JAMES WOLFENSOHN, who headed the World Bank a decade ago as it backed the sale of state-owned companies in emerging economies, ignored subordinates’ warnings and helped a man later accused of stealing $182 million from investors in Azerbaijan, a watchdog group said.

The Government Accountability Project said in a report presented today to the US Treasury Department that Mr Wolfensohn disregarded staff warnings about Czech financier Viktor Kozeny, who tried in 1998 to buy Azerbaijan's state-run oil company.

Mr Kozeny (45) holds an Irish passport as a result of his investment in 1995 of £1 million (€1.27 million) in the Irish Medical Systems software company.

Mr Wolfensohn met with Mr Kozeny and then wrote a letter absolving him of any wrongdoing, which helped Mr Kozeny attract investors whom he later cheated, the non-profit group said.

"None of the World Bank officials in a position to anticipate corruption was able to expose it, given that the bank president had helped to conceal it," according to the report. Mr Wolfensohn "lent his reputation and his institutions support to precisely the kind of fraud and theft that he so frequently denounced".

The report may tarnish the bank as it recovers from the resignation last year of president Paul Wolfowitz, who quit after the same group reported that he'd given a pay raise to a female employee with whom he was romantically involved.

Mr Wolfensohn (74), who emphasised anti-corruption measures as World Bank president, said through a spokesman that the report is wrong.

Jean-Louis Sarbib, managing director of Wolfensohn Co, a New York-based mergers advisory firm, said in a letter that Wolfensohn asked his vice-president to review Kozeny's complaint that World Bank staffers had disparaged him. The vice-president's review found that the staffers hadn't criticised Mr Kozeny, Mr Sarbib said.

Mr Wolfensohn relayed that conclusion to Mr Kozeny and to Azeri officials in a December letter. -( Bloomberg)