World Bank directors step up pressure on Wolfowitz

The World Bank's executive board yesterday increased the pressure on Paul Wolfowitz to step down as president by simultaneously promising swift action on the Shaha Riza controversy and broadening the scope of its investigations to include other issues as well.

The board, which is made up of directors representing shareholder governments including the US, instructed a sub-committee of seven directors to "consider immediately arrangements made for the secondment of the staff member closely associated with the president".

The decision came after a marathon 10-hour meeting which concluded at about 1am yesterday.

Mr Wolfowitz is in trouble over revelations that he ordered the bank's head of human resources to give Ms Riza, his girlfriend at the time, a large pay rise as part of a secondment package.

The board said that the sub-committee should consider whether the arrangements for Ms Riza violated staff rules, the bank's code of conduct, the president's own contract and "conflict of interest, ethical, reputational and other relevant standards".

The promise of swift action is not necessarily bad news for Mr Wolfowitz, who has been pushing for a quick resolution of the controversy. If the board vindicates him or fails to produce a clear ruling, he will claim that the question has been dealt with and say that the bank should move on.

But if the board finds that Mr Wolfowitz's conduct violated one or other of the rules, codes and ethical norms, this would undermine his hopes of remaining in office.

Moreover, the board sent an unmistakable signal to Mr Wolfowitz that its investigation of him and his officials will not end with its judgment on the Riza secondment. It said that other issues would "need to be addressed, including the various public communications made by the bank on the matter and issues around employment contracts made in the office of the president".

Many directors want Mr Wolfowitz to understand that there is no prospect of the board agreeing to a quick fix which would let him get on with running the bank.

The board expressed "great concern" about the current turmoil within the bank, where Graeme Wheeler, one of Mr Wolfowitz's two deputies, called for his resignation on Wednesday.

European governments are more determined than ever to get Mr Wolfowitz out.

The US has not retreated an inch from its statement that it has "full confidence" in Mr Wolfowitz. However, in a sign that it is not completely indifferent to the fate of the bank, a White House spokesman said this week that the board should think about the "long-term effectiveness of the institution".

Mr Wolfowitz's office issued a statement saying that he "welcomed the decision of the board to move forward and resolve this very important issue".