Wolfowitz Lashes at Critics, But May Consider Resigning: WSJ

World Bank President Paul Wolfowitz signaled he may consider resigning - but only if the bank's board clears him of having done anything wrong when he offered a generous compensation package to his girlfriend, the Wall Street Journal reported.

Earlier on, Wolfowitz had lashed back at critics who he said were conducting a smear campaign against him and vowed he would not resign. In a statement to a bank panel looking into whether he broke ethical and other rules in a pay-and-promotion deal he directed for his girlfriend, Wolfowitz said treatment of the issue had become "circus like."

"The goal of this smear campaign, I believe, is to create a self-fulfilling prophecy that I am an ineffective leader and must step down for that reason alone, even if the ethics charges are unwarranted," Wolfowitz said in a statement obtained by Reuters. "And, I will not resign in the face of a plainly bogus charge of conflict of interest," he said in the statement.

A change in his position could pave the way for a compromise that is being explored by the
bank's board, under which the board, or a board panel investigating Wolfowitz, would issue a statement that at least avoids a harsh condemnation of his actions. He would step down after that, bank officials said.

Sources said the meeting with the panel, led by Dutch government representative Herman Wijffels, lasted about two hours, and focused mainly on possible conflict of interest issues over the promotion for Shaha Riza, an Oxford-educated Middle East specialist.

Riza also met members of the panel on Monday.

Bush Repeats Support

At a news conference in the White House Rose Garden, U.S. President George W. Bush reiterated his support for Wolfowitz. "I think he ought to stay. He ought to be given a fair hearing," Bush told reporters.

The controversy has prompted calls by bank staff for Wolfowitz's resignation. Staff at the forefront of implementing the bank's anti-corruption strategy last week said their work had been undermined by the crisis.

Exactly how the bank's 24-nation board would proceed was unclear, with board sources close to the decision-making process saying directors would now need to reach a resolution among themselves on how to proceed.

The directors, who approve the appointment of the head of the bank, have the authority to remove him from office.

In doing so, the sources said the board was mindful of the fact that Wolfowitz potentially could push the matter into U.S. courts by contending he was not given a fair opportunity to present his case.

In a report to the panel, Wolfowitz's lawyers presented details that had led to Riza's transfer to the State Department, a move they said she did not want but accepted because of the relationship.

The report said Wolfowitz repeatedly asked to be recused from dealing with the issue, but an ethics committee told him to work with the bank's human resources manager to relocate Riza.

"The committee members did not want to implement his plan themselves, however, because they said they could not interact directly with a staff member situation," the document said.

The lawyers argued that the agreement reached with Riza was in line with other World Bank settlement deals and was consistent with what the ethics committee had advised.

"It would therefore be unjust, to now find that he acted improperly, to find that he breached his contract, or to take any action against him in connection with this matter," the report said.