Sheldon Alberts, CanWest News Service – May 18, 2007
Facing the threat of outright dismissal, Paul Wolfowitz agreed yesterday to resign as president of the World Bank after failing to squelch a nepotism scandal that has roiled the global lending institution for weeks.
In a statement released on the World Bank's Web site, Mr. Wolfowitz said he will step aside June 30 amid outrage over his role in negotiating a $193,500- a-year State Department job for his girlfriend in 2005.
"I have concluded that it is in the best interests of those whom this institution serves for (the bank's) mission to be carried forward under new leadership," Mr. Wolfowitz wrote.
In a separate statement, the World Bank's executive board offered Mr. Wolfowitz a measure of personal vindication.
The board of directors said it accepted Mr. Wolfowitz's claim he had "acted ethically and in good faith" in arranging the job for Shaha Riza, a bank employee.
It was clear that "a number of mistakes were made by a number of individuals" in the negotiations to secure Ms. Riza the plum appointment, the statement said.
The resignation draws to a close a bitter controversy that pitted Mr. Wolfowitz, a former deputy defence secretary and architect of the war in Iraq war, against World Bank employees and European shareholders, who insisted on his departure.
Canada, which has one member on the World Bank's 24-person board of directors, initially sided with Mr. Wolfowitz. But Ottawa withdrew its support after a bank panel investigating the controversy ruled Mr. Wolfowitz broke several of the institution's rules.
After several days of backroom negotiations that included his White House sponsors, the bank's directors forced Mr. Wolfowitz's resignation by preparing a resolution expressing non-confidence in his leadership.
"I regret that it's come to this," U.S. President George W. Bush said prior to the announcement. "I admire Paul Wolfowitz. I admire his heart. And I particularly admired his focus on helping the poor."
In a statement after Mr. Wolfowitz's announcement, the White House said it hoped for an "orderly transition" at the bank and that Mr. Bush would announce a replacement candidate soon.
The United States traditionally selects the World Bank president because of its status as the institution's largest shareholder.
Mr. Wolfowitz, 63, was a controversial choice as bank president following his departure from the Pentagon in 2005. Many of the World Bank's European shareholders privately stewed about his appointment, primarily because of disputes over the Iraq war.
There were further internal clashes when Mr. Wolfowitz began instituting sweeping reforms to the bank's governance and an anti-corruption push.
But the internal tension exploded over his role in arranging the State Department secondment for Ms. Riza, who worked at the bank as a Middle East expert when Mr. Wolfowitz took over as president.
The job transfer to the State Department resulted in a pay hike from US$133,000 a year to US$193,500 a year, more than the salary of U.S. Secretary of State Condoleezza Rice
Bank rules forbid personal relationships between bank employees and supervisors.
In a report issued on Monday, the bank's investigative panel said Mr. Wolfowitz had violated ethical guidelines, breached his contract and damaged the institution's reputation. As part of the deal securing Mr. Wolfowitz's resignation, the bank's executive board refused in its statement yesterday to endorse those criticisms.
But neither did it fully accept Mr. Wolfowitz's demand, made during negotiations earlier this week, that the bank's ethics committee shared blame in the scandal by giving him poor advice on how to handle Ms. Riza's reassignment.
Mr. Wolfowitz "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. "We also accept that others involved acted ethically and in good faith."
It was expected that Mr. Wolfowitz would receive his full $375,000 tax-free salary as part of the terms of his resignation.
Last updated 20/05/2007