May 14, 2007 -- An ad hoc World Bank panel has concluded that bank president Paul Wolfowitz broke bank rules when he orchestrated a promotion and raise for his girlfriend, a bank employee, after he became bank president in June 2005.
The report, submitted to the bank's board and released Monday, concluded that Wolfowtiz's actions represented a "conflict of interest." The report added that there is a "crisis in the leadership" at the World Bank.
Wolfowitz is expected to appear before the bank's 24-member board on Tuesday. The board could vote to oust the president, an unprecedented action. If the board decides not to vote Wolfowitz out, it could ask him to step down, offer a vote of no confidence, or reprimand him.
The report released today recommends that the board consider "whether Mr. Wolfowitz will be able to provide the leadership needed to ensure that the Bank continues to operate to the fullest extent possible in achieving its mandate" of eliminating world poverty.
Wolfowitz, backed by the White House that appointed him, has resisted calls for his resignation.
According to the Associated Press, Wolfowitz responded today to the special panel's report saying "It is highly unfair and unwarranted to now find that I engaged in a conflict of interest because I relied on the advice of the ethics committee as best I understood it."
When Wolfowitz arrived at the World Bank in 2005, the bank's ethics committee determined that his girlfriend Shaha Riza's employment at the bank presented a potential conflict of interest.
An investigation over the past several months has yielded documents showing Wolfowitz's involvement in securing a position for Riza at the State Department, which Wolfowitz has said was meant to eliminate any conflict of interest.
The position also provided Riza with a raise that increased her salary from $133,000 to $180,000. Eventually Riza would earn over $193,000. Today's report concluded that those actions were indeed a violation of bank rules.
Vice President Dick Cheney today offered renewed support for Wolfowitz in an interview with Fox News while traveling in Jordan. "I think Paul is one of the most able public servants I've ever known, and I've worked with him a lot over the years," Cheney said. "I think he's a very good president of the World Bank, and I hope he will be able to continue," the vice president added.
While the today's report found Wolfowitz guilty of violating bank rules, it acknowledged that the rules were murky in some instances and further recommended that the bank's board "undertake a review of the governance framework" at the bank to ensure clarity in the rules.