White House Staunchly Behind Wolfowitz As Report Finds He Damaged World Bank

The Bush administration circled its wagons round Paul Wolfowitz yesterday, arguing the World Bank president did not deserve to be sacked despite the findings of an investigating committee that he had damaged the organisation.

The concerted defence of Mr Wolfowitz, who was found to have broken rules in arranging a pay rise for his girlfriend, came only hours before his scheduled appearance before the bank's board yesterday afternoon to try to keep his job.

Mr Wolfowitz's greatest strength yesterday appeared to be his support from the administration he served. Mr Wolfowitz was the number two figure at the Pentagon and a prominent architect of the Iraq war until he joined the bank two years ago.

While administration officials acknowledged that Mr Wolfowitz had been wrong to secure a promotion and $60,000 (£30,000) rise for Shaha Riza, a communications officer, they said it was not a sacking offence. "He made mistakes," the White House spokesman, Tony Snow, told reporters. "That is obvious. On the other hand, it's not a firing offence."

The secretary of state, Condoleezza Rice, took a similar line, admitting Mr Wolfowitz's error, but saying it was not serious enough to cost him his job. "It doesn't seem to be the kind of thing that you would want to see the dismissal of the World Bank president over," she said.

Yesterday's show of support deepens the divisions between the bank's European members and America over Mr Wolfowitz's tenure at the organisation.

The bank was thought unlikely to make a final decision yesterday, and faces intense pressure from Washington to divorce the finding that Mr Wolfowitz had violated bank rules from its decision on whether he can still lead the bank.

President George Bush is known for his personal loyalty to administration officials under fire. However, the government's readiness to back Mr Wolfowitz against his legion critics goes further, said Sebastien Mallaby, an author of a book about the World Bank. The administration is acutely conscious that resentment towards Mr Wolfowitz is bound up in European opposition to the war on Iraq. It also wants to head off any move to change the system under which it remains a US prerogative to choose the president of the bank.

"Wolfowitz is still the guy that the president appointed and he is not going to cave in especially if he believes that the anti-Wolfowitz side is motivated by opposition to the war on Iraq," Mr Mallaby said.

In its report to the bank board on Monday, the committee investigating Mr Wolfowitz's handling of the conflict of interest between his post as World Bank president and his personal life was unsparing.

Not only did the panel find that Mr Wolfowitz broke bank rules in the compensation package for Ms Riza, but it said that he had put the institution in danger.

In his time at the bank, Mr Wolfowitz had exercised "questionable judgment and a preoccupation with self-interest," said the report. "Mr Wolfowitz saw himself as the outsider to whom the established rules and standards did not apply."

It called on the board in its meeting yesterday to "consider whether Mr Wolfowitz will be able to provide the leadership needed to ensure that the bank continues to operate to the fullest extent possible" in its mission to fight poverty.

However, Mr Wolfowitz has earned a reputation as a bureaucratic infighter during his more than 30 years in Washington, and has experience of operating amid a field of enemies. In his rebuttal to the report, he continued to blame the furore over Ms Riza's promotions on bad advice from the bank's ethics committee.

"It is highly unfair...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."