WORLD BANK STAFF SEEKS WOLFOWITZ'S OUSTER

by Emad Mekay

(IPS) WASHINGTON -- The World Bank's Staff Association, which represents 10,000 employees, asked Bank President Paul Wolfowitz to step down Thursday amid charges that he gave his girlfriend, a Bank employee, improper pay raises and attempted to cover it up.

The association made the call during an informal press conference inside the Bank at which dozens of employees showed up, the first time anyone inside the Washington-headquartered institution has demanded his ouster.

The gathering became dramatic when Wolfowitz himself appeared uninvited and sought to defend his actions.

"The president must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank Group and has destroyed the staff's trust in his leadership," said a statement from the Staff Association signed by its chairwoman Alison Cave. "He must act honorably and resign."

The call came less than an hour after Wolfowitz issued his own statement. "I made a mistake, for which I am sorry," said the 64-year-old World Bank president.

The Staff Association said it decided to call for his resignation even though the Bank's Board, which runs the institution's day to day affairs, announced that it is prepared to officially investigate the allegations that Wolfowitz used his position to enrich Shaha Riza, a Bank employee with whom he had a personal relationship, through large pay hikes that violated Bank protocols.

The association said it feared that the Board may not act quickly enough, and called for the release of all relevant documents, including a memorandum from Wolfowitz to the human resources vice president instructing him to second Riza to the U.S. State Department on a generous package that brought her salary to $193,000 a year -- $7,000 more than that earned by U.S. Secretary of State Condoleezza Rice.

Wolfowitz defended himself on Thursday, saying that he had already sought the advice of the Ethics Committee at the Bank and that he acted "in good faith".

He also said he was trying to ward off a possible legal problem for the Bank. He did not elaborate on whether Riza had threatened to sue the Bank if she was involuntarily assigned to the State Department -- a necessary move since Bank employees who are personally involved may not work together.

"This was an involuntary reassignment and I believed there was a legal risk if this was not resolved by mutual agreement," he said. "I take full responsibility for the details."

But Wolfowitz's statement did not allay concerns among staff that he may have placed his girlfriend's interests before the institution's.

The Staff Association says, for example, that there was no representation by the Bank's legal counsel during negotiations of the new contract for Riza, although her own attorney was present.

Wolfowitz has taken several hits over the past week, the last of which came from Ad Melkert, former chairman of the ethics committee, who denied that the committee directed or agreed to Riza's contract terms, as the Bank president alleged.

The Staff Association also says that the former general counsel of the Bank, Roberto Danino, rejected the terms for Riza's reassignment, leading to his exclusion by Wolfowitz from the actual contract negotiations.

The association said the affair is taking a toll on morale inside the Bank. "It therefore seems impossible for the institution to move forward with any sense of purpose under the present leadership, especially in our endeavor to assist governments and their people in improving their own governance," it said.

The controversy has been particularly embarrassing for Wolfowitz and the Bank because since he came to office in 2005, Wolfowitz has sought to make an anti-corruption crusade the signature of his tenure.

Last year, he announced a "long-term strategy" for using the Bank's funds and expertise to help developing countries rid their governments of bribe-taking and other dishonest practices.

But even as he assumed responsibility for decisions related to Riza, Wolfowitz went on the offensive, implying that the staff's reaction may have been motivated by displeasure with his role in the Pentagon as a main architect of the U.S. invasion and later occupation or Iraq, now in its fifth year and exacting huge human and financial costs.

"For those people who disagree with the things that they associate me with in my previous job, I'm not in my previous job," Wolfowitz said in a statement. "I'm not working for the U.S. government; I'm working for this institution and its 185 shareholders."

Wolfowitz came to the World Bank in mid-2005 from his post as the U.S. deputy secretary of defence.

His appointment to the World Bank sent ripples through many at the institution and within development circles who feared that his neo-conservative credentials and close association with the carnage caused by the Iraq war could undermine the Bank's image as one of the world's leading development agencies.

But the controversy over Riza's salary increases has mostly skirted his role in the Iraq war -- with Wolfowitz himself bringing it up.