The former US deputy defense secretary is accused of personally arranging a lucrative pay-and-promotion package and transfer to the State Department for his companion and fellow bank employee, Shaha Riza.

He was due to appear before the bank's 24 executive directors at 5:00 pm (2100 GMT) to explain his actions.

"Again we support him, but we also know, and he has said, that he is willing to be sitting down with members of the World Bank to try to figure out the proper way to serve the best interests of the institution," White House spokesman Tony Snow said Tuesday.

Snow, who unreservedly has voiced support for the former Pentagon hawk of President George W. Bush's administration, commented after the release late Monday of a damning World Bank report.

In the 52-page report, an investigatory panel named by the executive board to examine accusations against Wolfowitz concluded that he had violated the terms of his contract, the bank's code of professional conduct and three staff rules.

"By involving himself in the specific terms of Ms. Riza external assignment, Mr. Wolfowitz acted in a manner that was inconsistent with his obligations to the bank," the report said.

Shortly after Wolfowitz's arrival at the helm of the bank in June 2005, Riza, who worked as a bank communications specialist, was transferred to the US State Department and received a generous pay increase, deemed "in excess" of bank standards by the panel, while still on the bank's payroll.

The bank's ethics committee had recommended the transfer of Riza but in supervising it and arranging for salary hikes and promotions Wolfowitz violated rules, the ad hoc panel found.

"The ad hoc group concludes that the president placed himself in a conflict of interest situation," they wrote.

However, the panel recognized one of Wolfowitz's arguments in his defense: that the ethics committee had failed to provide him clear guidance.

But the overall conclusions of the report were scathing: "The current situation has generated a crisis not only in the management ranks, but across the institution," where a number of staff have openly called for Wolfowitz's resignation.

The European Union's German presidency expressed hope yesterday that the "integrity and credibility" of the World Bank could be restored

"There has to be a strong World Bank with a strong president," said German Development Minister Heidemarie Wieczorek-Zeul, whose country holds the rotating EU presidency.

"What we hope is that the integrity and the credibility of the bank can be preserved, that is to say re-established," she told a news conference in Brussels.

WHITE HOUSE BACKS WOLFOWITZ
The White House said yesterday that it still supported embattled World Bank president Paul Wolfowitz, who is caught up in a favoritism scandal, but added the lender's best interests had to be preserved.

"Again we support him, but we also know, and he has said that he is willing to be sitting down with members of the World Bank to try to figure out the proper way to serve the best interests of the institution," said White House spokesman Tony Snow.

Snow's comments came as Wolfowitz was due to appear before the World Bank board later Tuesday after a report accused him of breaking the rules by securing a generous pay deal for his girlfriend, fellow bank employee, Shaha Riza.

Wolfowitz was expected to fight hard for his job before the 24-member executive board, which will discuss and eventually decide his fate.

But a month of scandal surrounding Wolfowitz has divided the bank's 185 member states, with the United States standing by Wolfowitz and European governments and others pushing for his exit.

US President George W. Bush has continue to support Wolfowitz, 63, a former deputy defense secretary and an architect of the Iraq war even though bank executives have warned of a crisis of leadership at the international lender.

"There are two tracks going on right now. Number one we've made clear that we support Paul Wolfowitz," said Snow.

"And the separate track is what is gonna be best for the institution."

Snow said Wolfowitz agreed "that certainly a lot of mistakes were made in the personnel process, but it's not a firing offense."

But he stressed the White House was not trying to send a mixed message by voicing support for Wolfowitz while at the same time mentioning the World Bank's interests.