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World Bank chief Paul Wolfowitz has admitted to making a "mistake" by ordering hefty pay increases for World Bank staffer and his partner Shaha Riza. The former deputy US defence secretary is facing calls to resign from his position, but has thus far stood firm saying he will abide by any decision taken by the World Bank's board of governors.
The review by the board of member countries looked at situation to find if Mr Wolfowitz broke staff rules when he approved Ms Riza's promotion and hiked her pay to nearly $200,000. Wolfowitz admitted his mistake and said he was sorry for it.
“In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations," he said. "I made a mistake, for which I am sorry."
Ms Riza was a top communications staffer at World Ban's Middle East segment. The Libya-born Riza was moved to the US State Department in order to avoid conflict of interest when Wolfowitz took over in 2005. However her net benefits package of $193,000 rivals even that of her chief Secretary of State Condoleezza Rice, who receives $186,000 before tax.
The review board acknowledged that Mr Wolfowitz had indeed revealed his relationship with Ms Riza during negotiations for his own job contract. He had sought guidance from the ethics committee and was advised accordingly.
"The guidance given on an informal basis was that the employee [Ms Riza] should be relocated to a position beyond potential supervising influence,” the board said. However Mr Wolfowitz took it upon himself to send a memo to a human resources director at the bank detailing the contract offered to Ms Riza.
"You should accept immediately her offer to be detailed to an outside institution of her choosing while retaining Bank salary and benefits," the memo stated. "She has qualified for and should receive a promotion to H level at a mid-point salary level of $180,000 net income ... with annual increases which will approximate 8 per cent."
Wolfowitz was reportedly booed by about 200 World Bank staffers yesterday when he tried to address them. He faced calls for resignation in a stoic manner only saying he would stand by the board's decision.
It is thought the board might ask for Mr Wolfowitz's resignation. At the end of its meeting, the board promised to move matters rapidly.
“The executive directors will move expeditiously to reach a conclusion on possible actions to take," it said in a statement. “In their consideration of the matter the executive directors will focus on all relevant governance implications for the bank.”
Many newspapers stepped up calls for Wolfowitz's resignation. Britain's Financial Times newspaper said he had not alternative except to step down, "If the president stays, (the World Bank) risks becoming an object not of respect, but of scorn, and its campaign in favour of good governance not a believable struggle, but blatant hypocrisy," it said in an editorial.
Mr Wolfowitz's career has been controversial. When he was the US Deputy Secretary of Defence, he was seen as hawkish and favoring military action. In fact it is believed he was a forceful advocate of the invasion in Iraq in 2003.
The 63-year-old was nominated by President Bush to lead the World Bank in 2005. He divorced his wife in 2001 and has since then been linked to Ms Riza.
Mr Wolfowitz's current predicament is particularly embarrassing to the World Bank because he has led a campaign to drive out corrupt elements in developing countries. However he has pleaded for understanding even though most analysts feel he is on his way out.
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