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A former aide to Gordon Brown and board member of the World Bank denied allegations that his partner received preferential treatment because of his position.
Tom Scholar, widely tipped to become the Chancellor's chief of staff when he becomes prime minister, has issued a statement saying there is no conflict of interest having a girlfriend who is also a World Bank employee.
The institution's president Paul Wolfowitz announced on Thursday night that he would resign at the end of June over a generous pay and promotion package he arranged for his partner.
Outgoing Prime Minister Tony Blair is a contender for the job, according to Joe Stiglitz, one of America's most respected economists.
The allegations against Mr Scholar, appointed by the Treasury to be the British Government's executive director on the bank's board, appeared in an email leaked to the Wall Street Journal.
The message was sent late last year to the investigations hotline of the World Bank's department of institutional integrity, under the heading the "Hypocrisy of ED Tom Scholar"
It said: "Please know, that UK ED Tom Scholar is continuing an affair with (a bank employee).
"This woman has been given preferential treatment in (the department) because of her relationship with this powerful ED, this affair is well known, and is in violation of the bank staff rules and the board's standards of conduct."
Mr Scholar, the Chancellor's former principal private secretary, issued a statement denying the allegations.
He said: "I comply fully with the board's code of conduct and the relevant World Bank staff rules. There is no conflict of interest. I am not the supervisor of my partner, either directly or indirectly. We have never come into professional contact, and I have made arrangements to avoid any possibility of professional contact."
