Wolfowitz skips appearance as bank board meets

WASHINGTON, April 19 (Reuters) - World Bank President Paul Wolfowitz canceled an appearance at a major health conference on Thursday as the bank's board prepared to discuss an escalating controversy over the promotion of his girlfriend.

Organizers of the conference, which was sponsored by the bank's private-sector lending arm, said Wolfowitz canceled at the last minute and was "called away for urgent business."

"I'm sorry on behalf of Paul Wolfowitz that he couldn't come," said IFC chief Lars Thunell, who took Wolfowitz's place but offered no explanation for the World Bank chief's absence.

The bank's board is investigating whether Wolfowitz broke any rules in helping to direct the promotion for his companion, bank employee Shaha Riza, before she was given an outside assignment because of their relationship.

However, sources had said on Wednesday the Thursday meeting of the 24-nation board was not expected to reach any decision, as it still had to determine how to proceed given the unprecedented nature of the situation,

Senior Democratic congressmen and other critics have pressed demands for his resignation, saying his actions have undermined the campaign against corruption in the developing world that has been a hallmark of his World Bank tenure.

The need for a speedy resolution to the scandal intensified on Wednesday when one of two deputies to Wolfowitz, a former No. 2 official at the Pentagon and key architect of the Iraq war, told him at a meeting of senior bank staff that he should resign.

The call by Graeme Wheeler, a bank veteran, showed the degree to which the matter has led to a near-paralysis at the poverty-fighting global lender.

Wolfowitz has made clear he has no intention of stepping down. Last week, he apologized for how he handled Riza's promotion, saying he was new at the bank and in "uncharted waters."

As news of the resignation call leaked out on Wednesday, the bank's staff association appealed to senior staff to throw their support behind Wheeler, a New Zealander widely respected within the institution.

Wolfowitz's first two years at the helm of the bank has been rocked by controversy, starting in mid-2005 when he brought in aides from the White House and Pentagon, sidelining several long-serving staffers, many of whom have since quit.

The decision by Wolfowitz to surround himself with an inner circle of close advisers, left an impression among other staff that he distrusted them and would prefer to rely his own coterie for advice.

The White House on Wednesday repeated that President George W. Bush retained full confidence in Wolfowitz.

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