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Bank's ethics panel not consulted and did not approve of pay package for Wolfowitz's girlfriend

Bank's ethics panel not consulted and did not approve of pay package for Wolfowitz's girlfriend

The World Bank's ethics committee was not consulted and did not approve of a hefty compensation package for the girlfriend of bank president Paul Wolfowitz, says the Dutch man who was the panel's chairman at the time.
Ad Melkert made his comments Tuesday in an appearance before a special bank panel looking into Wolfowitz's handling of 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."
One day earlier, Wolfowitz told the panel 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, 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 panel is still considering the case, which 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 during the past weeks, was gathering again Tuesday 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 Tuesday 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 served as the No. 2 official at the Pentagon, where he played a key role in mapping out the Iraq war.
Wading into the matter, Sen. Max Baucus urged Wolfowitz to step down.
"It would be my hope that Wolfowitz finds that discretion is the better part of valor and finds a way to no longer be a part of the bank," said Baucus, Democratic chairman of the Senate Finance Committee.
Meanwhile, Roberto Danino, the World Bank's former top lawyer, 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. "I did not learn of these actions prior to my departure from the bank in January 2006," Danino wrote.
Wolfowitz, who appeared before the panel on Monday, maintains he acted in good faith.
In that appearance, Wolfowitz said he rejected a suggestion by the bank's personnel chief to involve Danino in the negotiations involving Riza. "I assumed that Mr. Danino, as adviser to the ethics committee, would participate in their final review of the outcome of the negotiations, and I assume that he did so," he said.
Riza, a Briton, had been working at the bank for eight years when Wolfowitz arrived in 2005. She had earned close to $133,000 (euros 97,750) 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 but remained on the bank's payroll. Her pay eventually rose to $193,590(euros 142,300).
Riza, who also appeared before the special panel on Monday, said she did not want to move in the first place, defended her pay as being within the same range as employees at the same grade level and said the ensuing "media circus" has hurt her career and her personal well being.
The U.S. is the bank's largest shareholder, and President George W. Bush has said Wolfowitz ought to remain on the job. The European Parliament, many of the bank's staff, former bank officials and some Democratic politicians have called on him to resign.
For his part, Wolfowitz was trying to carry on with his duties. On Tuesday, he was still planning to fly to an education summit in Brussels.
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