A trans-Atlantic power struggle over World Bank President Paul Wolfowitz's fate may be coming to a head after an internal probe reportedly found him guilty of breaching ethics rules. Attention is expected to shift to the bank's board of directors, which ordered the investigation and could vote to oust the former US deputy defence secretary from his post.
But a source close to the 24-member board said the body is split over how far to push the confrontation with Wolfowitz, a key architect of the Iraq war who is vocally opposed by key European countries but has kept US support.
In the search for a face-saving deal, European governments signalled they would let the US choose the bank's next chief if Wolfowitz stepped down, the New York Times reported Tuesday.
The US has chosen the bank's heads since its founding in 1944, but this year's crisis has prompted calls by aid groups and others to dump that tradition. The US is the development lender's biggest shareholder, but could be outvoted by a broad front of opponents.
At issue is a promotion and pay raise that Wolfowitz arranged for his World Bank-employed girlfriend three months after he became the bank's president in June 2005. Under the deal, Shaha Riza was loaned to the US State Department to avoid a potential conflict of interest, but kept on the bank's payroll.
Wolfowitz, who was nominated by US President George W Bush, has denied wrongdoing, accused his foes of a smear campaign and insisted he will not quit under an ethics cloud. He says the bank's ethics committee was aware of the Riza arrangement.
But a seven-member committee investigating Wolfowitz's leadership at the bank concluded that he violated ethics rules with the deal, media reports said Monday. Wolfowitz has received a copy and will be allowed to respond before the report goes to the World Bank's board, Bloomberg News reported. Wolfowitz's top public relations aide at the bank announced his resignation Monday.
Kevin Kellems, a former spokesman for US Vice President Dick Cheney, came to the bank with Wolfowitz in 2005 and has drawn the ire of bank staffers upset with his senior appointments.
The ethics scandal has sowed turmoil and paralysed the bank's work over the past month. The board, which represents the 185 member countries, is also looking into Wolfowitz's choices for senior posts. These include Kellems and Wolfowitz's counsellor Robin Cleveland, previously a senior official at the White House Office of Management and Budget.
Critics accuse Wolfowitz of installing senior officials in an attempt to promote Bush administration policies on issues such as Iraq and birth control through the World Bank.
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