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Bank board expresses 'great concern' on Wolfowitz

Special panel to review charges

Wolfowitz praised the board's decision to go "forward."

WASHINGTON -- The World Bank's board yesterday ordered a special panel to discuss the fate of bank president Paul Wolfowitz, whose leadership has been jeopardized by revelations that he helped his companion get a high-paying job.

The 24-member board expressed "great concern" about the situation and instructed an ad hoc group to take up the matter immediately. Members of the group were not identified.

Wolfowitz, who said he had made a mistake and has apologized, said he welcomed "the decision of the board to move forward and resolve this very important issue."

The White House renewed its support for Wolfowitz yesterday.

"The president still has confidence in him," said spokeswoman Dana Perino. "And, there is a review that's ongoing by the board, and we're leaving it with them to go ahead and complete that."

It remained unclear what action, if any, would be taken. Many of the bank's employees, aid groups, and some Democratic politicians want Wolfowitz to resign.

Also yesterday, the Pentagon said that a 2005 investigation by its inspector general determined that while he served as deputy secretary of defense, Wolfowitz had recommended that Shaha Riza be awarded a 2003 contract to study ways to set up a new government in Iraq. Officials refused to release the report, but said it concludes that Wolfowitz, a chief architect of the Iraq campaign, did not violate ethics regulations.

Wolfowitz's nearly two-year tenure at the World Bank, which fights global poverty, has been marked by trouble. The current controversy -- that he arranged a promotion and generous compensation for Riza, a bank employee whom he has dated -- is calling into question his leadership and has put his job in jeopardy.

The World Bank board said the situation should be dealt with "urgently, effectively, and in an orderly manner." The ad hoc group will make recommendations to the board's executive directors. No timetable was provided.

The board asked the group to look into Wolfowitz's handling of Riza's compensation package with regard to bank rules and "conflict of interest, ethical, reputational, and other relevant standards."

Other issues were identified that need to be addressed, including "the various public communications made by the bank on the matter and issues around employment contracts made in the Office of the President," the board said. That was viewed as a reference to salaries paid to Wolfowitz's close advisers, Kevin Kellems and Robin Cleveland. Each are paid more than $200,000 a year -- compensation that also has irked some bank staff.

The United States is part of the ad hoc group, according to Bush administration officials.

Some European governments would like to see Wolfowitz go but do not want to provoke a fight with the United States. At a finance meeting in Berlin, Dutch Finance Minister Wouter Bos weighed in, saying: "I think it's crucial for the World Bank to have a credible and sound reputation, and I'm concerned about that reputation in view of everything we know now about what seems to have happened."

Under an informal agreement, the United States names the head of the 185-nation World Bank and the Europeans choose the leader of its sister institution, the International Monetary Fund.