World Bank board expands Wolfowitz inquiry

WASHINGTON —  Paul D. Wolfowitz’s chances of remaining World Bank president grew more uncertain Friday after the governing board for the multinational aid agency expanded its probe into his role in a job promotion and pay raise his girlfriend received.

The bank’s 24-member executive board, which could oust Wolfowitz, expressed “great concern” about the controversy and created its second “ad hoc group” to look into the matter. The first one, which reported earlier this month, served as an information-gathering panel.

In setting up the new group, the board said some issues needed further investigation. It did not specify them, other than to say they involved “conflict-of-interest, ethical, reputational and other relevant standards.”

Wolfowitz has rejected a call from the group that represents the bank’s 13,000 employees and consultants that he resign. But some familiar with the bank’s workings said they viewed the expanded probe by the executive board, comprised of representatives of 24 nations, as a possible prelude to forcing him out.

Bea Edwards, international director of the Government Accountability Project, a watchdog group, said she believed the board was hoping to avoid taking a vote of “no confidence” in him while “a succession process” is worked out.

Wolfowitz, the former deputy Defense secretary who was a key advocate of President Bush’s decision to invade Iraq, was appointed to head the bank in 2005. At the time, his girlfriend, Shaha Ali Riza, worked there as a communications specialist.

To comply with bank rules aimed at avoiding conflicts of interest -- and with Wolfowitz intervening on her behalf -- she was given a promotion and detailed to the State Department.

Her annual pay was boosted from $132,600 to $180,000. She recently received another raise, to $193,590. Secretary of State Condoleezza Rice earns $186,600.

As details were disclosed recently about Wolfowitz’s involvement in the job change, bank employees added to the furor by publicly complaining about his management style and policies.

Wolfowitz has apologized for taking part in Riza’s transfer.

But he said he mentioned his potential conflict when he was hired and was directed by the bank’s ethics committee “to promote and relocate” her.

On Friday, his office issued a statement that said he welcomed “the decision of the board to move forward and resolve this very important issue.”

White House spokeswoman Dana Perino reiterated earlier in the day that Bush retained “full confidence” in Wolfowitz.

By informal agreement, the United States selects the president of the World Bank, and the Europeans choose the head of the bank’s sister institution, the International Monetary Fund.

In a separate development, the Defense Department acknowledged that Wolfowitz used his influence as deputy secretary in 2004 to help a company for which Riza was a consultant get a contract with the Pentagon’s office for reconstructing Iraq.

But the department’s inspector general found no harm. Wolfowitz, he said, was forthright about his relationship with Riza, who was “uniquely qualified” for the job and did not receive any direct payment from the contract.

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joel.havemann@latimes.com