Poverty; development; infrastructure: the areas the World Bank deals in are hardly the stuff of laughs. Its president, however, has got caught in a controversy that sounds like a bad joke. A man who was bundled into the job by the Bush administration, which could no longer find a use for him, blustered about educating borrower nations in the ways of good governance - and was found wanting in this area himself. Thanks to Mr Wolfowitz, the salary of his partner, Shaha Riza, is higher than Condoleezza Rice's earnings. At just under $194,000, it would make a respectable prize on a gameshow. As the American satirist Stephen Colbert says: "He knows corruption is the enemy; and Mr Wolfowitz fights fire with fire."

No wonder that there is now a mutiny among staff and some (primarily European) donor nations. The turmoil has already driven out the bank chief's PR man, Kevin Kellems. He resigned saying that "given the current environment...it is very difficult to be effective in helping to advance the mission of the institution".

The same logic obviously applies to his boss. Mr Wolfowitz has fought off calls for his resignation, each time with weaker ammunition. First he declared that an investigation by the bank's executives would exonerate him. Instead it found him guilty of "questionable judgment and a preoccupation with self-interest". The bank chief said he thought he had been asked to arrange Ms Riza's pay, a claim the report says "simply turns logic on its head". His last defence is one of acting in good faith. Yet he reportedly threatened bank staff with retaliation if they revealed the pay rises and promotions won for his partner.

The bank's executive board, which met Mr Wolfowitz last night, is due to make a statement later this week. It could reprimand the bank president, or issue a vote of no confidence. But Mr Wolfowitz has been found guilty of the sort of conflict of interest that would normally lead to the dismissal of any other of the bank's 10,000 staff, and neither measure would calm the storm. So it should either sack him or arrange the terms for his departure.

His role as an architect of the Iraq war meant that Mr Wolfowitz was never going to get an easy ride at the bank. If he does go, his critics will doubtless be in celebratory mood. They will have won a prized neocon scalp. But bringing down one of President Bush's inner circle for violating an institutional code of conduct is a bit like nabbing a mafia boss for tax evasion. They should take this opportunity to push for reform of the system that put such a divisive figure at the helm of what is, after the UN, the world's most important development organisation.

The job of World Bank president is traditionally the gift of the US, just as the head of the International Monetary Fund is a European appointment. This is the legacy of an antiquated system. So far Europe has resisted any change of this cosy arrangement for retiring politicians. The IMF's managing director, for instance, is Rodrigo Rato, a Spanish rightwinger whose main qualification for the job seemed to be that he needed one. This is the time to reshape the system. Even before this controversy, the bank was passing the cap around for funding. The least donor countries should extract in return is the promise of reformed behaviour. Mr Wolfowitz must leave, but his departure should be the start of change, not the end of it.