Financial Times editorial prays for the demise of gold ...


By David Crossland
Friday, April 16, 2004;jsessionid=EKN45ND1V0O4YCRBAE

BERLIN -- Bundesbank President Ernst Welteke resigned
in a dispute with the government on Friday after two
weeks of intense pressure to quit for letting a top
German bank pay an expensive hotel bill.

In a startlingly frank statement that reflected his
anger with the government and with accusations that he
breached ethical standards, Welteke said his relations
with the Finance Ministry had been "irreparably

"My integrity and that of the Bundesbank was being
constantly violated by the distorting and false claims,"
Welteke said.

He had taken a temporary leave of absence last week while
prosecutors examined whether he broke the law by letting
Dresdner Bank pay a 7,661 euro ($9,437) bill for a
four-day hotel stay for him and his family in Berlin's
Adlon Hotel during an event to mark the launch of euro
cash on January 1, 2002.

As head of the central bank, Welteke was responsible for
regulating German banks and the hotel bill was widely seen
as posing a potential conflict of interest.

But he had refused to resign until Friday, just as a
national broadcaster ARD was about to televise a story
likely to plunge him into fresh controversy.

Luxury carmaker BMW AG confirmed on Friday a report
that it had invited Welteke to watch the Formula One
Grand Prix in Monte Carlo in 2003.

A BMW spokesman said: "It is correct that we invited
Herr Welteke to Monaco in 2003." He said Welteke had met
business and cultural leaders as well as BMW board
members on the trip.

The carmaker said he spent the night on a boat chartered
by BMW but noted that Welteke paid for the flight himself.

As Bundesbank president, Welteke was a member of the
European Central Bank's (ECB) interest-rate setting
Governing Council. It was not clear who would replace
him. The Finance Ministry said it would name a successor
at the appropriate time.

The Finance Ministry, itself under pressure amid
allegations that it had waged a campaign to oust him over
disagreements about central bank gold sales and the budget
deficit, welcomed Welteke's decision.

Welteke, a member of Chancellor Gerhard Schroeder's
Social Democrats, was appointed in 1999. His fellow
party members rapidly distanced themselves from him
after the Adlon bill was reported in Der Spiegel magazine
two weeks ago.

The government now faces a possible parliamentary
inquiry into events surrounding the leaking of Welteke's
hotel bill details more than two years after the event.

In a statement, the Finance Ministry said: "The
resignation of the central bank president merits respect.
In view of the known and the new allegations, this is an
appropriate decision which preserves the standing of the
Bundesbank as an institution and the office of the
Bundesbank president."

The government appoints Bundesbank presidents but
has no power to dismiss them.

Possible successors include deputy finance minister Caio
Koch-Weser, Bundesbank Vice President Juergen Stark,
and Ingrid Matthaeus-Meier, a board member of the
KFW development bank.

Welteke at first said he saw nothing wrong with others
paying his costs to attend their events and said he
believed he was the victim of a smear campaign. He only
later admitted mistakes were made, amid intense political
and media pressure.

Welteke was Germany's highest-paid civil servant with
annual income of 350,000 euros a year. He and the
Bundesbank paid back the cost of the Dresdner bill last
week but that failed to silence critics.

The "Adlon-gate" affair has been front page news at a
time when the government has cut welfare and jobless

The Bundesbank has since said it will review gratuities
that all its board members received to examine whether
any payments or gifts violate central bank rules and its
code of ethics.


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