Washington – Embattled World Bank President Paul Wolfowitz will resign at the end of June, his leadership undermined by the generous compensation he arranged for his girlfriend.
His departure was announced this afternoon by the World Bank board.
Wolfowitz’s departure ends 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.
In its announcement of his resignation, the board said: “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.”
His departure was all but forced, however, by the finding of a special bank panel that he violated conflict-of-interest rules in his handling of the 2005 pay package of bank employee Shaha Riza, whom he is dating.
The board said it was clear that a number of people had erred in reviewing the 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.
“I regret that it’s come to this,” President Bush said earlier today as the bank’s 24-member board resumed deliberations on Wolfowitz’s fate. “I believe all parties in this matter have acted in good faith.”
Pressure on Wolfowitz to step down had grown since Monday’s release of a bank panel report on his handling of the pay package.
Sen. Chris Dodd, D-Conn., who has presidential aspirations, introduced a resolution earlier today calling on Bush to name a new candidate to replace Wolfowitz. Dodd said the accusation against Wolfowitz “conflicts with the bank’s global mission of reducing poverty, aid development and promoting good governance in all nations in which it operates.”
European members – led by France, Germany and the Netherlands – also pushed for Wolfowitz to resign.
The 185-nation World Bank, created in 1945 to rebuild Europe after World War II, provides more than $20 billion a year for projects such as building dams and roads, bolstering education and fighting disease. The bank’s centerpiece program offers interest-free loans to the poorest countries.
By tradition, an American has run the bank, with the board’s approval. A European heads the bank’s sister agency, the International Monetary Fund.
