World Bank leadership crisis could come to head

WASHINGTON, May 17 (Reuters) The crisis over leadership at the World Bank could come to a head today when the board meets to discuss the tenure of its embattled president, Paul Wolfowitz.

Wolfowitz, under a cloud over his handling of a raise and promotion for his companion, refused to bow to heavy European pressure to resign as he sought to clear his name in talks with the bank's board over a possible exit strategy.

''Mr Wolfowitz will not resign under this cloud and he will rather put this matter to a full (board) vote than to capitulate on his integrity,'' his lawyer Robert Bennett told Reuters yesterday.

Several European countries have said Wolfowitz should step down to salvage the bank's credibility, which they say has been damaged by his handling of the promotion for his companion, West Asia expert Shaha Riza.

Wolfowitz, the controversial former deputy US defense secretary and architect of the Iraq war, has insisted he acted in good faith on the advice of a board ethics committee in overseeing Riza's promotion and has said he wants it to acknowledge its own failures.

A board panel found his efforts on her behalf broke bank rules and represented a conflict of interest.

Board sources said talks were launched yesterday over how to push the dispute to a close.

Some members have suggested a resolution that would recognize the panel's findings and Wolfowitz's efforts to resolve the conflict of interest issues, but also acknowledge mistakes by the board.

The board adjourned without a decision and said in a statement its members would continue their deliberations today morning.

Pressure to resign had intensified on Wednesday as European countries signaled they would resist a US bid to keep Wolfowitz in the job.

REUTERS DS PM1130