WASHINGTON, May 14 (Reuters) - World Bank President Paul Wolfowitz's handling of a promotion for his companion violated the terms of his contract and constituted a conflict of interest, a bank panel report found on Monday.

The panel recommended that the World Bank's 24-nation board in deciding the issue, 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."

In response, a spokeswoman for U.S. Treasury Secretary Henry Paulson said the panel's findings did not merit the dismissal of Wolfowitz.

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