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The board of directors of the World Bank found today that Paul Wolfowitz, the President of the bank, had moved his girlfriend, Shaha Riza, to a new government post at a salary of nearly $200,000 without review by its ethics committee.
The revelation appears to contradict earlier statements from Mr Wolfowitz's office.
The World Bank said that the ethics committee had "informally" advised Mr Wolfowitz to relocate Ms Riza but that it had not approved her new salary and terms and conditions, which were ordered by Mr Wolfowitz.
Her new salary at the US State Department is thought to exceed even that of Condoleezza Rice, who, as Secretary of State, is the highest-ranking official in the department.
Adjourning its meeting, the board said: “The executive directors will move expeditiously to reach a conclusion on possible actions to take.
It added: “In their consideration of the matter the executive directors will focus on all relevant governance implications for the bank.”
Mr Wolfowitz apparently was booed when he attempted to address about 200 World Bank employees at headquarters in Washington yesterday.
He is said to have left after a few staff members began chanting "resign, resign" while others hissed and booed.
The board released the details of a memo that Mr Wolfowitz sent to a human resources director at the bank about Ms Riza.
It stated: "You should accept immediately her offer to be detailed to an outside insititution of her choosing while retaining Bank salary and benfits ... She has qualified for and should receive a promotion to H level at a mid-point salary level of $180,000 net income ... with annual increases which will approximate 8 per cent."
The review by the board of member countries focused on whether Mr Wolfowitz broke staff rules when he approved Ms Riza’s promotion, before she was assigned to the US State Department to resolve possible conflict-of-interest issues arising from his supervision over her work.
Mr Wolfowitz has taken full responsibility for Ms Riza’s promotion and apologised yesterday, saying that he had made a mistake in the way in which he handled the issue, but he noted that he was in “uncharted waters” and still new in his job.
“In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations," he said. "I made a mistake, for which I am sorry."
The board that said Mr Wolfowitz had revealed his relationship with Ms Riza while he was negotiating his own job contract and, at the directors’ request, sought guidance from the board’s ethics committee.
“The guidance given on an informal basis was that the employee [Ms Riza] should be relocated to a position beyond potential supervising influence,” the board said.
Mr Wolfowitz, who was nominated for the bank position in 2005 by President Bush, joined the institution from the Pentagon, where he was one of the architects of the American-led invasion of Iraq.
He has faced lingering distrust by many staff members and resentment over his close ties to the Bush Administration and his role in the Iraq conflict, which have overshadowed his first two years at the bank.
The bank’s staff representative association, which demanded last week that Mr Wolfowitz explain his actions, has called on him to resign, saying that it seemed impossible for the institution, whose mission is to fight global poverty, to move forward “with any sense of purpose under the present leadership”.
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People never learn,do they?It would seem that the"femme fatale"syndrome has once more prevailed.There has not been much reaction from women and no one is blaming Ms Ria who in my view should not have accepted the excessive salary increase as this decision could conceivably give rise to ethical/good governance problems and in the event did so.."Love is blind"on the one hand and"Greed is good" on the other.The damage having been done there remains only one honourable course of action:both are to resign from thier respective posts.
tingsing, portlouis,
People never learn,do they?It would seem that the "femme fatale" syndrome is still prevalent.There has not been much
reaction from women and nobody seems to blame Ms Riza.who in my view should not have accepted the excessive salary increase given that this could conceivably lead to ethical/good governance prolblems."Love is blind" on the one hand and "greed is good" on the other.The damage having been done there remains the only honourable course of action:both ought to resign from their
respective posts.
tingsing, portlouis,
The 'knives' have had their day, and may prevail. While likely a useful outcome, this will not resolve the more important issue of the overarching ineptness of the institution. It is a political playground where puffed-up, self-important, third rate, former bureaucrats and academics make jolly with other people's money. The cynicism that this bloated organism has engendered around the globe is most deserved. Its keystone policies such as state pension reforms have been major failures and its recantings of little comfort.
International institutions don't work. The Mother Teresa types do.
Mark S Fowler, St. Thomas, Ontario, Canada
Another nail in the integrity coffin of the the right wing hawks. How can developing nations trust or seek to promote ethical behaviour when the Head of the World Bank is guilty of nepotism.
