His apology didn't ease concerns among the bank's staff association, which wants him to resign.
The growing controversy has overshadowed major development meetings this weekend and is raising fresh questions about whether Wolfowitz will stay on the job. The White House, however, expressed confidence in the embattled bank president.
At issue are the generous compensation and pay raises of a bank employee, Shaha Riza, who has dated Wolfowitz. She was given an assignment at the State Department in September 2005, shortly after he became bank president.
"In hindsight I wish I had trusted my original instincts and kept myself out of the negotiations," Wolfowitz said. "I made a mistake, for which I am sorry."
The World Bank Group Staff Association is demanding that Wolfowitz step down.
"The president must acknowledge that his conduct has compromised the integrity and effectiveness of the World Bank Group and has destroyed the staff's trust in his leadership," the association said Thursday. "He must act honorably and resign."
Wolfowitz said he met Thursday morning with the World Bank's board and that members were looking into the matter. He declined to discuss what actions, if any, the board could take.
"I proposed to the board that they establish some mechanism to judge whether the agreement reached was a reasonable outcome," he said, referring to Riza's transfer. "I will accept any remedies they propose."
Wolfowitz dodged a question about whether he would resign over the flap. "I cannot speculate on what the board is going to decide," he said. A World Bank spokeswoman would not comment on what range of options the board could consider or when it would finish its deliberations. The White House voiced its support for Wolfowitz. "Of course President Wolfowitz has our full confidence," said White House spokesman Tony Fratto. "His leadership is helping the bank accomplish its mission of raising living standards for poor people throughout the world. In dealing with this issue, he has taken full responsibility and is working with the executive board to resolve it." The Government Accountability Project, a watchdog group, estimated Riza's salary at $193,590 as a result of the job transfer and pay raises. The group says she was paid by the World Bank and remains on the bank's payroll. The World Bank would not comment on Riza's compensation, citing confidentiality concerns. "I take full responsibility for the details," of the job transfer, Wolfowitz said. "I did not attempt to hide my actions nor make anyone else responsible," he said. The job change was made, he said, to avoid a conflict of interest when he took his post at the World Bank, where Riza already worked. World Bank rules bar employees from supervising anyone with whom they had a personal relationship. "I took the issue to the Ethics Committee and after extensive discussions ... the committee's advice was to promote and relocate Ms. Shaha Riza," Wolfowitz said. "I made a good faith effort to implement my understanding of that advice," he explained. Riza worked as a communications adviser in the bank's Middle East Department before she was detailed to the job at the State Department. The State Department says Riza left in September 2006 and now works for Foundation for the Future, an international organization that gets some money from the department. The World Bank's stated mission is to fight poverty and improve the living standards of people in developing countries. It lends about $20 billion a year for various projects. Wolfowitz - who took the bank's helm on June 1, 2005 - asked for "some understanding" of his position in the controversy. "Not only was this a painful personal dilemma, but I also had to deal with it when I was new to this institution, and I was trying to navigate uncharted waters," he said. President Bush appointed Wolfowitz, a main architect of the Iraq war when he served as deputy defense secretary. His appointment was greeted with protests by international aid and other groups, and some worried he might use the bank to help America's allies and punish its enemies. When asked about those fears on Thursday, Wolfowitz said: "We're not playing favorites with anybody."