Under pressure to quit, Wolfowitz in negotiations

World Bank board is reluctant to take formal vote ousting him

May 17, 2007|By Maura Reynolds | Maura Reynolds,LOS ANGELES TIMES

WASHINGTON -- The battle over the fate of Paul D. Wolfowitz raged behind closed doors yesterday, with World Bank directors trying to persuade him to resign as the institution's president and Wolfowitz insisting his name be cleared before he will consider stepping down.

For weeks, Wolfowitz's eventual departure from the bank has appeared inevitable, and pressure has continued to mount since the bank's directors released a report Monday evening accusing him of ethics violations in arranging a new job and pay raise for a bank official with whom he was romantically involved.

A senior German official publicly advised Wolfowitz to skip a meeting of finance ministers scheduled this week in Berlin.

Wolfowitz "would do the bank and himself a great service if he resigned," German media quoted Development Minister Heidemarie Wieczorek-Zeul as saying yesterday.

But in the face of such criticism, Wolfowitz has appeared only to dig in his heels deeper. His lawyer, Robert S. Bennett, said yesterday that there was no resignation deal. If the board wants to oust Wolfowitz, Bennett said, it will have to take a formal vote.

"Mr. Wolfowitz will not resign under this cloud," Bennett told the Reuters news service after daylong negotiations with the board. His client, he said, would "rather put this matter to a full vote than to capitulate on his integrity."

The directors, who represent the bank's donor countries, generally make decisions by consensus and have been loath to take a formal vote on Wolfowitz's future. European nations, especially France and Germany, have pushed especially hard for him to resign, arguing that he has lost all credibility. They contend that his actions have besmirched the reputation of the bank, which must set an ethical example for the developing countries it serves.

"We're in the end game," said a bank source familiar with the negotiations, who spoke on condition of anonymity because no one has been authorized to speak for the bank's board. "He may be denying it, but he is resigning."

Wolfowitz canceled a trip to Slovenia to continue his talks with the board, which is to meet again today. However, it was not clear whether he would proceed with plans to attend the finance ministers' meeting in Berlin tomorrow and Saturday.

He has been accused of improperly intervening on behalf of Shaha Riza, a bank communications official. The two were dating before President Bush nominated Wolfowitz to head the institution, which makes loans to fund development projects around the world.

In May 2005, while negotiating his contract with the bank, Wolfowitz told officials about the relationship and asked for advice from the bank's ethics committee about avoiding a conflict of interest. The panel suggested Riza be moved to a position outside the bank where he would have no supervisory authority over her.

Riza was reassigned to a job at the State Department, although she remained on the bank's payroll. She received hefty salary increases that eventually brought her compensation to almost $194,000 a year - more than the salary of the secretary of state.

A report by a seven-member panel investigating the controversy found that Wolfowitz's role in arranging that new assignment and salary increase violated his contract and the bank's code of conduct. The bank's board released that report Monday evening, hours before Wolfowitz met with them to present his case.

Before joining the bank, Wolfowitz served more than four years as deputy secretary of defense, where he was seen as one of the architects of the war in Iraq - a role that made him highly unpopular with European nations.

Critics inside the bank have accused Wolfowitz of surrounding himself with politically minded senior aides and bringing the Bush administration's agenda with him to an institution that is supposed to be nonpartisan.

Wolfowitz argues that the controversy over Riza is a proxy for other issues concerning his leadership, and he is insisting that they be separated.

Maura Reynolds writes for the Los Angeles Times.

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