Wolfowitz to step down as Bank chief

World Bank President Paul Wolfowitz, embroiled in a favouritism scandal for arranging a hefty pay package for his girlfriend, today announced that he was stepping down by June-end in the "best interests" of the bank, after resisting for weeks the demand for his ouster.

"I have concluded that it is in the best interest of those whom this institution serves for its mission to be carried forward under new leadership," Wolfowitz said in a statement.

The World Bank chief was in the eye of a storm for arranging a generous promotion and pay package for his girlfriend Shaha Riza.

Announcing Wolfowitz's resignation, the 24-member Bank board said, "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".

A Bank panel had found that Wolfowitz violated conflict of interest rules in his handling of the issue.

Wolfowitz said he was pleased that the board "accepted my assurance that I acted ethically and in good faith in what I believed were the best interests of the institution, including protecting the rights of a valued staff member."

From the very start Wolfowitz maintained that he went by the suggestions of the ethics committee in 2005 as he sought to handle the affairs of his girlfriend.

The statement of the Board made no mention of any financial arrangements related to Wolfowitz's departure, nor did it speak to Riza's future.