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KATHLEEN SCHALCH: When Paul Wolfowitz took over the helm of the World Bank in 2005, he created a personnel problem. A woman he had been dating for years, Shaha Riza, already worked there. Bank rules say employees who are romantically linked can't supervise one another.

So Riza got a new outside job at the U.S. State Department. She also got a promotion.

World Bank expert Sebastian Mallaby says the process raised red flags.

SEBASTIAN MALLABY: Most people, when they got that kind of promotion, there is a huge, sort of, committee process to review the candidate, to check on the suitability of the candidate. In this case, the permission seems to have gone through rather unnaturally quickly.

SCHALCH: Along with her new job came a big raise.

DYLAN BLAYLOCK: She received a percentage increase that was almost double the percentage increase that a person in her position was allowed.

SCHALCH: Dylan Blaylock is a spokesman for a watchdog group called the Government Accountability Project.

BLAYLOCK: A year later, it happened again. To this point, she's making $193,000.

SCHALCH: Tax-free.

BLAYLOCK: Tax-free.

SCHALCH: He says the salary increase is a violation of bank rules. Riza now earns more than Secretary of State Condoleezza Rice. Even though Riza now works for a State Department-funded NGO, her salary is still being paid by the World Bank.

Bank staffers were outraged when they learned what had happened. The employee association wrote a letter demanding an explanation, and the bank's board of directors said it would investigate.

Wolfowitz has issued a statement accepting responsibility for, quote, "the actions taken." But Dylan Blaylock says the furor has not subsided.

BLAYLOCK: The atmosphere at the Bank is, from all accounts that we've received, terrible.

SCHALCH: Blaylock says Wolfowitz and his aides are furious.

BLAYLOCK: He's going to investigate who are the people who are leaking this information to us and to the press.

SCHALCH: Bank staffers say they fear a witch-hunt. At the same time, some have been emboldened. They've flooded the Bank's internal Web site with more allegations of wrongdoing and even call for Mr. Wolfowitz to resign. The latest postings concern the salaries of two of Wolfowitz' aides, said to be earning what bank vice-presidents typically get. World Bank expert Sebastian Mallaby says this scandal is serious.

MALLABY: The danger is that this issue is going to weaken the leadership of a leader of the World Bank who is already weak, who is weak in terms of having rocky relationships with some major borrowers like India, weak in terms of relationships with major shareholders like Britain, and weak in terms of his relationship with his staff.

SCHALCH: The World Bank did not respond to repeated NPR requests for comment. Critics point to what they view as an embarrassing irony. One of Wolfowitz' top priorities has been to root out corruption and investigate allegations of impropriety among bank staff. One former Bank official said, quote, "Paul built a glass house, and now, he's thrown a brick through it."

Kathleen Schalch, NPR News, Washington.

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