Mumbai: A World Bank committee report has found that President Paul Wolfowitz had violated ethics rules by awarding promotion and generous pay rise for his companion and that his involvement had gone against the bank''s interests.

Wolfowitz rejected the critical report while the United States showed no sign of yielding in its support for its former deputy defence secretary, saying the findings were no grounds to dismiss him.

"Mr. Wolfowitz''s contract requiring that he adhere to the Code of Conduct for board officials and that he avoid any conflict of interest, real or apparent, were violated," the panel said of Wolfowitz''s handling of a pay and promotion deal for World Bank Middle East expert Shaha Riza in 2005.

The salary increase Ms. Riza received at Mr. Wolfowitz''s direction was in excess of the range established by Rule 6.01," the report added.

Wolfowitz called the findings "unbalanced and flawed" and argued that the panel had omitted statements and documents that support his position.

The panel said Wolfowitz believes the blame lies with others and not with him.

It said he did not accept the bank''s policy on conflict of interest and tried to bypass rules that he believed did not apply to him. He sought to negotiate for himself a resolution different from that which would have applied to the staff he was selected to head, the panel said.

"The ad hoc group concludes that in actuality, Mr Wolfowitz from the outset cast himself in opposition to the established rules of the institution," it found.

The panel referred a final decision to the bank''s 24-nation board of shareholder governments, which meets on Tuesday when Wolfowitz will make a final pitch to hold on to his job.

The board is unlikely to make a final decision before Wednesday and it was still unclear if they would be forced to vote on the issue or decide by consensus.

In deciding the issue, the board should consider "whether Wolfowitz will be able to provide the leadership needed to ensure that the bank continues to operate to the fullest extent possible in achieving its mandate," the panel recommended.

Meanwhile, 37 country directors on the front line of the bank''s operations said in a letter to the board and to Wolfowitz that the leadership crisis had damaged the bank''s reputation and effectiveness in fighting poverty.

US Treasury Secretary Henry Paulson spoke to his counterparts in several other countries telling them he did not think "the facts merit dismissal," according to a spokeswoman.

The fact remains that Wolfowitz was a controversial choice by President George W. Bush to head the poverty-fighting institution because of his neoconservative background and high-profile role as an architect of the Iraq war.