WASHINGTON - Paul Wolfowitz encountered stiffening opposition yesterday to staying on as World Bank president, amid allegations he showed favoritism in arranging a promotion and pay package for his girlfriend.
European countries led by Germany and France want Wolfowitz to step down, while support for the embattled president has eroded in Nordic nations and elsewhere, according to bank officials and others close to the situation.
A special bank panel is investigating whether Wolfowitz violated bank rules in his handling of the 2005 promotion of bank employee Shaha Riza to a high-paying State Department job.
The World Bank's 24-member board is expected to make a decision this week about what action, if any, to take. The board could ask Wolfowitz to resign, signal it does not have confidence in his leadership, reprimand him, or take no action.
Critics, including World Bank staff, former bank officials, the European Parliament, aid groups and some Democrats, say the controversy has damaged the development institution's reputation and may hobble its ability to fight global poverty. They are pressing Wolfowitz to step down on his own.
Wolfowitz has said he made a mistake. He has apologized and said he does not intend to resign. He plans to make his case before the special panel tomorrow.
The panel, which is making recommendations to the board, is said to be finalizing its work.
The Washington Post, citing unnamed sources, reported yesterday that the panel concluded that Wolfowitz breached ethics rules by arranging the compensation package for Riza. The panel was considering whether to explicitly recommend that Wolfowitz resign, according to the report.
Bank officials would neither confirm nor deny the report.
One day earlier, addressing rumblings of such draft recommendations, Wolfowitz's attorney, Robert Bennett, said it was "really outrageous" for anything to circulate before his client had a chance to address the special panel.
The United States, the bank's largest shareholder, has expressed support for Wolfowitz. By tradition, the World Bank has been led by an American. President Bush tapped Wolfowitz and the bank's board approved the selection, despite complaints from Europeans about Wolfowitz's role in the Iraq war.
Before joining the bank in June 2005, Wolfowitz was the deputy defense secretary and played a main role in mapping out the U.S.-led war in Iraq.
The matter at hand that has Wolfowitz fighting to keep his World Bank job involves whether he violated bank rules in his handling of the 2005 promotion and pay package for Riza.
She already worked at the bank when Wolfowitz took the job. She was later assigned duties outside the bank to avoid a conflict of interest, although she remained on the bank's payroll. Riza had earned close to $133,000 as a communications adviser in the bank's Middle East department. After the assignment change, she was getting paid $193,590.
The terms and conditions of the package, however, had not been "commented on, reviewed or approved" by the World Bank's ethics committee, its chairman or the bank's board, according to the bank's executive directors.
Riza also is expected to appear before the special bank panel tomorrow.