World Bank works on resignation plan for Wolfowitz

By Staff
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WASHINGTON, May 17 (Reuters) The World Bank board today fleshed out details of a resignation package for bank president Paul Wolfowitz that would avoid making a decision to fire him, board officials said.

There was no certainty, however, that Wolfowitz, who is under fire for arranging a pay and promotion agreement for his companion, would accept such an offer.

US President George W Bush, in a news conference with outgoing British Prime Minister Tony Blair, said he regretted the fight over Wolfowitz's tenure had reached this point.

''I regret that it's come to this,'' Bush said. ''All I can tell you is Paul Wolfowitz has an interest in what's best for the bank,'' he added, in a hint that was no longer willing to expend political capital to keep Wolfowitz in the job.

The controversial former US deputy defense secretary and Iraq war architect so far has resisted heavy pressure to resign without a resolution that also clears his name.

The exact details of the package being discussed by the board were unclear, but by resigning Wolfowitz would retain some of the benefits due to him under his World Bank contract.

Under the contract he signed in June 2005, Wolfowitz would receive a year's salary, or around 375,000 dollars, if his services were either terminated by the board or if he resigned. But if he were fired he would lose a number of other benefits.

Wolfowitz's lawyer, Robert Bennett, told Reuters yesterday that his client would rather push the issue of his leadership to a vote by the board, which would be unprecedented for the World Bank, than to resign under a cloud.

'UNDER THIS CLOUD' ''Mr Wolfowitz will not resign under this cloud and he will rather put this matter to a full vote than to capitulate on his integrity,'' Bennett said.

Wolfowitz has said he should not have to shoulder all the blame for the high-paying promotion for Shaha Riza, a World Bank West Asia expert, arguing that he followed advice from a board ethics committee and that the board needs to acknowledge its own mistakes.

A report by a board panel that looked into Wolfowitz's role in the promotion concluded on Monday that he broke several rules along the way and that terms of Riza's pay increase and promotion exceeded bank norms.

The report did concede that the board should have dealt with potential conflict of interest issues before Wolfowitz assumed his position and that the bank's own governance procedures should be examined.

Pressure for Wolfowitz to resign has increased over the past few days from European and other governments, including in Germany, where Wolfowitz was due to attend a meeting of finance chiefs from the Group of Eight industrial countries this weekend.

The G8 nations -- the United States, Japan, Canada, Italy, France, Germany, Britain and Russia -- are among the bank's largest shareholders.

Developing countries began to speak out today.

Slovenian Finance Minister Andrej Bajuk called on Wolfowitz to end the crisis by stepping down to save the credibility of the poverty-fighting institution.

''The best would be if the gentleman would go away,'' Bajuk told reporters on the sidelines of a World Bank conference in Bled, which Wolfowitz was meant to attend but canceled.

Reuters PB DB2309

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