Washington – World Bank President Paul Wolfowitz will resign at the end of June, he and the bank said late Thursday, ending his long fight to survive pressure for his ouster over the generous compensation he arranged for his companion.
His departure culminates a two-year run at the development bank that was marked by controversy from the start, given his previous role as a major architect of the Iraq war when he served as the No. 2 official at the Pentagon.
“He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution and we accept that,” the board said in its announcement of Wolfowitz’s resignation.
Wolfowitz was all but forced out, however, by the finding of a special bank panel that he violated conflict-of-interest rules in his handling of the 2005 pay package for his girlfriend, bank employee Shaha Riza.
The controversy was seen as a growing liability that threatened to tarnish the poverty-fighting institution’s reputation and hobble its ability to persuade countries around the world to contribute billions of dollars to provide financial assistance to poor nations.
By tradition, the World Bank has been run by an American. The Bush administration keenly wanted to keep that decades-old practice firmly intact as the board dealt with Wolfowitz’s fate. The United States is the bank’s largest shareholder.
The White House said it would have a new candidate to announce soon.
Earlier Thursday, President Bush had seemed resigned to the likelihood that Wolf owitz would lose his job over the conflict-of-interest charges.
“I regret that it’s come to this,” Bush said.
In its statement, the bank’s board said it was clear that a number of people had erred in reviewing Riza’s pay package.
Riza worked for the bank before Wolfowitz took over as president in June 2005. She was moved to the State Department to avoid a conflict of interest but stayed on the bank’s payroll. Her salary went from close to $133,000 to $180,000. With subsequent raises, it eventually rose to $193,590.
Wolfowitz, who had fought the pressure to resign for weeks, had sought a recognition from the bank that he did not bear sole responsibility for the matter. In his own statement Thursday, Wolfowitz said he was pleased that the board “accepted my assurance that I acted ethically and in good faith in what I believed were the best interests of the institution, including protecting the rights of a valued staff member.”
The board’s statement made no mention of any financial arrangements, nor did it speak to Riza’s future.
As a result of the controversy, the board pledged to review the World Bank’s ethics policies, noting that “the bank’s systems did not prove robust to the strain under which they were placed.”
Possible replacements mentioned for Wolfowitz are former Deputy Secretary of State Robert Zoellick; Robert Kimmitt, the No. 2 man at the Treasury Department; and Treasury Secretary Henry Paulson, among others.
