Wolfowitz to resign from World Bank
By Steven Weisman Published: May 17, 2007


WASHINGTON: Paul Wolfowitz this evening ended weeks of furor over charges of favoritism toward a bank employee who is his female companion and announced his resignation as president of the World Bank, effective June 30.

The bank board backed away from threats to force Wolfowitz to resign for violating his contract, as a special investigative committee had concluded, and instead accepted his claim that his actions were honorably intended.

The resignation brought a dramatic conclusion to two days of negotiations between Wolfowitz and the bank board, which went along with his demands for an exoneration of the charges that he had broken ethics and governance rules in arranging for a generous pay and promotion package for Shaha Ali Riza, his girlfriend, in 2005.

"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's directors said. "We also accept that others involved acted ethically and in good faith."

In a carefully negotiated statement, the board praised Wolfowitz for his two years of service at the bank, and especially for his work in arranging for debt relief and pressing for more assistance to poor countries, especially in Africa, and also combating corruption, which was Wolfowitz's signature issue.

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said he was grateful for the directors' decision and, referring to the bank's mission of helping the world's poor, added: "Now it is necessary to find a way to move forward. To do that I have concluded that it is in the best interests of those whom this institution serves for that mission to be carried forward under new leadership."

Earlier Thursday, President George W. Bush expressing regrets about the pending downfall of Wolfowitz during a news conference with Prime Minister Tony Blair, who was paying his last official visit to the White House before leaving office this summer.

"First of all, I believe all parties in this matter have acted in good faith," Bush said in response to a question, employing language similar to that the World Bank later used in its statement.

"I regret that its come to this," the president added. "I admire Paul Wolfowitz. I admire his heart, and I particularly admired his focus on helping the poor."

Wolfowitz had previously been an architect of the Iraq war while serving as a deputy defense secretary in the first Bush term.

Wolfowitz's desire to stay on at the bank through the end of June was attributed by bank officials to him wanting to show that he still had sufficient confidence of the board to manage the banks affairs, and to represent it at international meetings, despite the allegations of misconduct.

Some bank officials said the bank staff had signaled to the board that they wanted Wolfowitz to leave out of fear that he might retaliate against his critics.

Bank officials briefed on the mood of the board said the anger and impatience of the World Bank's staff was a major factor in the negotiations with Wolfowitz.

The board's 24 members represent countries or groups of countries. It does not have a chairman. Instead it has a "dean," who holds his job by virtue of seniority, and who does not have the authority to act on the board's behalf.

The dean, Eckhardt Deutscher, of Germany, was a known advocate of ousting Wolfowitz and adopting the special committee's conclusions that he had violated bank rules.

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