NEW YORK (CNNMoney.com) -- Embattled World Bank President Paul Wolfowitz will step down from the position by June 30, according to a joint statement released Thursday by the bank and Wolfowitz.
In the statement, the development bank also acknowledges some responsibility for the handling of the affair centering on the employment status of Wolfowitz's girlfriend, Mideast expert Shaha Riza.
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| World Bank President Paul Wolfowitz |
A World Bank committee concluded Wolfowitz violated staff rules when he arranged a raise and transfer for Riza, a longtime bank employee. Riza was transferred to a State Department foundation after Wolfowitz took over at the bank in 2005, at a tax-free government salary of almost $194,000 a year.
The bank said it is looking for a successor immediately.
Wolfowitz, the White House and bank officials held talks Wednesday afternoon to work out details of his resignation, with Wolfowitz's lawyer, Robert Bennett, insisting his client would not leave "under this cloud."
The matter had dogged Wolfowitz in recent months after it was first reported.
Members of the 24-seat board complained that Wolfowitz's actions undermined the integrity of the bank's mission to help the developing world.
In the statement the bank took some responsibility for the matter, saying, "a number of mistakes were made by a number of individuals in handling the matter under consideration," and "the Bank's systems did not prove robust to the strain under which they were placed."
Wolfowitz said, "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."
Wolfowitz has been the World Bank president since June 2005, following his work at the Pentagon, where he occupied the No. 2 civilian position during the planning and first years of the Iraq war.
Wolfowitz was elected unanimously by the 24-member board, although European member countries reportedly fumed in private over the Bush administration's choice for the job.
President Bush sounded resigned to his appointee's fate in a news conference Thursday afternoon before the official announcement.
"I regret that it has come to this," he said. "I admire Paul Wolfowitz, I admire his heart, and I particularly admired his focus on helping the poor."
As the largest shareholder in the bank, the United States appoints its president. After the announcement, the White House said President Bush "reluctantly accepts" Wolfowitz's resignation and would announce a replacement soon.
--from staff and CNN reports 
