Wolfowitz Says Sorry for World Bank Pay Row

In an attempt to fight off mounting criticism, World Bank president Paul Wolfowitz today apologised for his role in the promotion and pay increases awarded to a bank official with whom he was romantically involved, saying: "I made a mistake, for which I am sorry."

Facing a series of hostile questions at a press conference in Washington the day the controversy was to be discussed by the bank's governing board, Mr Wolfowitz also pledged to make changes among the small circle of his closest advisors, and denied that he was acting as an agent of the Bush administration.

Repeatedly pressed as to whether his position as president was under threat, or whether he planned to resign, Mr Wolfowitz declined to answer, saying the matter was in the hands of the board.

The controversy follows revelations that Mr Wolfowitz may have broken internal rules by being personally involved in decisions to compensate his girlfriend, Shaha Riza, who was working within the bank before Mr Wolfowitz's appointment.

Bank regulations forbid partners in a relationship from working together, and after Mr Wolfowitz's appointment in 2005 Ms Riza was seconded to the US state department, along with a substantial pay rise.

Mr Wolfowitz said he had raised the issue of Ms Riza's employment when he first joined the bank, asking the advice of the ethics committee of the bank's governing board.

"I made a good faith effort to implement my understanding of that advice, and it was done in order to take responsibility for settling an issue that I believed had potential to harm the institution," Mr Wolfowitz said.

"In hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations. I made a mistake, for which I am sorry."

Clearly nervous and fidgeting during questioning at today's press conference, Mr Wolfowitz repeatedly stated: "I didn't volunteer to get involved in this, I didn't get involved for personal reasons."

But further details of the affair emerged today that cast doubt on Mr Wolfowitz's position. The Financial Times reported that a personal memo was written by Mr Wolfowitz directing the bank's head of human resources to offer Ms Riza a large pay rise and a promotion as part of her reassignment package.

The memorandum - according to sources quoted by the Financial Times - dated August 11 2005 specified in detail what Xavier Coll, the World Bank's vice-president for human resources, was to offer Ms Riza, setting out her salary, promotion, and the basis on which her annual pay increases were to be calculated.

The memo also appears to contradict an earlier statement by Mr Wolfowitz's spokesman, Kevin Kellems: "All arrangements concerning Shaha Riza were made at the direction of the bank's board of directors."

The bank's internal staff association claims the terms of the assignment went against bank rules, and that Ms Riza's pay increase took her annual salary to $193,000 (£97,590) tax free - a higher figure than that paid to Condeleezza Rice, the state department's head.

In November last year Ms Riza moved from the state department to a UN agency, but she is still on secondment and her salary is still being paid by the World Bank.

The board is composed of executive directors appointed by the bank's major country shareholders. The ethics committee has competed its investigations, and has passed its findings to a meeting of the full executive board, expected to be held today.

The controversy highlights concerns that have dogged Mr Wolfowitz since he was named to the post two years ago.

The job of World Bank president is traditionally in the gift of the US government, and Mr Wolfowitz's appointment followed his prominence as a key architect of the US invasion of Iraq in 2003, when he was assistant secretary of defence under Donald Rumsfeld.

In his defence, Mr Wolfowitz told the press conference: "For those people who disagree with the things that they associate me with in my previous job, I'm not in my previous job. I'm not working for the US government."

Asked about complaints that he relied on a small coterie of advisors, Mr Wolfowitz replied that he had only brought two staff with him, complaining: "Sometimes it sounds like an army of Bush administration retreads."

But he admitted he had heard the complaints, and conceded that the role of his two advisors "needs to be structured better - I agree with that." The two advisors are Mr Kellems, a former spokesman for US vice-president Dick Cheney, and Robin Cleveland, a former White House policymaker.