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Wolfowitz to quit the World Bank World Bank head Wolfowitz to quit
(about 2 hours later)
Paul Wolfowitz is to quit as president of the World Bank following a bitter promotion row involving his partner. Paul Wolfowitz is to quit as president of the World Bank following a bitter promotion row involving his girlfriend.
The global lending body said Mr Wolfowitz would step down on 30 June and that it would begin the search for a successor immediately. After lengthy talks with the bank's board, Mr Wolfowitz said he would quit the global lending body on 30 June.
Mr Wolfowitz faced widespread calls for his resignation after being accused of a conflict of interest over a pay rise given to ex-Bank employee Shaha Riza. He had faced widespread calls for his resignation after being accused of a conflict of interest over a pay rise given to ex-bank employee Shaha Riza.
The White House, which had backed Mr Wolfowitz, said President George W Bush reluctantly accepted his decision.
The former US deputy defence secretary joined the World Bank in 2005.The former US deputy defence secretary joined the World Bank in 2005.
The Bank said it would start an immediate search for his successor.
'Good faith''Good faith'
In a statement, the World Bank said it had been assured by Mr Wolfowitz that he had "acted ethically and in good faith". In a statement, the board of directors said it accepted Mr Wolfowitz's assurances that he had "acted ethically and in good faith".
I have concluded it is in the best interests of those whom the institution serves for that mission to be carried forward under new leadership Paul WolfowitzI have concluded it is in the best interests of those whom the institution serves for that mission to be carried forward under new leadership Paul Wolfowitz
But it acknowledged that a "number of mistakes" had been made in how Ms Riza's role and remuneration had been handled.But it acknowledged that a "number of mistakes" had been made in how Ms Riza's role and remuneration had been handled.
It added that it "regretted" that Mr Wolfowitz's achievements at the Bank had been "overshadowed by recent events". The board added that it "regretted" that Mr Wolfowitz's achievements at the Bank had been "overshadowed by recent events".
In response, Mr Wolfowitz said his decision to resign was "in the best interests" of the institution, which has more than 180 members worldwide.In response, Mr Wolfowitz said his decision to resign was "in the best interests" of the institution, which has more than 180 members worldwide.
Mr Wolfowitz has been under severe pressure for several weeks, with a number of European politicians calling on him to step down to prevent the Bank's credibility in tackling corruption worldwide from being eroded. Mr Wolfowitz has been under severe pressure for weeks, with a number of European politicians calling on him to step down to prevent the Bank's credibility in tackling corruption worldwide from being eroded.
The White House strongly supported Mr Wolfowitz - although experts believed its influence would not be enough to save his position in the face of European hostility.The White House strongly supported Mr Wolfowitz - although experts believed its influence would not be enough to save his position in the face of European hostility.
President George W. Bush said earlier on Thursday that he regretted the current situation. President George W Bush said earlier on Thursday that he regretted the crisis over his conduct.
However, the World Bank's staff association said Mr Wolfowitz had done the necessary thing by resigning.
"He has damaged the institution and continues to damage it every day that he remains as its president," an association spokeswoman said.
Conflict of interestConflict of interest
Mr Wolfowitz faced calls to resign since details emerged about his role in securing a pay rise for Ms Riza, who used to work at the bank. Mr Wolfowitz faced calls to resign after details emerged about his role in securing a pay rise for Ms Riza, who used to work at the bank.
When Mr Wolfowitz was appointed to head the body, Ms Riza was transferred to work for the US state department, to avoid any conflict of interest. When appointed to head the body in 2005, he notified the bank of a potential conflict of interest because of his relationship with Ms Riza.
The World Bank lends money to the poorest countries in the world He asked that he be allowed to recuse himself, or step aside, from any decisions regarding Ms Riza's future.
But her salary rose quickly to about $193,000 (£98,000) - more than the $186,000 that Secretary of State Condoleezza Rice receives before tax. The bank's ethics committee acknowledged a conflict of interest but did not allow Mr Wolfowitz to recuse himself.
A panel of World Bank found that Mr Wolfowitz had provoked a "conflict of interest" by breaking its code of conduct and violating the terms of his contract. Mr Wolfowitz then proposed to move Ms Riza to the US state department, where she would be paid and promoted apparently in line with her prospects at the World Bank.
As recently as Wednesday, Mr Wolfowitz's lawyer said the 24-members of the Bank's board of directors would have to vote to sack him if it wants him to leave. The bank accepted and Ms Riza was duly transferred. Her salary rose quickly to about $193,000 (£98,000) - more than the $186,000 that Secretary of State Condoleezza Rice receives before tax.
A panel of the World Bank later found that Mr Wolfowitz had provoked a "conflict of interest" by breaking its code of conduct and violating the terms of his contract.
The panel found that the salary Mr Wolfowitz arranged for Ms Riza had been higher than her due and that he had acted "in opposition to the rules of the institution".
Salary entitlement
While admitting he made a mistake in his handling of the case, Mr Wolfowitz says he has been the victim of a smear campaign and ought to have followed his initial instinct to recuse himself.
As recently as Wednesday, Mr Wolfowitz's lawyer said the 24-members of the board would have to vote to sack him if it wants him to leave.
The board is made up of representatives of the Bank's leading members including the US, UK, Japan, France and Germany.The board is made up of representatives of the Bank's leading members including the US, UK, Japan, France and Germany.
The Bank gave no further details of its agreement with Mr Wolfowitz, who was appointed for a five-year term on 1 June 2005. The bank gave no further details of its agreement with Mr Wolfowitz, who was appointed for a five-year term on 1 June 2005.
His contract states that he is entitled to a year's salary should he resign or be removed from office as long as he served a year in the job.His contract states that he is entitled to a year's salary should he resign or be removed from office as long as he served a year in the job.