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Wolfowitz account denied

Ethics panel never OK'd friend's pay, World Bank told

Paul Wolfowitz said panel had access to details of the pay deal.

WASHINGTON -- The World Bank's ethics committee was not consulted about and did not approve a hefty compensation package for bank president Paul Wolfowitz's girlfriend, said the man who was the panel's chairman at the time.

Ad Melkert made his comments yesterday in an appearance before a special bank panel looking into how Wolfowitz handled the 2005 promotion and pay package of bank employee Shaha Riza.

Melkert, who was ethics chief when the arrangement was made but now works at the United Nations, said he rejects "any direct or indirect allegation or suggestion that the ethics committee was aware or should have been aware of the terms and conditions of Ms. Riza's contract."

A day earlier, Wolfowitz told the panel that the bank's ethics committee had access to all the details surrounding the arrangement involving Riza "if they wanted it."

Melkert said the committee was not consulted on, nor did it approve, details of Riza's compensation package, including "the large initial pay increase, the stipulation for subsequent annual increases, and the stipulations for subsequent promotions."

The dispute over the arrangement has prompted calls for Wolfowitz's resignation.

Ultimately, the bank's 24-member board will decide what action should be taken, if any. The board, which has been meeting on and off over the past weeks, was gathering again yesterday to be briefed on the special panel's preliminary findings. It was unclear whether any board decision would emerge from that session.

The board could ask Wolfowitz to resign, signal it lacks confidence in his leadership, reprimand him, or take no action.

People familiar with the bank's workings suggest there might be a compromise in which Wolfowitz is found to have acted in good faith but later resigns. "He could step down with his reputation as intact as is possible," said Carl Tobias, law professor at the University of Richmond's law school.

Wolfowitz said Monday, "Only when the cloud of these unfair and untrue charges is removed will it truly be possible to determine objectively whether I can be an effective leader of the World Bank."

His attorney, Robert Bennett, said yesterday that his client "is not going to resign in the face of this bogus conflict-of-interest charge." Wolfowitz has led the bank -- whose mission is to fight global poverty -- for close to two years. Before he took over, he was the number two official at the Pentagon, where he helped map out the Iraq war.

Meanwhile, Roberto Danino, the World Bank's former general counsel, says he believes Wolfowitz acted "incorrectly" in helping arrange Riza's compensation package.

In a written statement late Monday, Danino said he wasn't aware of details about what he called an "extraordinary salary increase" for Riza, and " did not learn of these actions prior to my departure from the bank in January 2006."

Riza had been working at the bank for eight years when Wolfowitz arrived in 2005. She had earned close to $133,000 a year as a communications adviser in the bank's Middle East department. She was reassigned at the State Department to avoid a conflict of interest with Wolfowitz, but remained on the bank's payroll. Her pay eventually rose to $193,590.