Mr. Paul Wolfowitz - the arch neo-con who played an important role as Deputy Secretary of Defence to Donald Rumsfeld in the run upto the Iraq war – is taking the heat for arranging a promotion and pay rises for his girlfriend and World Bank staff Shaha Riza, in possible violation of bank rules.
This is the kind of personnel nepotism and corruption that Wolfowitz has stated he is trying to wipe out at the Bank and in the client governments of the Bank.
Now his own personal behavior belies what was his self-declared moral campaign against others' corruption both inside the bank and in client country governments.
It was amazing to see Wolfowitz getting booed by his own employees in a meeting of the bank's governing board that met two days back to decide his fate.
Amid calls for his resignation, Mr Wolfowitz yesterday repeatedly apologise for his role in this controversy.
Aid agencies said the controversy was distracting the world's leading aid institution from carrying out its role as a leader in development at a vital time. "The world's poor cannot afford a lame duck president at the World Bank," said Oxfam.
In a strongly worded editorial, the Financial Times also called on Mr Wolfowitz to stand down. Calling the controversy "lethal" to the bank's credibility, the paper's leader column said: "In the interests of the bank itself, he should resign. If he does not, the board must ask him to go."
Mr Wolfowitz's fate now lies in the hands of the bank's executive board members, each representing the World Bank's major donor nations, ranked by shares reflecting the importance of their stake. The bank's regulations allow the president to be dismissed by a simple majority of votes by shareholders - the US being the largest with 16% of shares.
So far, individual countries have not voiced any public support for Mr Wolfowitz, with executive board members awaiting instructions from their country's finance ministers, who are gathering in Washington this weekend for meetings.
The whole affair is a huge embarrassment for the bank and Mr Wolfowitz, especially given his desire for a tough stance against corruption and rewards for good governance. Critics say that Mr Wolfowitz's own actions have now made a mockery of those aims.