Wolfowitz Out?

White House official says "all options are on the table."

ByABC News
February 9, 2009, 8:01 PM

May 15, 2007 — -- World Bank President Paul Wolfowitz is fighting for his job amid a conflict of interest controversy that centers around his personal relationship with his girlfriend -- a longtime World Bank employee.

A senior White House official tells ABC News that "all options are on the table" regarding Paul Wolfowitz's future and that "it is an open question" whether he should should remain as president of the World Bank.

"If you don't have board support and you don't have staff support, it is hard to get anything done," the official told ABC News.

"There are really two questions," the official said. The first question is Wolfowitz's handing of his girlfriend Shaha Riza's pay raise. The second is whether he should remain president of the World Bank.

On the first issue, White House press secretary Tony Snow told reporters Tuesday morning that Wolfowitz may have made some mistakes on that matter but that's "not a firing offense."

On the second issue, the senior official told ABC News "it is an open question" whether Wolfowitz can remain an effective president of the World Bank.

An internal panel tasked with investigating the lucrative pay and promotion package Wolfowitz arranged in 2005 for his girlfriend Shaha Riza found that he was guilty of breaking bank rules.

The committee's report also said he tried to hide the salary and promotion package from top ethics and legal officials within the bank. The report added that there is a "crisis in the leadership" at the World Bank.

The controversy has set off a media firestorm, with questions swirling about the current status of Wolfowitz's relationship with Riza and it isn't clear if they are still together.

Wolfowitz has defended the pay package, telling the bank's investigative committee he was trying to avoid a potential lawsuit from Riza.

"Ms. Riza was extremely angry and upset about being required to take an external placement," Wolfowitz wrote in a May 11 statement to the World Bank investigative committee.

Riza had been a World Bank employee for eight years, promoting women and democracy in the Middle East, when Wolfowitz was named president of the institution in 2005.

Against the wishes of Riza, the Bank's ethics committee determined Riza needed to leave the bank when Wolfowitz took control to avoid a conflict of interest.

"I was not given a choice to stay, and against my personal and professional interests, I agreed to accept an external assignment," said Riza in an April 30 written statement to the bank panel investigating her raise and promotion package.

"The irony of my working to ensure women's participation and rights through the work of the World Bank and [was] stripped of my own rights by this same institution," Riza wrote.

Under a lucrative compensation package that Wolfowitz arranged with the vice president of Human Resources at the World Bank, Riza was moved to the State Department and given a promotion to communications specialist, but was still retained on the World Bank payroll.

Her income jumped from $133,000 to $193,590 in just two years -- more money than Secretary of State Condoleezza Rice makes before tax.

"I was ready to pursue legal remediesI only acquiesced to signing the agreement so as not to cause turmoil at the bank," Riza wrote in the April 30 statement to bank officials.