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Wolfowitz to resign as World Bank chief

WASHINGTON: World Bank President Paul Wolfowitz bowed to weeks of pressure Thursday and agreed to step down June 30 to end a favouritism scandal that had rocked the poverty-fighting institution.

Wolfowitz, 63, said he was resigning in the “best interests” of the bank, thus ending a scandal over a generous pay and promotions package for his girlfriend.

“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,” Wolfowitz said in a statement after three days of deliberations by the World Bank board.

Wolfowitz violated bank rules in arranging a generous promotion and pay package for the girlfriend shortly after he assumed the bank presidency in June 2005, according to an internal World Bank report made public Monday.

The report also said the bank gave Wolfowitz vague instructions on how to resolve the possible conflict of interest over Riza.

Wolfowitz said in his statement that he “acted ethically and in good faith” in what he believed “were the best interests of the institution, including protecting the rights of a valued staff member.”

The bank’s 24 executive directors also issued a statement that seemed tailored to meet Wolfowitz’s reported demand that the bank recognize their flawed advice in the Riza affair.

The announcements drew a delicate face-saving balance, acknowledging that wrongs were done on both sides but that all parties had acted in good faith.

The directors pointed to successes under Wolfowitz’s two-year tenure, such as debt relief, clean energy investment and avian flu projects.

“It is regrettable that these achievements have been overshadowed by recent events,” they said. The resignation deal leaves Wolfowitz in office, but with greatly reduced powers, according to a source close to the negotiations, who said the outgoing president agreed to not make any major decisions on policy or personnel matters.

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