Bundesbank president Ernst Welteke, one of Europe's most influential central bankers, took a leave of absence on Wednesday in an ethics row that exploded over a lavish hotel bill paid for him by a top German bank.
The German government voiced its dismay that Welteke had not resigned. That thrust the Bundesbank, a symbol of stability and integrity since Germany's post-World War II reconstruction, into a confrontation over its independence.
PHOTO: EPA
The Bundesbank said it will await a state prosecutor's investigation into Welteke's admission that he let Dresdner Bank pay almost 8,000 euros (US$9,737) for him and his family to stay at a luxury Berlin hotel over New Year 2002. The visit was to attend a launch party for euro coins and notes.
The probe could take many months. Meanwhile Bundesbank vice president Juergen Stark will fill Germany's seat on the European Central Bank's (ECB) interest-rate setting Governing Council.
"There is not sufficient ground for the board to ask for the Bundesbank president to be expelled from office," the Bundesbank said in a statement after meeting for more than seven hours.
The Finance Ministry called the decision inappropriate and said it assumed Welteke would "take the necessary consequences."
"The decision of the Bundesbank board does not support the goal in the appropriate measure of preserving the high esteem of the Bundesbank in public opinion," it said in a statement.
Dresdner, one of Germany's oldest and largest banks which is regulated on a daily basis by the Bundesbank, paid Welteke's bill for a four-night stay at the luxury Adlon hotel by Berlin's Brandenburg Gate as well as that for his wife, three-year-old son and his 25-year-old son and his girlfriend.
When revealed in the media, that provoked a barrage of criticism, particularly since the Bundesbank official regularly calls for government austerity and comes at a time when ordinary Germans face budget cutbacks and high unemployment.
"Speechlessly, I'm witnessing the self-destruction of the institution of the German Bundesbank," said Steffen Kampeter, budget spokesman for the conservative opposition Christian Democrats after the Bundesbank decision.
But Bundesbank board member Hans Reckers said the central bank was defending its independence from government.
"The Bundesbank has decided after carefully probing the situation, taking into account its independence, also towards media and the federal government," Reckers said.
The ECB, also averse to any appearance of political meddling, has left the matter to the Bundesbank, even though its code of ethics covers Welteke. That code says members shall not accept perks "in excess of a customary or negligible amount."
Welteke, 61, has earned praise for helping introduce the new euro currency. But last week found the party that thrust him into power, the Social Democrats, failed to support him as the Dresdner case unfolded.
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