Paul Wolfowitz lost his battle to hang on to his job as president of the World Bank on Thursday, announcing his resignation after a bitter international controversy. However, he managed to extract a statement from the bank’s executive board exonerating him for wrongdoing in engineering a generous pay rise for his partner, Shaha Riza, who is on the staff of the bank.
He is to step down at the end of next month, after two years at the bank.
“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 his resignation on Thursday night.
There was no mention of a financial arrangement involving Mr Wolfowitz, or of Ms Riza’s future at the bank.
Officials said the bank would announce an interim head on Friday.
The White House, which by tradition controls the selection of the bank president, said it would announce a new candidate soon.

Contenders
Early contenders for the post were thought to include Robert Zoellick, who has served as deputy secretary of state as well as trade chief in the Bush administration, and Jim Leach, the former Republican congressman from Iowa. Mr Wolfowitz’s resignation ended a saga which convulsed the bank for weeks, opening a chasm between America and European members, after it emerged that he had engineered a $60,000 pay rise for Ms Riza in violation of bank rules. The bitterness of the dispute was exacerbated by a fierce campaign by Mr Wolfowitz to shift some of the blame for that pay rise to other officials at the bank.
The bank’s board said: “A number of mistakes were made by a number of individuals in handling the matter under consideration,” and that “the bank’s systems did not prove robust to the strain under which they were placed.”
Mr Wolfowitz said he had concluded it would be in the best interests of the bank if he stood down. “I am pleased that, after reviewing all the evidence, the executive directors of the World Bank group have 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,” he said.