Wolfowitz, Riza to address World Bank panel Monday

WASHINGTON (Reuters) - World Bank President Paul Wolfowitz and his bank-employed girlfriend will appear before a special panel on Monday to discuss a promotion and raise he arranged for her that has sparked calls for his resignation.

"He will be appearing on Monday morning and making a full presentation to the committee, showing them that there is absolutely no merit at all in the allegation that there was a conflict of interest," Wolfowitz's lawyer, Robert Bennett, told Reuters.

Bennett will be present but will not be allowed to address the committee, which was appointed by the World Bank's board of shareholder nations last week to look into whether Wolfowitz breached ethical or other rules by approving a promotion for his girlfriend, Shaha Riza.

Bennett said he was notified by Victoria Toensing, a lawyer for Riza, that her client would also address the committee. Toensing could not be reached for comment.

Wolfowitz has faced increased pressure to step down as the controversy over the promotion reached fever pitch at the bank, where some staff have openly voiced deep concern that the issue has undermined their work in eradicating poverty.

The former Pentagon No. 2 and Iraq war architect has apologized for how he handled the promotion. He has said he was new to the job and acted on the advice of a board ethics committee to deal with the issue in a "practical way."

The issue has been a lightning rod for broader unhappiness over Wolfowitz's appointment to the bank in 2005 and his management style. Many longtime World Bank employees accuse him of relying heavily on the advice of a coterie of aides he brought with him from the Pentagon and White House.

Earlier this week, Wolfowitz complained he was being treated "shabbily and unfairly without regard to appropriate process" when the committee refused to allow Bennett to address its members, and he asked for more time when the panel gave him less than 24 hours' notice to appear.

"We have finally gotten them to give us Monday, which isn't much time, but we're going to go in and show there is absolutely no merit to this," Bennett said.

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In a letter to the board earlier this month, Riza said she has been "victimized" by the uproar over her promotion and a related transfer to the State Department, which she said she was forced to take because of her relationship with Wolfowitz.

Board sources said the panel investigating the matter had hoped to wrap up its work this week but that Wolfowitz's appointment of a lawyer had set them back.

The sources, who are close to the decision-making process and spoke on condition of anonymity, said the committee was focusing on whether Wolfowitz worsened potential conflict of interest issues when he "pressured" a bank vice president into giving Riza the promotion and pay raise.

The Washington Post, citing unidentified sources, reported in its Saturday edition that the panel had nearly finished a draft report concluding that Wolfowitz broke ethics rules by getting Riza the raise, but was still debating whether it should recommend that he resign.

Another board source told Reuters the issue would likely not be put to a vote of the World Bank's 24-nation board. Instead, the source said the board would try to build a consensus on how to proceed because of the "political nature" of the decision.

It is unclear what steps the board might take because of the unprecedented nature of the issue. The board has never been faced with a decision over the bank president's fate.

The White House has repeatedly stated that Wolfowitz has the support of President George W. Bush.

The source said Canada also supported the World Bank chief, but that countries such as Japan, Saudi Arabia, China and India were still uncertain about their positions.

(Additional reporting by Peter Szekely)