World Bank President Paul Wolfowitz has resigned his post, effective June 30.
An internal panel tasked with investigating the lucrative pay and promotion package Wolfowitz arranged in 2005 for girlfriend Shaha Riza found him guilty of breaking bank rules.
The committee also found that he tried to hide the salary and promotion package from top ethics and legal officials within the bank. The report added that there is a "crisis in the leadership" at the World Bank.
Wolfowitz is the first World Bank president to ever leave the bank under a cloud of scandal.
Wolfowitz lost the fight to keep his job after months of controversy surrounding his involvement with securing his girlfriend a pay raise and promotion.
The controversy set off a media firestorm, with questions swirling about the current status of Wolfowitz's relationship with girlfirend Shaha Riza, and it's unclear whether they are still together.
Wolfowitz has defended the pay package, telling the bank's investigative committee he was trying to avoid a potential lawsuit from Riza.
"Ms. Riza was extremely angry and upset about being required to take an external placement," Wolfowitz wrote in a May 11 statement to the World Bank investigative committee.
Riza had been a World Bank employee for eight years, promoting women and democracy in the Middle East, when Wolfowitz was named president of the institution in 2005.
The Bank's ethics committee determined Riza needed to leave the bank when Wolfowitz took control to avoid a conflict of interest.
"I was not given a choice to stay, and against my personal and professional interests, I agreed to accept an external assignment," said Riza in an April 30 written statement to the bank panel investigating her raise and promotion package.
"The irony of my working to ensure women's participation and rights through the work of the World Bank and [was] stripped of my own rights by this same institution," Riza wrote.
Under a lucrative compensation package that Wolfowitz arranged with the vice president of human resources at the World Bank, Riza was moved to the State Department and given a promotion to communications specialist, but the World Bank still retained her on its payroll.
Her income jumped from $133,000 to $193,590 in just two years -- more money than Secretary of State Condoleezza Rice makes before taxes.
"I was ready to pursue legal remedies. … I only acquiesced to signing the agreement so as not to cause turmoil at the bank," Riza wrote in the April 30 statement to bank officials.
At several points in the scandal, the Bush administration insisted Wolfowitz stay on as bank president.
"Wolfowitz has acknowledged mistakes and apologized for them," White House spokesman Tony Fratto told ABC News Tuesday morning. "We don't believe that actions warrant a change of leadership at the World Bank."
But just hours later a senior White House official told ABC News that "all options are on the table" regarding Paul Wolfowitz's future and that "it is an open question" whether he should should remain as president of the World Bank.
"If you don't have board support and you don't have staff support, it is hard to get anything done," the official told ABC News.