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Last Updated: Thursday, 17 May 2007, 19:54 GMT 20:54 UK
Wolfowitz crunch talks continue
Paul Wolfowitz
Paul Wolfowitz has been resisting pressure to resign
The World Bank's board is continuing discussions over the fate of its embattled president, Paul Wolfowitz.

He has been mired in a row over alleged favouritism involving his partner, prompting calls for him to quit.

Unconfirmed reports have suggested that Mr Wolfowitz and the Bank are trying to negotiate terms for his departure.

President George W. Bush said he "regretted" the situation had arisen, while saying he believed all those involved had "acted in good faith".

Bush ally

Mr Wolfowitz is a key ally of the White House, having been deputy defense secretary in the Bush administration before taking up his current role in 2005.

I regret that it has come to this right now
President Bush

"I know that Paul Wolfowitz has an interest in what is best for the bank," President Bush said during a press conference at the White House.

"I regret that it has come to this right now."

Mr Wolfowitz's lawyer has stated that the 24-member board of the global lending institution's main operating arm will have to vote to sack him if it wants him to leave.

The board is made up of representatives of the Bank's leading members including the US, UK, Japan, France and Germany.

A protester outside the World Bank in Washington
Plenty of people have called on Mr Wolfowitz to stand down

Mr Wolfowitz was appointed for a five-year term on 1 June 2005.

His contract states that he is entitled to a year's salary should he resign or be removed from office as long as he served a year in the job.

In 2005-6, he was paid a basic salary of $376,380 as well as an annual allowance of $67,380.

'Credibility'

It has been widely reported that the former US deputy defense secretary wants the board to agree to accept some of the blame for the scandal relating to his girlfriend's pay rise.

The World Bank's board resumed discussions on the issue on Thursday but could not confirm when any outcome was likely to be delivered.

However, there were fresh calls in Europe for Mr Wolfowitz to step down.

"The World Bank is too important to be preoccupied with itself," said Slovenian finance minister Andrej Bajuk, adding that Mr Wolfowitz "should withdraw".

"Now this scandal has been dragging on for too long, which is undermining the credibility of the institution."

'Equitable resolution'

Mr Wolfowitz is under pressure to resign after a World Bank ethnics panel said he had broken its code of conduct by helping to secure a pay rise for his partner, Shaha Riza.

On Tuesday, he told the board that their decision would affect how the US and the world viewed the World Bank.

"You still have the opportunity to avoid long-term damage by resolving this matter in a fair and equitable way that recognises that we all tried to do the right thing," he said.

Family on the island of Masbate in the Phillipines
The World Bank's mission is to work for a world free of poverty

A day earlier, a panel of World Bank executives said Mr Wolfowitz provoked a "conflict of interest" at the bank by breaking its code of conduct and violating the terms of his contract.

Mr Wolfowitz has faced calls to resign since details emerged about his role in securing a pay rise for Ms Riza, who used to work at the bank.

When Mr Wolfowitz was appointed president of the World Bank in 2005, Ms Riza was transferred to work for the US state department, to avoid any conflict of interest.

But her salary rose quickly to about $193,000 (98,000) - more than the $186,000 that Secretary of State Condoleezza Rice receives before tax.

The World Bank has since been investigating the extent of Mr Wolfowitz's role in securing the pay increase.




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