Development ministers from around the globe on Sunday voiced "great concern" over World Bank chief Paul Wolfowitz's handling of his girlfriend's promotion, but Wolfowitz said he intends to stay in his job.
"The current situation is of great concern to all of us," the top officials said in a communique issued after a meeting of the IMF-World Bank Development Committee.
"We have to ensure that the bank can effectively carry out its mandate and maintain its credibility and reputation as well as motivation of the staff," the ministers from World Bank member states said.
In a news conference shortly after the Development Committee's tough words were released, Wolfowitz said he believed he could still effectively lead the poverty-fighting lender. "This is important work and I intend to continue it."
Top European officials were among those who expressed worry in closed-door sessions on Sunday that Wolfowitz had tarnished the bank's reputation by helping to secure a high-paying promotion for his girlfriend, bank employee Shaha Riza.
At the start of speeches to the Development Committee, ministers from Britain and Germany said the bank's reputation had been dented, sources told Reuters.
Other sources monitoring the meeting said several other European countries also briefly addressed the issue, although they did not call outright for Wolfowitz to step down.
The Netherlands, a large donor country, was among the chorus of nations wondering how the bank's credibility could be restored. "We are critical but are awaiting development," William Lelieveldt, Dutch Treasury spokesman, told Reuters.
Moral Authority In Question
Staff and development activists accuse Wolfowitz of breaking bank rules in helping to arrange Riza's promotion before she was assigned to outside work at the State Department.
They argue the institution's moral authority has been left in tatters, especially its authority to make countries who receive aid accountable for the money, a priority for Wolfowitz, who has ruffled feathers at the bank with a strong-arm anti-corruption push.
The former No. 2 official at the Pentagon has apologized for his handling of Riza's promotion and has said he was advised by a World Bank ethics panel to assign her to a job outside the bank to avoid a conflict of interest.
While his backers in the White House have come to his defense, large shareholders like Britain, Germany and France question whether he still has the credibility to lead the bank, which spends about $25 billion a year on projects to fight poverty in developing countries.
African ministers have expressed confidence in Wolfowitz and many World Bank member countries have cautioned against judging him until an examination by the bank's board wraps up.
The board has said it will move quickly.
Still, the scandal has stirred up lingering antagonism over Wolfowitz's appointment to the bank in mid-2005 by the U.S. administration and bitterness over his role in the U.S. invasion of Iraq while he was deputy defense secretary.
In notes of a speech prepared for delivery to the Development Committee on Sunday, Wolfowitz appealed to rich nations to deliver on aid promises and to keep the bank's own coffers stocked so it can keep lending to needy countries.
"We stand half way to the 2010 goal post for doubling aid to Africa compared with 2004," Wolfowitz said, as he outlined priority areas for the bank.
But his appeal was clouded by the concerns of many of the bank's main donor countries, who are beginning year-long talks about replenishing the World Bank's main lending fund.
Some insiders worry some donors could withhold funding to the bank's International Development Association if the scandal hampers Wolfowitz's ability to run the back.