April 23 (Bloomberg) -- World Bank President Paul Wolfowitz, under investigation by the bank's board of directors, hired Robert Bennett, an attorney who represented former President Bill Clinton against sexual harassment claims.

Wolfowitz retained Bennett, a partner at Skadden, Arps, Slate, Meagher & Flom LLP, a day after the board on April 20 set up a group to probe the World Bank chief's decision to give his companion a pay increase.

The head of the Washington-based global development agency also sent an e-mail to bank staff late on April 20, encouraging employees to focus on their daily responsibilities while the board deliberates. Wolfowitz has said he intends to stay and continue the bank's ``important work'' even as key members said credibility in the bank's anti-corruption drive was at stake and former officials called for him to resign.

``I've handled hundreds of conflict of interest cases, and this is a `nothing' case,'' Bennett said in a telephone interview in Washington yesterday. ``The scandal has been created'' by people who oppose Wolfowitz, he said.

Bennett declined to specify the scope of his employment, including whether he would manage Wolfowitz's communications with the board over the investigation. He also declined to discuss the specifics of the case.

The World Bank's 24-person board of directors three days ago ordered a group of its members to make ``early recommendations'' on Wolfowitz's future, while refraining from announcing a timeframe. The board also broadened its investigation to include the employment contracts of Wolfowitz's top advisers.

Call to Resign

In a letter published in the Financial Times today, 42 former World Bank executives said the only way Wolfowitz could ``further the mission of the bank'' would be to resign.

``We believe that he can no longer be an effective leader,'' the former officials said in the letter. ``The World Bank must remain credible if it is to speak with the moral authority necessary to move the poverty agenda forward,'' they wrote.

The group didn't endorse a potential successor. The World Bank president traditionally is chosen by the U.S. Robert Zoellick was the leading candidate to head the bank in 2005 before the White House named Wolfowitz to the post. Zoellick became deputy secretary of State, a position he left last year. He now works at Goldman Sachs Group Inc.

Speculation about possible replacements increased last week, even as the Bush administration reiterated its support. The Washington Post reported April 20 that United Nations Development Program Chief Kemal Dervis could be a candidate, while the Times of London cited Afghan Finance Minister Ashraf Ghani.

Bush's Confidence

President George W. Bush ``still has confidence'' in Wolfowitz, White House Deputy Press Secretary Dana Perino told reporters in Washington on April 20.

Wolfowitz, a 63-year-old former U.S. deputy secretary of defense, stirred controversy among staff members by appointing advisers he recruited from the Bush administration. He said on April 12 that he would organize his office ``to put them in the structure better.''

Three months after becoming president in June 2005, Wolfowitz sent companion Shaha Riza, 52, on assignment to the State Department to comply with rules forbidding one partner from reporting to another. Riza, who stayed on the bank's payroll, received a promotion and a 36 percent pay increase that was twice as large as allowed by bank rules, according to the Staff Association, which represents employees.

European nations including the Netherlands, Luxembourg, Switzerland and France have been critical.

`Act Accordingly'

``The matter must be clarified in full and those that represent the different groups in the World Bank must act accordingly,'' Luxembourg Finance Minister Jean-Claude Juncker said April 20 after chairing a meeting with his euro-region counterparts.

Wolfowitz may struggle to isolate the investigation from the bank's work. The controversy overshadowed the semiannual gathering of the bank's 185 member-nations earlier this month and continues to preoccupy executives. A group of seven board members scratched a nine-day trip to Mongolia and the Philippines that was scheduled to start late this month.

With Bennett, Wolfowitz brings a lawyer experienced in handling crises. The attorney represented Clinton during the sexual harassment lawsuit brought by Paula Jones. He also worked for former New York Times reporter Judith Miller in a case involving the leak of the identity of a covert Central Intelligence Agency agent.

``I believe in the mission of this organization, and I believe I can carry it out,'' Wolfowitz said April 16. ``This is important work and I intend to continue it.''

To contact the reporter on this story: William McQuillen in Washington at bmcquillen@bloomberg.net

Last Updated: April 23, 2007 09:15 EDT