World Bank Panel Finds Wolfowitz at Fault; Aide Resigns

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New York Times

World Bank Panel Finds Wolfowitz at Fault; Aide Resigns

by
Steven R. Weisman

WASHINGTON - A committee of World Bank directors has formally notified Paul D. Wolfowitz that they found him to be guilty of a conflict of interest in arranging for a pay raise and promotion for Shaha Ali Riza, his companion, in 2005. The findings stepped up the pressure on Mr. Wolfowitz to resign.

The contents of the panel's findings were not made public. People who are familiar with the panel's report said that it reviewed extensive documents and testimony before concluding that Mr. Wolfowitz breached his obligations in arranging for Ms. Riza's reassignment from the bank to the State Department. 0508 01 1 2

The report, as transmitted to Mr. Wolfowitz, did not recommend a punishment for Mr. Wolfowitz. Bank officials, speaking anonymously because the proceedings are supposed to be confidential, said that the special committee was still working today on what to recommend.

It was not clear whether the committee, consisting of 7 of the bank's 24 board members, would remove Mr. Wolfowitz from his post or, more likely, express a loss of confidence in his leadership in a manner that might persuade him to resign. Bank officials say that a majority of the bank board has concluded that he should go.

In another sign of Mr. Wolfowitz's difficulties, his top communications aide, Kevin Kellems, resigned today, saying that "the current environment surrounding the leadership" at the bank made it "very difficult to be effective in helping to advance the mission of the institution."

Mr. Kellems said in a written statement that he had "tremendous respect and admiration" for the bank's staff. He made no mention of Mr. Wolfowitz, with whom he had a close association when the bank president was deputy secretary of defense.

European officials at the bank said that if Mr. Wolfowitz resigns, either now or some time in the future, Europeans may be willing to let the United States continue to exercise its customary prerogative of choosing the next bank president.

Since the bank was established as part of the post-World War II global economic architecture in a conference at Bretton Woods, N.H., the United States has always chosen the bank's president, in part because it has always had the largest single share of voting rights at the bank, currently 16.4 percent.

A senior European official said that Europeans have informally told Treasury Secretary Henry M. Paulson Jr. that many of their governments, some of whom asked for the custom to be discarded in 2005, would now renew their demand, especially if Mr. Wolfowitz is forced out by a vote of the bank board.

This official said that the overwhelming sentiment in Europe, as expressed in editorials, political commentaries and even web logs, was that European governments should never again let the United States pick the president of the World Bank all by itself.

In addition, the Europeans say that they have begun signaling their intention of aiding African countries and other poor nations through their own development agencies, rather than through the World Bank or its principal vehicle for aid to the poorest countries, known as the International Development Agency.

The bank estimates that there are now about 230 separate government and non-government organizations that channel aid to the poorest countries, resulting in a splintering of aid programs that have created duplications and contradictions.

Some officials at the bank said that despite the antipathy toward Mr. Wolfowitz among members of the bank board, they will probably take their cue from the finance and development ministries in their home countries. These ministries, in turn, may be guided by the wishes of the political leadership of their nations.

Technically, it is the bank's 24-member board of executive directors that has the power to choose, remove or reprimand a bank president. Each director represents either a single country or a "constituency" of countries that vote as a bloc after polling their home governments.

Bank officials say that as of now, only the United States, Japan and Canada would vote in favor of Mr. Wolfowitz. They represent less than 30 percent of the voting shares. Most other directors are reported to be willing to vote against Mr. Wolfowitz, though some countries, mainly in Africa, are said to be wavering.

Mr. Kellems's departure leaves another top aide to Mr. Wolfowitz, Robin Cleveland, still in place. Both Mr. Kellems and Ms. Cleveland have been the focus of complaints from the bank's staff over their unusually high salaries - about $250,000 each - and unusual level of control at the bank.

Ms. Cleveland remains at the bank, but officials said that she moved out of her office just outside Mr. Wolfowitz's last week, and into a smaller office elsewhere at the bank headquarters.

Copyright 2007 The New York Times Company

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