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Wolfowitz steps down

Broadcast: 18/05/2007

Reporter: Tom Iggulden

After resisting pressure to resign over a conflict of interest, World Bank president Paul Wolfowitz
says he is stepping down in the best interests of the organisation.


VIRGINIA TRIOLI: The World Bank president, Paul Wolfowitz, has ended weeks of speculation about his
future by stepping down from his position.

His resignation comes amid claims he arranged a promotion and pay increase for his partner Shaha

The former US deputy secretary of defence is a close ally and friend of President Bush, and during
his short time at the bank had been leading a drive to reform the institution.

Tom Iggulden reports.

TOM IGGULDEN: Today came the bank statement that Paul Wolfowitz had been hoping would never arrive.
In a carefully worded announcement, the World Bank said while Paul Wolfowitz had acted ethically
and in good faith, he'd inadvertently broken the Bank's rules and would be resigning next month.

The furore began weeks go when it was revealed Mr Wolfowitz arranged generous pay and promotions
for this woman, Shaha Ali Riza, a bank employee and Mr Wolfowitz's companion.

PAUL WOLFOWITZ, WORLD BANK PRESIDENT: Not only was this a painful personal dilemma, but I had to
deal with it when I was new to this institution and I was trying to navigate in unchartered waters.

TOM IGGULDEN: He's been steadfastly refusing to resign but two days ago began negotiating an exit
with the Bank's board, as calls for heads to roll grew louder.

He leaves with a large pay out and an acknowledgment from the bank that he was poorly advised.
President Bush offered his commiserations before the official announcement.

GEORGE W BUSH, US PRESIDENT: First of all, I believe all parties in this matter have acted in good
faith. I regret that it's come to this. I admire Paul Wolfowitz. I admire his heart. And I
particularly admired his focus on helping the poor.

TOM IGGULDEN: But the announcement was welcomed by the bank's staff.

WORLD BANK EMPLOYEE: Mr Wolfowitz has finally done the necessary thing by resigning. He has damaged
the institution and continues to damage it every day that he remains as its president. He cannot
continue to be the face of the World Bank. He has demeaned the bank, insulted the staff, diminished
its clients and dragged this institution through the mud.

TOM IGGULDEN: A chief architect of the war in Iraq...

(Excerpt of archival footage)

PAUL WOLFOWITZ: I am reasonably certain that they will read us as liberators.

(End of excerpt)

TOM IGGULDEN: ...and an ally of President Bush, Mr Wolfowitz was always a controversial choice to
run the bank. His aim is to fight world poverty.

IAN VASQUEZ, CATO INSTITUTE: This will be the most contentious nomination in for history of the
World Bank. Precisely because Bush's foreign policy is not held in high esteem by the other major
members of the World Bank.

TOM IGGULDEN: After his appointment, Mr Wolfowitz made corruption his highest priority.

DR GEORGE AYITTEY, FREE AFRICA FOUNDATION: Corruption alone costs Africa $148 billion. The Bank
knew this, did nothing. So when Wolfowitz came and made corruption - anti corruption campaign - its
number one priority, it resonated with a lot of Africans.

TOM IGGULDEN: But the perception of special treatment for his partner was contrasted with Mr
Wolfowitz's attempts to tie anti corruption measures to the Bank's $27 million in loans and grants
delivered to developing countries annually.

DR GEORGE AYITTEY: Even if he had been exonerated completely, a lot of people recognise that there
was too much acrimony and rancour at the World Bank and the relationship... The entire atmosphere of
the bank had been poisoned, which will have made it literally impossible for him to be an effective

TOM IGGULDEN: Former US trade negotiator, Robert Zellik, who Mr Wolfowitz beat for the position 18
month ago, is favourite to replace him in the position.

Tom Iggulden, Lateline .