Paul Wolfowitz to resign from World Bank in June

World Bank President Paul Wolfowitz said Thursday he will resign at the end of June, giving up 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 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 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, the AP reports.

Pressure for Wolfowitz to resign had increased over the past few days from European and other governments, including in Germany, where Wolfowitz was due to attend a meeting of finance chiefs from the Group of Eight industrial nations this weekend.

The G8 nations -- the United States, Japan, Canada, Italy, France, Germany, Britain and Russia -- are among the bank's largest shareholders and it biggest funders, Reuters reports.

World Bank watchers say possible successors include Robert Zoellick, the former U.S. trade representative who is now a Goldman Sachs Group Inc. executive; Allan Hubbard, director of the White House National Economic Council; and even Treasury Secretary Henry Paulson.

Wolfowitz resigned after three days of negotiations with the bank's directors yielded a compromise that allowed him to avoid sole responsibility for his involvement in a pay-and- promotion package for his companion, Shaha Riza.

“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 directors said in a statement.

A panel of seven directors on May 6 told Wolfowitz that he had violated staff rules and his employment contract when he dictated the terms of a 36 percent pay increase for Riza, along with guarantees of further 8 percent annual increases. The panel, in its report, told the full 24-member board that the bank's reputation had been damaged and the board should consider firing him, Bloomberg reports.

Source: agencies

Prepared by Alexander Timoshik

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Author`s name Alex Naumov