Showdown on Wolfowitz looms

World Bank chief meets today with board to discuss his future

April 30, 2007|By New York Times News Service

WASHINGTON -- On the eve of what appears likely to be an ugly showdown between Paul D. Wolfowitz, president of the World Bank, and its board of directors over his future there, both sides are talking about trying to avert a prolonged confrontation that could cripple the bank and its mission of aiding poor countries.

For a week at least, the bank's board has seemed determined to force Wolfowitz out on grounds that he showed favoritism to his companion, a bank employee, in giving her a raise and promotion when he became bank president in 2005.

More recently, however, there is talk at the bank of avoiding a confrontation by having Wolfowitz resign in return for a reprimand that acknowledges that he acted in good faith at the time and that ethics officials at the bank had approved of his actions when they examined them in 2005 and 2006.

"I think the board has been looking for a way out of this," said a bank official who was briefed on the board's thinking but not authorized to discuss it publicly. "The directors do not want to set a precedent by ousting Wolfowitz. I'm convinced that they are hopeful that he will see the light and give a way out by resigning or proposing something palatable from a political perspective."

The bank's 24-member board of directors is to meet today to hear Wolfowitz -- and possibly his companion, Shaha Ali Riza, who is now working at a foundation that promotes democracy in the Middle East -- before deciding later in the week what to do.

It is unclear whether the issue will come up during President Bush's scheduled meeting today with the chancellor of Germany, Angela Merkel, who is to visit the White House as the current president of the European Union.

European officials say that Merkel is prepared to tell Bush that Europe favors Wolfowitz's resignation. Some Europeans view his leadership as divisive, and as an obstacle to rich countries meeting their commitment to raise $30 billion over the next three years for poor countries.

But German officials say Merkel may not raise the matter on her own, because the Germans have been told that Bush would reply forcefully that the United States still stands behind Wolfowitz.

On the fringes of the Merkel-Bush meeting, however, there could be discussions about a way out of the impasse, based on a growing recognition that if Wolfowitz stays, the bank's aid flows would be jeopardized and a raft of other senior bank leaders would resign.

New talk of averting a confrontation is based partly on Wolfowitz's display of tough tactics since his hiring of Robert S. Bennett, a high-powered Washington lawyer known for adept legal skirmishing and negotiation.

Last week Wolfowitz accused the bank's board of directors, which has assumed the task of evaluating his conduct in 2005, of treating him "shabbily" by giving him insufficient time to defend himself.

More recently, he has signaled that at the meeting today, scheduled to give him a day in court, he will be citing documents indicating that top officials at the bank cleared his actions in 2005 and early 2006. His argument is that if he was to blame for any dereliction of duty, that dereliction was shared by the board.

For example, a document that Wolfowitz is expected to cite, dated June 22, 2005, from Ad Melkert, chairman of the board's ethics committee, suggests that Riza was entitled to "full recognition of her [considerable] professional qualifications" in arranging for her to be compensated for moving to another job.

Bennett, in an interview yesterday, said Wolfowitz had no intention of resigning and would continue to fight for his job. But Bennett seemed to signal that if the bank were willing to recognize a shared responsibility for the current crisis, it could clear the way for resolving the conflict.

"We are going to be presenting to the committee tomorrow powerful evidence that Mr. Wolfowitz acted in the best interest of the bank," he said. "Mr. Wolfowitz also believes that not only he but the bank acted in good faith. Perhaps with the benefit of hindsight everyone could have done a better job. But everyone acted in good faith."

Bennett said that he was convinced that "if the temperature is lowered," both sides could talk about what was good for the future of the bank.

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