May 16, 2007 By Jeannine Aversa Ap Economics Writer 4 min read

WASHINGTON (AP) – The White House said Tuesday that “all options are on the table” about the leadership of the World Bank, even as it publicly defended embattled President Paul Wolfowitz as he fights conflict-of-interest charges. Wolfowitz maintains that he acted in good faith in arranging a generous pay package for his girlfriend and is waging a vigorous fight to keep running the institution. He will appear before the bank’s 24-member board late Tuesday. The board, whose proceedings are carried out behind closed doors, ultimately will decide what actions to take against him.

“We have faith in Paul Wolfowitz,” White House spokesman Tony Snow said. He insisted that the charges against Wolfowitz are not “a firing offense.”

Only after the charges against Wolfowitz are resolved, he said, would it then be appropriate to consider the bank’s leadership going forward.

“Separately, at some point in the future there are going to be conversations about the proper stewardship of the World Bank,” Snow said. “In that sense … all options are on the table,” Snow said.

It was unclear whether this rhetorical shift signaled a weakening of support at the White House for Wolfowitz, or more of an attempt to calm European allies who are clamoring for him to step aside. Promising future conversations, and separating them from the process of determining Wolfowitz’s fate based upon the pay package issue, could give those speaking against Wolfowitz the sense that their concerns will be addressed at some point.

Snow’s comments came a day after a special bank panel concluded that Wolfowitz broke bank rules in his handling of the pay package. It said the board must consider whether Wolfowitz “will be able to provide the leadership” to ensure that the bank achieves its mission of fighting poverty around the world.

In a response, Wolfowitz said, “It is highly unfair and unwarranted to now find that I engaged in a conflict of interest because I relied on the advice of the ethics committee as best I understood it.”

The controversy that has put Wolfowitz’s job in jeopardy involves his handling of the 2005 compensation package for his girlfriend, Shaha Riza, a bank employee. The special panel bank panel said that Wolfowitz’s involvement in the details of Riza’s salary “went beyond the informal advice” given by the ethics committee and that he “engaged in a de facto conflict of interest.” Under Wolfowitz’s contract as well as the code of conduct for board officials, he was required to avoid any conflict of interest, the report said.

Riza worked for the bank before Wolfowitz took over as president in June 2005. She was moved to the State Department to avoid a conflict of interest, but stayed on the bank’s payroll. Her salary went from close to $133,000 to $180,000. With subsequent raises, it eventually rose to $193,590.

Wolfowitz had served as the No. 2 official at the Pentagon and played a lead role in mapping out the U.S.-led war in Iraq before taking over the bank nearly two years ago.

European members are pushing for Wolfowitz to resign. The United States is the bank’s largest shareholder. Bush tapped Wolfowitz for the job, a move that was approved by the bank’s board even though Europeans didn’t like him because of his role in the Iraq war.

The White House believes that the controversy that has embroiled Wolfowitz is rooted not as much in what he did, but in his role as a key architect of the Iraq war. This proxy fight has made the president more determined to stand behind Wolfowitz, unless the facts made it absolutely clear that his behavior was egregious, a senior administration official said. The official was not authorized to speak publicly on the matter and thus spoke only on the condition of anonymity.

Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson also said they don’t think the facts in the conflict-of-interest case merit Wolfowitz’s dismissal.

“It doesn’t seem to be the kind of thing that you would want to see the dismissal of the World Bank president over,” Rice said. “I hope it will be resolved in a way that is true to what really happened there but also strengthens the bank, which is a really important institution,” she added.

By tradition, the World Bank has been run by an American. The Bush administration wants to keep that decades-old practice firmly intact in any discussions about the bank’s future leadership.