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Wolfowitz to resign from World Bank

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  • Greg Cannon
    http://news.yahoo.com/s/ap/20070517/ap_on_bi_ge/world_bank_wolfowitz;_ylt=Aq20S9HModz77rIMuIy0W6Ws0NUE Wolfowitz to resign from World Bank By JEANNINE AVERSA,
    Message 1 of 1 , May 17, 2007
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      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 girlfriend.

      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
      pay package.

      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
      Democratic politicians.

      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
      bank rules.

      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
      report said.

      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.
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