World Bank President Paul Wolfowitz said Sunday he would remain at his post, despite criticism over his involvement in securing a large pay increase for a female friend. An economic reporter details Wolfowitz's troubles.
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The bank's semi-annual meeting in Washington this weekend was overshadowed by calls for its president, Paul Wolfowitz, to resign. At issue: Wolfowitz's involvement in the compensation and promotion of an employee who is also his girlfriend.
Wolfowitz became president of the World Bank in 2005. Soon after, Shaha Riza was assigned to the State Department to avoid a conflict of interest, but she remained on the bank payroll, and Wolfowitz helped arrange a pay raise for her, bringing her total salary to nearly $200,000 a year tax-free.
The World Bank's Staff Association has called for Wolfowitz to step down. On Thursday, the bank's board of directors said it was investigating the matter and, quote, "will move expeditiously to reach a conclusion on possible actions to take."
Late last week, Wolfowitz apologized, saying he shouldn't have been involved.
PAUL WOLFOWITZ, World Bank President:
I made a mistake for which I am sorry. But let me also ask for some understanding. Not only was this a painful personal dilemma, but I had to deal with it when I was new to this institution, and I was trying to navigate in uncharted waters.
I didn't volunteer to get involved in this. I didn't get involved for any personal reasons, but rather to resolve something I think posed institutional risk. I didn't hide anything that I did. And I'm, as I said, prepared to accept any remedies that the board wants to propose.
Member countries issued a statement this weekend that the matter was of great concern for the bank's reputation.
Since its creation in 1944, the World Bank has always been headed by an American, nominated by the president and confirmed by the bank's board. The bank's original purpose was to finance reconstruction of nations devastated by World War II.
But today, the 185-nation lending institution focuses on developing countries. It provides long-term loans for education, agriculture and industry at low rates. In return, developing countries are supposed to improve their economies, limit corruption, and foster democracy.
Wolfowitz was nominated by President Bush to head the bank in 2005. Before that, he was deputy defense secretary and a key architect of the Iraq war. In his two years as the president of the bank, Wolfowitz has called for withholding aid to countries that don't fight corruption.
Yesterday, Wolfowitz insisted he intends to stay.
Look, I believe in the mission of this organization, and I believe that I can carry it out. I've had many expressions of support, as well as the things that you referred to. I come back to what we agreed to in that communique, which is that we need to work our way through this. The board is looking into the matter, and we'll let them complete their work.