Wolfowitz courted controversy from the start because of his role in the Iraq war when he was deputy defense secretary. However, it was his role in arranging a hefty pay raise for Shaha Riza, his girlfriend and bank employee, that forced his upcoming departure. That prompted a staff revolt and calls by Europeans and others for Wolfowitz to resign.
President Bush turned to Zoellick - his former top trade envoy and No. 2 diplomat - to the heal wounds and mend the relationships strained by the Wolfowitz episode. Welcoming the board's action Monday, Bush called Zoellick "a dynamic leader who is deeply committed to the mission of the World Bank."
To this end, Zoellick took a two-week global tour to Africa, Europe and Latin America. His goals were listening and learning, he said.
Zoellick, 53, brings to the World Bank years of experience in the foreign and economic policy arenas under three Republican presidents, starting with Ronald Reagan. Zoellick left the Bush administration last year to become an executive at the Wall Street giant Goldman Sachs.
Ahead of his appointment, Zoellick met with the board for around four hours last Wednesday to discuss key issues, including challenges of development, the bank's governance and leadership as well as future strategic directions.
The controversy over Wolfowitz's role in the pay raise for Riza led to a staff revolt and calls by Europeans and others for him to resign.
The whole matter was seen as a growing liability that threatened to tarnish the institution's reputation and hobble its ability to persuade countries around the world to contribute billions of dollars to provide financial assistance to poor nations.
Oxfam International, an anti-poverty group, called on Zoellick to be a bold reformer, including getting rid of some strings attached to bank lending and overhauling the bank's governance structure.
"Zoellick must begin a series of reforms in his first 100 days to create a new deal between the bank and the world's poor. We can't continue with business as usual," said Jeremy Hobbs, Oxfam's executive director.
By tradition, the World Bank has been run by an American. The Bush administration made clear it wanted to keep that decades-old practice firmly intact throughout the Wolfowitz debacle. The United States is the bank's largest shareholder and its biggest financial contributor.
The bank, created in 1945 to rebuild Europe after World War II, provides more than $20 billion a year for projects such as building dams and roads, bolstering education and fighting disease. The bank's centerpiece program offers interest-free loans to the poorest countries.