raise for a girlfriend who worked at the World Bank.

Wolfowitz is to meet with the board at 5 pm Tuesday to discuss the situation, the bank said in an e-mail to reporters.

At issue is a hefty pay raise and promotion for Wolfowitz's girlfriend Shaha Riza, three months after Wolfowitz became the development bank's head in June 2005. She was loaned out to the US State Department to avoid a potential conflict of interest, but kept on the World Bank payroll.

Wolfowitz, 63, denies wrongdoing and says he was broadly following suggestions by the bank's ethics committee. The ethics panel's ex-head, former Dutch Labour Party politician Ad Melkert, has disputed Wolfowitz's account in a statement to the World Bank investigators.

Germany, France, the Netherlands and Norway have been among Wolfowitz's sharpest critics, calling for quick resolution of a scandal that has gripped the 185-nation bank for a month.

Foes say the ethics issues have undermined the credibility of a global anti-corruption drive that Wolfowitz has made a hallmark of his tenure.

US President George W Bush, who nominated Wolfowitz for the post, has continued to back him. But Treasury Secretary Henry Paulson, the main US representative to the bank, has tended to be more cautious in his support.