Wolfowitz’s World Bank deputy tells him to quit

Richard Adams

Paul Wolfowitz’s tenure as president of the World Bank may be decided today by the bank’s governing board, after he was abandoned by the Bush administration and faced a revolt led by his own deputy.

When Mr Wolfowitz asked a meeting of senior staff yesterday what he could do to repair faith in his leadership, he was told bluntly to resign by Graeme Wheeler, a managing director of the bank and one of two deputies to the president.

Mr Wheeler - a well-respected New Zealander appointed to his post by Mr Wolfowitz last year - told the meeting of 30 vice-presidents at the bank’s headquarters in Washington that Mr Wolfowitz should go for the good of the organisation. Several vice-presidents said they agreed with Mr Wheeler.

Mr Wolfowitz is said to have replied that he didn’t think his resignation would be in the bank’s best interests, and that he had no intentions of going.

Sources inside the bank have described the situation as “civil war”. The Bank’s staff association has called for Mr Wolfowitz to resign, and a group of senior staff have threatened to quit if he stays. Other staff are planning to wear blue ribbons to show their support for the calls for his resignation.

The World Bank’s board, made up of 24 directors representing the bank’s member countries, has cancelled its previous agenda for today to discuss Mr Wolfowitz’s personal intervention to secure pay increases and benefits for his girlfriend, Shaha Riza, shortly after he took over as head of the bank.

Yesterday the Bush administration suggested it was prepared to see the board sanction Mr Wolfowitz - a signal that its patience is wearing thin.

After reiterating that President Bush had “full confidence” in Mr Wolfowitz, a White House spokesman said: “I think the effort of the World Bank board should be to get to the facts, treat it with fairness and think of the long-term effectiveness of the institution.”

The careful formulation used by the White House indicated that it was washing its hands of Mr Wolfowitz, a bank source said.

Another sign that his defenders are giving up came in a damning editorial published in a staunchly Republican newspaper. The Washington Times called on Mr Wolfowitz to step down as his leadership had been “rendered ineffective” by the scandal.

“Mr Wolfowitz has lost the reputation for ethical impeccability on which the World Bank relies,” the newspaper wrote.

Although many other newspapers, including the Financial Times and the New York Times, have already called on Mr Wolfowitz to go, the Washington Times is an insight into the thinking of conservative Republicans, who were delighted at Mr Wolfowitz’s appointment by President Bush in 2005.

Mr Wolfowitz had been a hero to many on the right for his prominent advocacy of the US invasion of Iraq when he worked for the Bush administration.

Since taking over as president of the World Bank, Mr Wolfowitz has redirected the bank’s priorities towards fighting corruption and encouraging good governance - an effort critics say is damaged by the controversy surrounding Ms Riza.

The events of the scandal took place in 2005, when Mr Wolfowitz overruled bank staff to demand a 46% pay increase and a promotion for Ms Riza when she was moved outside the bank to avoid rules forbidding partners from working together.

Ms Riza was seconded to the US state department, where she was paid more than Condoleezza Rice, the secretary of state.

In recent days evidence has emerged that a contractor for the US government working in Iraq said in 2003 that it was ordered to hire Ms Riza as a consultant on governance issues. The order was issued by Douglas Feith, then undersecretary of defence. Mr Wolfowitz was deputy secretary at the Pentagon at the time, and Mr Feith’s boss.

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