Bank report says Wolfowitz broke rules

WASHINGTON - World Bank president Paul Wolfowitz broke bank rules in arranging a hefty compensation package for his girlfriend, a situation that has caused a "crisis in the leadership" at the institution, according to a report released yesterday by a special bank panel.

The panel recommended that the full 24-member board determine whether Wolfowitz "will be able to provide the leadership" to ensure that the bank achieves its mission of fighting poverty around the world.

The board ultimately will decide Wolfowitz's fate.

Board members have discussed a range of disciplinary options. The board could fire Wolfowitz, ask him to resign, signal that it lacks confidence in his leadership, or reprimand him. Board members have been leaning toward an expression of no confidence or other tough language that would make it difficult - if not impossible - for Wolfowitz to stay on.

Wolfowitz is scheduled to appear before the board today. The proceedings are not public. A decision could come as early as today or tomorrow.

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 bank panel concluded that Wolfowitz's involvement in the details of the package "went beyond the informal advice" given by the bank's ethics committee and that he "engaged in a de facto conflict of interest," the report said.