Fredi, London,
Wolfowitz MUST GO! NOW! There is no other sane option.
Todd Green, Ottawa,
And this is a person who was one of the responsible for the US foreign policy decisions and invasion of Iraq! What a miserable character! He can't make sure that his socks do not have holes and now he shows every sign of nepotism and corruption. The only lame exuse he can produce: "I am new here..." Well, how can he be new after 2 years at work, unles he is mentally challenged? What a fine example for every CEO in the world! What a beacon of integrity and trust! I wonder what other White House characters are like? And I feel myself very uncomfortable at the thought that these people are trying to shape our world for their own convinience. I think that resignation is too weak a response. He probably should be prosecuted and tried and hopefully put to jail. As a fine example for every CEO in the world.
Oleg, Toronto, Canada
This man represents everything that is wrong in the world today.
Lets hope he goes hunting with Cheney sometime.
Alex, Southampton,
What is the problem with this ? As long as we accept that if politician' s lips move they ARE lying. Then these stories will not be newsworthy, and politicians can get on with their jobs withjout distraction.
It might be time to evaluate whether we need an industry dedicated to self agrandisment and enrichment at the cost to the taxpayer.
This comment could be applied to most political items reported today.
peterb, Kirkcaldy, Scotland
As a long time Republican, I am sad to say this is par for the course for the Bush crowd.
Charles Wordsworth, Lancaster, California, U.S.A.
The World Bank employs numerous knowledgeable and experienced advisors to ensure "mistakes" are not made. Wolfowitz sought to place himself above both the advisors and in-house policy to benefit himself. How is this not corrupt? He should not only be dismissed but should be charged for corruption just like anyone else who abuses their power in this way. This is similar behaviour to that of the Enron officials, why should Wolfowitz be any less accountable or receive any less punishment?
Matthew, Bucks, UK
Wolfowitz himself says that he was in "uncharted waters." What were those uncharted waters? He was faced with making an unethical decision and didn't have the Bush Administration to hide his crime or spin it out of existence.
Jim Houghton, Los Angeles, USA
8% increases?
I've always considered myself a capitalist, but this is a prime example showing that the "lefties" are sometimes quite correct. It's a disgrace.
Malcolm Scarratt, Bragg Creek, Alberta, Canada
He should not wait for the decision of the Board of the World Bank. If he believes in the standards he set for the leaders of the third world, he should resign immediately. There is no honor to be gained by staying.
dec, Tokyo, Japan
What a disgrace. A person in charge of the World Bank, that one of its main objectives is to fight corruption and poverty gives his missus a fat paycheck. He should lose his job, otherwise the World Bank will become synonymous to corruption itself.
Evangelos, Brighton,
Wolfowitz made a mistake. Corrupt nations are trying to capitalize on the issue because he tried to stop the "seepage" of loan money into the hands of the politicians of those countries. I hope he stays on and exposes the corrupt leaders.
Roger, New York, USA
Blair rubber-stamped the approval of this Bush acolyte.
There is no way that Blair could not have known exactly who and what Wolfowitz is.
How anyone could think that this narrow, ideologically-driven neo-con was qualified to head the World Bank is beyond comprehension.
Blair's choice is to declare himself to be naive about or complicit in Wolfowitz's appointment.
In either case, his acceptance of Wolfowitz is just another indication of how powerless Blair (and consequently, Britain) is when it comes to opposing any of Bush's wishes.
RAS, Bloomfield Hills, MI, USA
I think I'd like to get a job at this bank...
Jim , Sacramento, California
I cannot believe he would have been stupid enough to throw a big bung to his girlfriend so perhaps he personally approved a normal pay change simply because he knew who it was.
Has anyone actually identified whether the payrise was materially different from what would routinely have been approved anyway?
Dean, Gibraltar,
Couldn't have happened to a nicer man.
Huge, Basingstoke, Hampshire
I thought this sort of behaviour is called corruption. He should go.
Michael Smith, Southampton, UK
It is no longer a case of ¨should he stay or should go¨...he has, as a leader of an institution, set a standard that cannot be tolerated. If he stays he becomes an unethical cancer in the organization.
The position must remain free of ethical questions.
Do the right thing this time Mr. Wolfowitz.
Mark Hardman, Cd. Juarez, Chih, Mexico