Wolfowitz pleads case to bank board

WASHINGTON —  A day after World Bank directors accused Paul D. Wolfowitz of breaking ethics rules in negotiating a promotion and salary raise for his companion, the bank president pleaded with them Tuesday to give him another chance at leading the anti-poverty lender.

Defending himself at an evening board meeting, Wolfowitz urged directors to separate the specific mistakes he may have made in handling his companion’s reassignment and larger questions about his rocky two-year tenure at the bank.

“If you want to have a discussion about my leadership, my management style and the policies I support, let’s do it,” Wolfowitz said, according to a prepared text of his remarks released by his lawyers. “That’s fair. That’s legitimate. But let’s get past this conflict-of-interest matter that was resolved over a year ago.”

Wolfowitz has resisted calls to resign over the scandal, in which he is accused of improperly negotiating a significant raise and promotion for his companion, Shaha Ali Riza, who was a senior bank employee when President Bush nominated Wolfowitz for the top job.

Critics have seen the controversy over Riza as emblematic of larger management failures by Wolfowitz, a former No. 2 official at the Pentagon who is seen as a chief architect of the Iraq war. Bush’s decision to name him to the World Bank was considered by many career staff members to be an effort to impose the administration’s foreign policy priorities on the bank. The bank is an international institution chartered by member nations who appoint its board of governors and executive directors.

On Monday, an ad hoc committee of board members reviewing the Riza controversy released a report saying Wolfowitz had exhibited “questionable judgment and a preoccupation with self-interest over institutional best interest.” They also questioned whether Wolfowitz would be able to provide the leadership the bank needed.

In his statement, Wolfowitz contended that the two issues should not be conflated.

“I sincerely believe that if you read my submissions, you will conclude that I acted in what I believed were the best interests of the institution, and that my conduct with respect to Ms. Riza’s external placement does not justify taking any action against me or warrant a finding that you lack confidence in my leadership,” Wolfowitz said.

White House officials rose to Wolfowitz’s defense Tuesday. “The fact is that he made mistakes. They’re not, in our view, firing offenses,” White House spokesman Tony Snow said, in the most forceful language the administration had employed in the case.

However, Snow also indicated for the first time that the White House might be open to Wolfowitz’s departure. “Separately, at some point in the future, there are going to be conversations about the proper stewardship of the World Bank,” Snow said. “In that sense ... all options are on the table.”

In his statement, Wolfowitz argued that he misunderstood bank directors’ memo saying the bank’s vice president for human resources should act on Wolfowitz’s “instruction” in setting the terms for Riza’s reassignment to a State Department job. “It did not suggest I could delegate that task to anyone else,” Wolfowitz said.

Bank directors said in their report that the advice “should have been drafted in language that would not leave open the possibility of misinterpretation.” But they said Wolfowitz’s interpretation “simply turns logic on its head” -- that it would make no sense for the bank’s ethics committee to find that he had a conflict of interest and then specifically direct him to act on the conflict of interest.

Wolfowitz also argued that the salary increases he approved were in part to compensate Riza for what she considered damage to her career by having been passed over for promotions in the past and her forced reassignment to the State Department. Moreover, Wolfowitz said, there was concern that Riza would be in a position to sue the bank for damages.

“The agreement with Ms. Riza was not simply an employment agreement,” Wolfowitz said. “It was in the nature of a settlement agreement. At the time everybody ... thought she had legitimate grievances and that steps should be taken to avoid the potential for litigation and reputational risk for the bank.”

There is no formal procedure to oust a World Bank president, who is traditionally named by the United States, the bank’s largest donor. Board members have been ratcheting up the pressure on Wolfowitz behind the scenes in an effort to force his resignation and avoid a vote.

In his statement, Wolfowitz made it clear that he was refusing to resign and was fighting the allegations in large part to clear his name.

“In the last month, Shaha Riza and I have been held up to public ridicule. I have been caricatured as a ‘boyfriend’ who used his position of power to help his ‘girlfriend,’ ” Wolfowitz said. “I have had to explain to my children, my friends and my professional colleagues that this was not the case. I tell you this so that you can understand why I have been fighting so hard to defend myself.”

Wolfowitz has previously said he would consider resigning if the board of directors formally finds that he did no wrong in the conflict-of-interest case.

White House officials said that the bank report suggested there was “plenty of blame to go around.”

“We want a report that brings forth all of those facts,” said White House spokesman Tony Fratto. “The ethics committee and the general counsel were partially to blame for all of this, and the board, perhaps, as well.”

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maura.reynolds@latimes.com