World Bank board probes promotion of Wolfowitz friend

WASHINGTON (Reuters) - The World Bank board is probing whether the promotion of a female staffer involved with President Paul Wolfowitz possibly violated staff rules, according to a note to bank employees on Friday.

The board, made up of representatives and advisers of the bank’s 185 member countries that oversees its day-to-day operations, said in the note dated April 5 that it had met “concerning a possible violation of staff rules in favor of a staff member closely associated with the President”.

“They have decided to acquire all the information related to this matter and will respond to the issues raised as soon as possible, in accordance with their responsibilities,” it said.

The controversy erupted this week when the bank’s Staff Association questioned the promotion and pay increase of Shaha Riza who was given an external bank assignment to the U.S. State Department in September 2005, when her involvement with Wolfowitz became public.

Both are divorced. Riza worked at the bank for eight years and was a senior communications adviser in its Middle East department when she was transferred to the State Department.

Soon after Wolfowitz took up his position in mid-2005 after serving as U.S. deputy defense secretary, he was advised by the board’s ethics committee that Riza’s presence in the bank presented a conflict of interest and she should be transferred to a job outside the bank.

The Staff Association said that before Riza’s assignment at the State Department, she was promoted to a senior position which would normally be “competitive, vetted and approved by the relevant sector board.”

“This promotion clearly does not conform to the procedures,” the association said.

It also said she was given a pay raise that was more than double the amount allowed under staff rules.

A senior bank official said Wolfowitz tried to remove himself from the matter but was overruled and advised to make the changes by the board’s ethics committee, then headed by Ad Melkert, who was the Dutch director on the board and is now with the U.N. Development Programme.

A spokesman for Melkert told Reuters the ethics committee advised Wolfowitz at the time that Riza be moved outside the bank, but left it up to senior management to determine conditions and terms of the move.

A bank source said the agreement was negotiated among her lawyers, the bank’s former senior counsel Roberto Danino and vice president for human resources Xavier Coll.

Danino, who has since quit the bank, told Reuters on Friday he was not involved.

“I categorically deny that I was involved in anyway in the implementation of the ethics committee advice to the president regarding the Shaha Riza matter,” he said in a statement.