By Brian Knowlton Published: April 12, 2007

WASHINGTON: Paul Wolfowitz, the World Bank president, made his most candid admission of error Thursday for having helped to steer a close female friend and Bank associate into a particularly well-remunerated job, but he faced open revolt from many of his subordinates and his future at the Bank was less than clear.

"I made a mistake, for which I am sorry," Wolfowitz said in a statement read during a news conference, which , came awkwardly, as hundreds of finance and economics ministers from around the world were gathering for the annual spring meetings this weekend of the World Bank and the International Monetary Fund.

The staff's anger over Wolfowitz's apparent preferential treatment for the friend, Shaha Riza - who was seconded to the State Department in 2005, shortly after Wolfowitz became bank president, and has since received substantial raises - had been bubbling for weeks.

The executive board of the World Bank was meeting late Thursday, and there appeared to be a real possibility that Wolfowitz might have to resign. He had met with its members informally early in the day.

But no member of the board had publicly withdrawn support from Wolfowitz, whose term normally would run to 2010.

Much of the staff anger had to do with the high level of compensation paid to Riza, whom Wolfowitz has dated. It has been estimated at $193,000, which would exceed that of Secretary of State Condoleezza Rice by about $10,000.

Wolfowitz said Thursday that he had made the decision regarding Riza soon after joining the bank, while he was still in "uncharted waters." In a statement posted on the World Bank's Web site, Wolfowitz said he had confessed his "potential conflict of interest" to the board when he arrived. He said he took the issue to its Ethics Committee and ultimately took that panel's advice, "to promote and relocate Ms. Shaha Riza."

Still, he said, "in hindsight, I wish I had trusted my original instincts and kept myself out of the negotiations" over her salary. "I proposed to the board that they establish some mechanism to judge whether the agreement reached was a reasonable outcome," he said. "I will accept any remedies they propose."

Asked by reporters whether he was prepared to resign, he said only: "I take full responsibility for the details. I did not attempt to hide my actions nor make anyone else responsible."

Some critics consider the matter particularly nettlesome because Wolfowitz, whether he technically violated bank rules or not, has made the fight against corruption a central goal of his presidency. Whatever action the board takes, it appeared that the flap might revive longtime calls by Europeans to rethink the understanding by which the United States traditionally has nominated the World Bank's presidents while Europeans pick the leader of its sister organization, the IMF.

Wolfowitz's tenure at the 185-nation World Bank has been controversial from the beginning. A former deputy defense secretary, he left the Bush administration under what, for many at the World Bank, was the cloud of having been a key advocate of war with Iraq. And he brought with him a cadre of advisers who rubbed some at the global institution the wrong way.

In addition, many at the bank - which provides low- or no-interest loans to developing countries - have been critical of Wolfowitz's emphasis on steering assistance away from countries deemed particularly corrupt. That, the critics say, means that some of the world's poorest people are being punished for the actions of their rulers.

Riza is making an estimated $193,590 - about $60,000 more than when she left the Bank in 2005 - according to a watchdog group, the Government Accountability Project. That is a high figure even by the relatively generous standard of World Bank salaries (the Bank does not disclose salaries). Before her secondment, she was a communications adviser in the Middle East section.

Earlier this week, Wolfowitz sought to turn attention away from the Riza matter - noting that a committee had been named to investigate it - and toward issues like poverty, corruption and environmental problems. But criticism from the bank's staff has flared sharply, even as world finance officials converge on Washington. Riza, meantime, has not commented publicly on the matter.

Whether or not Wolfowitz survives his current troubles, the World Bank clearly has been rattled.

"The bank under President Wolfowitz is confronting some major issues of focus, process and morale," said Edwin Truman, who was an assistant treasury secretary for international affairs in the second term of President Bill Clinton, and is now with the Peter Peterson Institute for International Economics. "It is good that Wolfowitz has admitted he made a mistake. Let's hope that this allows the bank and its shareholders to address the big issues."

But he said he did not believe, based on the latest information, that Wolfowitz's job was in jeopardy.

See corruption is everywhere not just in Nepal. From contracts in Iraq now this ? Thought Democrats were bad during Clinton yrs. This is like khuleyaam ghush diney liney. Man!! hope he gets canned. From what I heard He's so called galfren makes more $$$ than Conde Rice. :-)

Corruption will be there, but there should be a system so that it comes out to the public to let people know of the truth and have a system to punish the culprits through the rules and regulations. That system is only possible in the system of your 'demoquashy'. What we're having now is not really democracy yet, it is still the quasi-democracy as the culprits have never been punished in our system yet including king gyanendra and maoists as well, and all so-called committees formed has been just to calm down the public.

Talking about corruption here you go another one!

Former CA CEO Sanjay Kumar To Pay Over $52 Million
By Tom Hays
April 13, 2007 11:26AM


Prosecutors said Sanjay Kumar, former CEO of Computer Associates, plotted to report more than $2 billion in false revenue between 1999 and 2000, and was the architect of an elaborate fraud and cover up that included backdating contracts, lying under oath, and trying to buy the silence of a potential witness.

A judge has signed off on a restitution agreement requiring the former chief executive of Computer Associates International Inc. to pay at least $52 million -- including proceeds from the sale of his yacht and pair of Ferraris -- to victims of a huge accounting fraud at one of the world's largest software companies.

U.S. District Judge Leo Glasser approved the deal on Friday following a brief hearing in Brooklyn at which a special master overseeing a restitution fund announced that tens of thousands of people who lost money on the company would recover only a small fraction of their investments.

The agreement with Sanjay Kumar, who was sentenced to 12 years in prison in November for his role in the scandal, would theoretically make him liable for as much as $798.6 million in payments to investors.

Prosecutors acknowledge, though, that Kumar and his family will probably never have enough money to pay that amount.

The deal, which was filed earlier this month, calls for Kumar to instead make installment payments of $40 million, $10 million and $2 million by December of 2008, then pay 20 percent of his annual income once he is released from prison.

Those payments would continue for the rest of his life.

Kumar, 45, will be forced to sell off his stock portfolio, a 57-foot yacht in Naples, Fla., and four cars, including the Ferraris. But his family will keep its estate in Upper Brookville, on Long Island.

The agreement "allows his family to live reasonably well," said Kumar's attorney, Lawrence McMichael. "That's fair. They didn't commit a crime."

Kumar, who attended the hearing, left court without speaking to reporters. He must report to prison on Aug. 14.

The $52 million will go into a restitution fund that currently totals about $235 million, said the special master, Kenneth Feinberg. The roughly 95,000 investors who are eligible for restitution will recover only about 2.3 percent of their loss, he said.

The judge acknowledged that many investors would be disappointed with the payouts. "But that's the nature of the beast," he said.

Kumar pleaded guilty a year ago to obstruction of justice and securities fraud in connection with his actions at the company, which since has become known as CA Inc.

Prosecutors said Kumar plotted to report more than $2 billion in false revenue between 1999 and 2000, and was the architect of an elaborate fraud and cover up that included backdating contracts, lying under oath, and trying to buy the silence of a potential witness.

As part of the deal, the government agreed not to pursue certain assets held by Kumar's relatives. It also waived an $8 million fine that was imposed at sentencing, with the intent of making more money available to fraud victims.

CA Inc., which says it is the fifth largest independent software company in the world based on revenues, now has about 15,000 employees worldwide. It is based in Islandia, on Long Island.