Embattled World Bank President Paul Wolfowitz is negotiating an agreement to resign, NPR has confirmed. The development comes after the bank's board met on Wednesday to consider Wolfowitz's fate, and caps weeks of controversy swirling around the former deputy defense secretary.
The board ended Wednesday's meeting without taking any action. The body is considering a report by a special bank panel that found that Wolfowitz violated bank rules in 2005, when he arranged a promotion and pay raise for his girlfriend and bank employee, Shaha Riza.
Wolfowitz insists he did nothing wrong and was, in fact, acting under the advice of the bank's ethics committee when he arranged to have Riza transferred to the State Department. In its report, the bank panel reprimanded Wolfowitz for violating bank rules by boosting Riza's salary by nearly $50,000, but it also acknowledged that the advice given to him at the time "was not a model of clarity."
The bank board is considering whether Wolfowitz should be forced to step down, but it postponed any decision on that question until Thursday.
The United States is the World Bank's biggest shareholder, and White House backing was crucial for Wolfowitz to remain in his post. Initially, President Bush and other administration officials voiced strong support for Wolfowitz. But in recent days, that support has wavered. On Tuesday, White House Spokesman Tony Snow said "all options are on the table" about who should lead the bank, and on Wednesday, he acknowledged that the controversy has been a "bruising episode" for the World Bank.
When he took over as president in June 2005, Wolfowitz vowed to uproot corruption and mismanagement at the bank. Instead, he found himself the subject of an investigation into an alleged conflict of interest.
Throughout the investigation, Wolfowitz has fiercely defended himself.
"I respectfully submit, to criticize my actions or to find them as a basis for a loss of confidence would be grossly unfair and would be contrary to the evidence we have presented to you," Wolfowitz said in a statement to the board. "You still have the opportunity to avoid long-term damage by resolving this matter in a fair and equitable way that recognizes that we all tried to do the right thing, however imperfectly we went about it."
Wolfowitz promised to make changes to his management style if he is allowed to keep his job.
Wolfowitz's critics acknowledge that the kerfuffle over his girlfriend's pay raise and promotion is only one reason they have pushed so hard for his resignation.
"I think Wolfowitz's management style has a lot to answer for," said Sebastian Mallaby, a senior fellow at the Council on Foreign Relations and author of a book on the World Bank. "He was just a bad leader."
As deputy defense secretary, Wolfowitz was one of the architects of the war in Iraq. That made him suspect in the eyes of the bank's European members and among many of its 10,000 employees. His reportedly heavy-handed management style did not win him many friends at the bank during his nearly two years as president.
The World Bank was founded in 1944. Its self-declared mission is the eradication of global poverty. Traditionally, the United States chooses the president of the bank.
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