April 13, 2007	Friday	Rabi-ul-Awwal 24, 1428

WASHINGTON, April 12: World Bank president Paul Wolfowitz on Thursday apologised for making a “mistake” over hefty pay rises given to his girlfriend at the development lender, but refused to say if he might quit.

“I made a mistake, for which I am sorry,” Wolfowitz told a press conference as an uproar intensified over an employment package worth nearly $200,000 given by the World Bank to his Libyan-born partner, Shaha Riza.

The former deputy US defence secretary, one of the architects of the war in Iraq, refused to say if he might have to resign as the World Bank’s board of governors met to discuss the row on Thursday.

“I'm not going to pre-empt their deliberations,” he said, but stressed: “I will accept any remedies they propose.

“I take full responsibility for the details of the agreement,” he added, after explaining that he had followed advice given by the bank's ethics committee on Riza's employment.

“I did not attempt to hide my actions nor make anyone else responsible.” The controversy has embarrassed Wolfowitz just as he battles to overcome scepticism about a campaign that he is waging against corruption in the World Bank's multi-billion-dollar lending.

He is also under fire from veteran World Bank staff for his management style, following a series of clashes with the board and hostility towards his appointment of Republican Party allies to key bank posts.

Amid a series of media leaks over the Riza affair, the World Bank's legal department this week retained a Washington law firm to investigate the disclosure of “confidential” internal communications.

“Clearly, this is an attempt by bank management to create a climate of intimidation and to silence whistleblowers, both past and future,” commented Bea Edwards of the Washington-based Government Accountability Project.

Riza was transferred from the World Bank's communications office to the US State Department, in line with bank regulations to avoid a conflict of interest after Wolfowitz's appointment in mid-2005.

While still on the World Bank payroll, she was then rapidly promoted and ended up with compensation of more than $193,000 -- about $7,000 higher than Secretary of State Condoleezza Rice earns.

Wolfowitz acknowledged that the controversy “had the potential to harm this institution” but stressed that he had initially wanted no involvement in her employment terms.

“This was not in any way to protect personal interests. My real regret was that I didn't more forcefully keep myself out it,” he said.

The ethics committee's advice had been to “promote and relocate” Riza out of the World Bank, he said, although that is disputed by some bank staff.

According to a Financial Times report on Thursday Wolfowitz personally ordered the massive pay rises given to Riza.

It cited two people who had seen a memo from Wolfowitz to the head of human resources spelling out the terms of the package.

Last week the bank's governors, who are appointed by national governments, ordered an investigation into a “possible violation of staff rules in favour of a staff member closely associated with the president.” The probe was instigated after a circular from the World Bank's internal staff association said it had been “inundated with messages from staff expressing concern, dismay and outrage” over the Riza case.

Wolfowitz, whose nomination two years ago by the US government was controversial given his role in the Iraq war, refused to say whether his credibility was now damaged beyond repair.

But he insisted that he had taken on board staff criticisms, especially over his appointment of two former members of President George Bush's administration to high-ranking jobs in his inner circle.

Wolfowitz denied he had brought in an “army of Bush administration retreads” but acknowledged: “I agree that their role has to be better structured.”

“For those people who disagree with the things that they associate with my previous job, I'm not in my previous job,” he added.

“I'm not working for the US government. I believe deeply in the mission of the (World Bank) institution and have a passion for it.”—AFP