opps, apologize for drifting into OT. How about economic politics?
news.ft.com
Fresh allegations bring down Bundesbank head
By Tony Major and Patrick Jenkins in Frankfurt and Hugh Williamson in Berlin
Published: April 16 2004 16:01 | Last Updated: April 16 2004 19:07
Ernst Welteke resigned as the president of Germany's Bundesbank on Friday, after two weeks of intense pressure from the government over a corporate hospitality scandal.
The government is expected to appoint his successor, who will also a become a key member of the European Central Bank's rate-setting governing council, at a cabinet meeting next week.
The appointment is unlikely to tip the balance of power at the ECB, but economists warned the standing of the Bundesbank could be affected if its new president was considered too close to the government.
The government, which has become increasingly exasperated by the ECB's reluctance to cut rates despite sluggish eurozone growth, faces allegations that it waged a bitter campaign to oust Mr Welteke.
Mr Welteke said he had decided to quit because his relationship with the finance ministry had been “irreparably destroyed”. He said the bank had been placed under an irresponsible level of pressure to force him out.
In his letter of resignation to the Bundesbank board, Mr Welteke, who had resisted government and opposition pressure to step down, said the bank's “constitutionally guaranteed independence” had been damaged.
The Bundesbank board said it regarded Mr Welteke's resignation “as appropriate in view of the institution's reputation and its tasks”.
The finance ministry said Mr Welteke's resignation was “an appropriate decision” in the context of the allegations against him.
A ministry spokesman said the scandal “had damaged the reputation of the Bundesbank” because Mr Welteke should have resigned earlier “due to the seriousness of the allegations against him”.
The scandal broke two weeks ago when a German magazine revealed that Mr Welteke had allowed Dresdner Bank, which is regulated by the Bundesbank, to pay a €7,661 ($9,193, £5,125) hotel bill for him and his family two years ago. He initially shrugged off the story and failed to acknowledge the conflict of interest. But within days, he had issued an apology and repaid the money to Dresdner and was sent on a leave of absence by the Bundesbank board.
Repeated calls from the government for Mr Welteke to take the “appropriate consequences” were stoked by further revelations that he had accepted an opera invitation from the Austrian central bank and had his hotel accommodation paid for him.
New allegations against him emerged on Friday when BMW, the German carmaker, confirmed that he and his wife accepted an invitation to watch the Monte Carlo Grand Prix last June.
BMW, which owns a bank that falls under the Bundesbank's supervision, provided the Weltekes with accommodation on a luxury yacht, but it said Mr Welteke had paid for the flights to Monte Carlo himself.
Mr Welteke is thought to have resigned after being confronted with the new allegations.
Hans Eichel, the finance minister, will present his nomination for Mr Welteke's successor to the cabinet “in the near future”, said a spokesman. He indicated this was likely to be at the next meeting on Wednesday.
Mr Eichel is thought to favour Caio Koch-Weser, a state secretary in the finance ministry, who has broad international experience.
The Bundesbank, however, would favour Jurgen Stark, its vice-president, who became acting president in Mr Welteke's absence.
Alfred Tacke, a state secretary in the economics ministry, is also seen as a possible “compromise” candidate. |
