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Wolfowitz Decries 'Smear Campaign'

Filed at 2:16 p.m. ET

WASHINGTON (AP) -- World Bank President Paul Wolfowitz on Monday decried what he called a ''smear campaign'' against him and told a special bank panel that he acted in good faith in securing a promotion and pay raise for his girlfriend. He reiterated that he had no plans to resign, and President Bush gave him a fresh endorsement.

In a prepared statement to the panel, Wolfowitz said the institution's ethics committee had access to all the details surrounding the arrangement involving bank employee Shaha Riza, ''if they wanted it.''

Wolfowitz told the panel, ''I acted transparently, sought and received guidance from the bank's ethics committee and conducted myself in good faith in accordance with that guidance.''

The special bank panel is investigating Wolfowitz' handling of the 2005 promotion of bank employee Riza, who was scheduled to appear later in the day.

The controversy has prompted calls for the resignation of Wolfowitz, an architect of the Iraq war in his preceding Pentagon job. The bank's 24-member board is expected to make a decision in the case this week.

Bush, meanwhile, said Wolfowitz ''ought to stay. He ought to be given a fair hearing.''

Wolfowitz lamented that the controversy over the pay package was part of an effort to oust him from the office, which he has held for nearly two years. The institution's mission is to fight global poverty.

''The goal of this smear campaign, I believe, is to create a self-fulfilling prophecy that I am an ineffective leader and must step down for that reason alone, even if the ethics charges are unwarranted,'' Wolfowitz said.

He vowed to fight for his job. ''I will not resign in the face of a plainly bogus charge of conflict of interest,'' he said.

Bush said Wolfowitz' fate did not come up during a U.S.-European Union summit at the White House. The Europeans, including a German government official, have been critical of Wolfowitz and the European Parliament has called on him to resign. There had been talk that German Chancellor Angela Merkel, whose country holds the rotating EU presidency, would bring up Wolfowitz.

As part of his defense, Wolfowitz, among other things, cited a Feb. 28, 2006, letter which he characterized as showing that bank's ethics committee had looked at the arrangement.

The panel's chairman, Ad Melkert, said in the letter that an allegation relating to ''a matter which had been previously considered by the committee did not contain new information warranting any further review.''

The letter didn't specifically mention Wolfowitz or Riza by name. However, Wolfowitz pointed to it as proof that ethics officials were aware of Riza's compensation package.

The bank's executive directors, however, have said the terms and conditions of the package had not been ''commented on, reviewed or approved'' by the ethics committee, Melkert or the bank's board.

Melkert's February 2006 letter informed Wolfowitz that the ethics committee had reviewed two e-mails from an anonymous whistleblower alleging ethical lapses by the World Bank's president. One e-mail complained about the size of Riza's pay raise.

Riza was working at the bank when Wolfowitz arrived in 2005 and had earned close to $133,000 as a communications adviser in the bank's Middle East department. She was reassigned at the State Department to avoid a conflict of interest but remained on the bank's payroll. Her pay then rose to $180,000 and eventually to $193,590.

Wolfowitz said the initial $180,000 she received ''was in line with salaries paid to bank employees'' holding similar H level positions. He said the salary ''seemed reasonable to me'' and noted that ''many World Bank employees are, comparatively speaking, generously paid, and hundreds of them earn more than the U.S. Secretary of State.''

He also denied accusations that he sought to hide details of Riza's pay package.

''I always expected that the ethics committee could know the details of how the matter was resolved if they so desired,'' Wolfowitz said. ''I also understood that experts in the human resources department would review the contract. It never occurred to me that they would not, and I believe that they did.''

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