The founder of Te Wananga o Aotearoa, Rongo Wetere, has bowed to Government pressure and quit as chief executive of the embattled institution.

Dr Wetere, who was the driving force behind the nationwide tertiary education provider, ended more than 20 years at its helm by resigning, effective yesterday. His decision came a week after the release of a damning Auditor-General's report into the wananga.

The report raised concerns over the inappropriate use of taxpayer money, and conflicts of interests worth tens of millions of dollars involving members of Dr Wetere's family.

The Herald understands yesterday's announcement followed a week of negotiations involving Dr Wetere, union organiser Matt McCarten, and the Government appointee-dominated five-member council.

A confidante of Dr Wetere, who did not want to be named, said the Government had made it very clear it was prepared to do whatever was necessary to get him out of the top job.

"He has had enough. It has been a very tough year, and Rongo knew it was pointless continuing to fight."

The source said Dr Wetere believed he was vindicated by the audit report, as no issues of fraud or nepotism had been found, and believed he could resign with his mana intact.

Tertiary Education Minister Michael Cullen welcomed Dr Wetere's resignation and applauded the work of those who assisted in his decision.

"I'm grateful to some of those who have been advising him on the matter."

Dr Cullen described Dr Wetere's work at the wananga as "large" but his resignation was the best for its future.

"The current wananga council and the Crown Manager have made huge progress in dealing with the governance and management failures highlighted in the Auditor-General's report.

"I am confident that they will now be able to bring these issues to full resolution," Dr Cullen said.

Council chairman Craig Coxhead, a key figure in the negotiations, said the resignation ended all legal action between Dr Wetere and the council.

An employment dispute was set to be heard in Auckland yesterday but was called off to allow negotiations to continue.

Dr Wetere had been stood down on paid leave since October pending the outcome of an internal inquiry.

Mr Coxhead paid tribute to Dr Wetere's work at the wananga and to Maori education.

"It is a contribution that Te Wananga o Aotearoa is determined and confident will continue."

Dr Wetere declined to comment yesterday, but a key adviser said changes to the number and make-up of the council, and assurances about the future direction of the wananga had convinced him it was time to go.

National Party education spokesman Bill English said the Government would have to shoulder responsibility for the wananga in future now that Mr Wetere had resigned.

"The Government is in charge of it and responsible from now on for what happens."

Exit deal

* Dr Wetere gets six months' salary worth $115,000 and free use of offices for that time.
* Exclusive rights to market Greenlight programme, an adult literacy programme developed by the wananga and the Cuban education ministry.
* Bentham Ohia, a confidant of Dr Wetere's, works as acting chief executive until a replacement can be found.
* Payment of about $150,000 in legal fees.