Embattled World Bank President Paul Wolfowitz is fighting to keep his job after disclosing his involvement in obtaining a substantial pay raise for a female friend.  The controversy has provoked demands for Wolfowitz's resignation. He says that decision is up to the bank's board members.  VOA's Mil Arcega reports.

Paul Wolfowitz, 15 Apr 2007

But Jean-Louis Sarbib, a former World Bank Senior Vice president, says Wolfowitz's actions have damaged the bank's credibility.  "I think it's extremely sad that the World Bank is in the news as a scandal institution at a time when poverty is a very big issue for the rest of the world and where the credibility of the institution and the credibility of its head is absolutely essential.  So I think he should go."

At the center of the controversy is Wolfowitz's admitted involvement in procuring a promotion and a pay raise for his girlfriend, Shaha Riza, a former bank advisor.  Documents show that after her transfer to the U.S. State Department, Riza's annual pay jumped from $133,000 to nearly $200,000. 

Wolfowitz said, "I didn't hide anything that I did and, as I said, I am prepared to accept any remedies that the board wants to propose."

Wolfowitz is no stranger to controversy. President Bush appointed the former U.S. Deputy Defense Secretary two years ago amid protests over Wolfowitz's involvement in promoting the war in Iraq.  Since then Wolfowitz has received praise from leaders of some of the world's poorest countries. 

Liberian Finance Minister Antoinette Sayeh says Wolfowitz has been a strong advocate for African nations. "He has been absolutely supportive, responsive – there for us -- making advocacy that is absolutely essential to getting the international community to do the right thing by these countries and we're very, very grateful to his leadership in getting Liberia to where we are today."

Although few question Wolfowitz's priorities at the World Bank, some say his actions have damaged his own campaign to root out international corruption. 

Dennis de Tray is vice president at the Center for Global Development, a Washington-based think-tank that looks at issues affecting developing countries. "I think it is clearly a problem for the World Bank that its leader, rightly or wrongly, is being accused of violating at least the intent of some of the rules that govern the bank's processes and procedures when he has made such an important pillar of his own administration issues of governance transparency and accountability," he says.

While the European Commission has expressed deep concerns, the United States – the bank's largest shareholder – is standing by Wolfowitz.  White House spokeswoman Dana Perino recently said, "The president has full confidence in Paul Wolfowitz. He's done a remarkable job at the World Bank, where they are working to lift people up out of poverty from around the world.  He's apologized for the matter, and his board is undergoing an internal review. And we expect him to remain as World Bank president."

Although analysts believe the scandal will not have a long-term impact on the World Bank, some say it could force the international community to revisit how the bank selects its leader.

De Tray says, right now, the U.S. government is the sole arbiter. "In this day and age that's not a very good system.  It's neither transparent nor is it merit-based nor does it build the kind of international credibility that a multilateral institution like the World Bank needs.  So it's a good time to step back and ask let's give the next president of the World Bank the kind of international base of credibility that he or she needs to lead a great multi-lateral institution."

World Bank board members say they are reviewing the Wolfowitz controversy but there is no timetable for a decision.