Wolfowitz to resign from World Bank
By JEANNINE AVERSA, AP Economics Writer 7 minutes ago
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 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
"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 of bank employee Shaha Riza.
The controversy, which gripped the bank for a month,
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, allowing for an orderly transition.
Earlier Thursday, President Bush had seemed resigned
to the likelihood that Wolfowitz 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
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."
Now, he said, it was in the best interest of the board
that its mission "be carried forward under new
The board's statement made no mention of any financial
arrangements related to Wolfowitz's departure, 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."
Wolfowitz waged a vigorous battle to save his job and
maintained he had acted in good faith.
European nations had led the charge for Wolfowitz to
resign. Those calls were backed by many on the bank's
staff, former bank officials, aid groups and some
Until near the end, the Bush administration had
professed support for Wolfowitz. But in a shift on
Tuesday, the White House indicated for the first time
it was open to his departure. It was the same day
Wolfowitz made a last-ditch plea to save his job
before the board.
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. The panel concluded that
the salary increase Riza received "at Mr. Wolfowitz's
direction was in excess of the range" allowed under
Wolfowitz "placed himself in a conflict of interest
situation" when he became involved in the terms and
details of Riza's assignment and pay package and "he
should have withdrawn from any decision-making in the
matter," the panel said. Under Wolfowitz's contract as
well as the code of conduct for board officials, he
was required to avoid any conflict of interest, the
The panel acknowledged that the informal advice
Wolfowitz received from the bank's ethics committee
"was not a model of clarity."
Still, the entire episode involving Wolfowitz's
handling of the pay package "underscores that there is
a crisis in the leadership of the bank," the panel
Before taking over the bank nearly two years ago,
Wolfowitz was the No. 2 official at the Pentagon and
played a lead role in mapping the U.S.-led war in
Bush tapped Wolfowitz for the job, a move that was
approved by the bank's board even though Europeans
didn't like him because of his role in the Iraq war.