Wolfowitz Negotiating Terms Of Resignation

(CBS) WASHINGTON Embattled World Bank President Paul Wolfowitz is negotiating an agreement to resign, according to an official familiar with the talks.

Embattled World Bank President Paul Wolfowitz is negotiating an agreement to resign, according to an official familiar with the talks.

His departure would include an acknowledgment from the bank that he doesn't bear sole responsibility for the controversy surrounding a generous pay package for his girlfriend, the official said.

The negotiations were taking place as the bank's board resumed deliberations over Wolfowitz's fate Wednesday afternoon.

The official said Wolfowitz wanted the bank to accept some responsibility for conflicts of interest cited against him by a special bank panel. The official spoke on condition of anonymity because of the delicate state of the negotiations.

It was not clear whether the bank's 24-member board would accept Wolfowitz's terms.

Pressure on Wolfowitz to resign has grown since a special bank panel report, released Monday, found that he broke conflict-of-interest rules in his handling of the 2005 pay package of bank employee Shaha Riza.

Wolfowitz has maintained that he acted in good faith.

The White House, which picked Wolfowitz for the post, indicated for the first time on Tuesday that it was willing to consider new leadership for the bank.

By tradition, the World Bank has been run by an American, with the approval of the bank's board. The bank's sister agency, the International Monetary Fund, is headed by a European.

On Tuesday the White House weighed in on the situation and backed Wolfowitz by offering a different reason for the controversy around him: His role in the war in iraq.

The president was determined to stand behind Wolfowitz unless facts made it absolutely clear that his behavior was egregious, a senior administration official said. The official was not authorized to speak publicly on the matter and thus spoke only on the condition of anonymity.

"We have faith in Paul Wolfowitz," White House spokesman Tony Snow said. He insisted that the charges against Wolfowitz are not "a firing offense."

The special panel bank panel said that Wolfowitz's involvement in the details of Riza's salary "went beyond the informal advice" given by the ethics committee and that he "engaged in a de facto conflict of interest."

Under Wolfowitz's contract as well as the code of conduct for board officials, he was required to avoid any conflict of interest, the report said.

Riza worked for the bank before Wolfowitz took over as president in June 2005. She was moved to the State Department to avoid a conflict of interest, but stayed on the bank's payroll. Her salary went from close to $133,000 to $180,000. With subsequent raises, it eventually rose to $193,590.

Wolfowitz had served as the No. 2 official at the Pentagon and played a lead role in mapping out the U.S.-led war in Iraq before taking over the bank nearly two years ago.

European members are pushing for Wolfowitz to resign. The United States is the bank's largest shareholder. Bush tapped Wolfowitz for the job, a move that was approved by the bank's board even though Europeans didn't like him because of his role in the Iraq war.

In recent weeks one of Wolfowitz's top advisers decided to leave due to the ongoing investigation.

"Given the current environment surrounding the leadership of the World Bank Group, it is very difficult to be effective in helping to advance the mission of the institution. Therefore, I have decided to leave for other opportunities," Kevin Kellems told The Associated Press on Monday.

Wolfowitz had tapped Kellems, who came from the White House and worked with him previously at the Defense Department, to become his adviser at the poverty-fighting institution. Kellems' arrival in June 2005 eventually touched off criticism among staff that Wolfowitz was sealing himself off with a small cadre of trusted advisers.