Wolfowitz poised to face bank directors

Paul Wolfowitz will on Monday testify before the panel of World Bank directors investigating his conduct in the Shaha Riza controversy, amid fresh calls for him to resign as bank president.

The directors are expected to rule later this week as to whether he broke bank rules when he arranged a large pay rise for Ms Riza, his girlfriend and a bank employee, as part of her secondment to the US state department.

Oxfam, the anti-poverty charity, on Sunday became the first top-tier non-governmental organisation to join the campaign for his ousting. In a statement to the Financial Times, Jeremy Hobbs, executive director of Oxfam International, said the bank’s mission to fight poverty was being “deeply compromised” by the ethics dispute.

“We believe that the World Bank’s ability to act as a leading development institution has already been so damaged that Mr Wolfowitz’s continued presidency of the World Bank is untenable,” he said.

Mr Wolfowitz will be accompanied in Monday’s meeting by Robert Bennett, a high-profile Washington lawyer best known for representing former President Bill Clinton against sexual harassment charges.

Ms Riza will also speak to the seven-member panel separately, as the controversy over her secondment enters a critical phase.

Mr Wolfowitz and the bank board had a sharp exchange of letters last week when the president refused a request to appear before the panel with less notice and unsuccessfully demanded that his lawyer should be allowed to make a presentation for him.

The board acceded to the request for a slight delay until Monday, but said Mr Wolfowitz must testify in person, in keeping with past bank practice.

Mr Bennett has told the FT that he is certain Mr Wolfowitz acted in good faith and will be able to prove it. Mr Bennett has described the push to remove his client as a power play by European countries against the US, which traditionally appoints the bank president.

People close to the board said it would keep an open mind to any new evidence or arguments presented by Mr Wolfowitz. But they are not expecting anything radically new, as Mr Wolfowitz has already appeared before the investigating panel to give his version of events.

Even if Mr Wolfowitz were to survive the investigation into his handling of the Riza secondment, he faces further scrutiny over public communications on the subject and appointments made by his office.

More than 40 former top bank executives wrote an open letter earlier this month calling for his resignation, and the bank’s Independent Evaluation Group issued a damning indictment of his leadership.

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