Scandal - hit WB chief refuses to resign

UNITED STATES: World Bank president Paul Wolfowitz survived a weekend of meetings of global financial policymakers but is still under intense pressure to quit over a favoritism scandal.

Wolfowitz on Sunday refused to resign as the development lender’s member governments revealed their “great concern” over staggering pay hikes and guaranteed promotions he secured for his girlfriend at the bank.

But the 185-member bank’s ministerial policymakers remained split on his fate, with the former Pentagon deputy chief continuing to enjoy strong backing from the US administration.

“The current situation is of great concern to all of us,” finance and aid ministers from the United States, Europe and other members said in a statement after the bank’s spring meeting here.

“We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as the motivation of the staff,” they said.

The ministers said they would await the findings of a review by the World Bank’s executive board into the conduct of Wolfowitz, who directed that his Libyan-born partner, Shaha Riza, get a pay deal worth nearly 200,000 dollars.

Wolfowitz, one of the driving forces behind the war in Iraq, echoed that the board should be allowed to complete its work.

But he also stressed his determination to continue the global lender’s work on improving the plight of the poorest nations, especially in Africa, where he also enjoys backing.

“This is important work and I intend to continue it,” Wolfowitz told a news conference at the end of a weekend of meetings of the bank, the International Monetary Fund and the Group of Seven (G7) rich nations.

Battle lines were drawn as European governments revived their long-held suspicion of Wolfowitz, a “neoconservative” policy wonk who was deputy to former defense secretary Donald Rumsfeld before coming to the bank in 2005.

“It was important to lay down the line. And the fact that the United States itself accepted it reinforces the message,” German development minister Heidemarie Wieczorek-Zeul told reporters.

“An institution like the World Bank lives by its moral authority and its credibility,” she said.

At the press conference, Wolfowitz was grilled on whether his credibility is now in tatters at a time when the World Bank is trying to raise up to 25 billion dollars in new funds from its donors to maintain aid for the poor.

But referring to the ministerial statement, he said: “I think it speaks for all of us on our desire for the board to look into the matter and to conclude its work.”

Asked if it was hypocritical for him to stay in office while waging a war on corruption in the World Bank’s 24-billion-dollar annual lending, he said: “I’m not commenting on the premise of the question. I will just stop there.”

Wolfowitz pushed through a package for Riza that included an immediate 60,000-dollar pay rise and guaranteed promotions, once she returned from an outside assignment to the US government.

She stayed on the World Bank payroll during her external assignment from its Middle East arm to the State Department, which was designed to prevent conflicts of interest after Wolfowitz took charge of the bank in June 2005.

Wolfowitz first claimed that he had nothing to do with the generous terms of the assignment, then admitted his involvement but said he acted in “good faith” to resolve an unprecedented personnel problem.

Campaigners kept up a clamor for Wolfowitz’s head to roll.

“It is absolutely hypocritical for the World Bank to take stands against corruption in poor countries when its president is embroiled in a corruption scandal,” Eric Gutierrez of ActionAid said.

“It’s time for the board to show Wolfowitz the door.”

Washington, Monday, AFP.