Waiting for acknowledgement of the obvious about gold

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Ex-Bundesbank President Pays EU25,000 to End Probe

By Corinna Budras
Bloomberg News Service
Thursday, June 24, 2004

http://quote.bloomberg.com/apps/news?
pid=10000100&sid=ad.OPMf_dys8&refer=germany

FRANKFURT -- Ernst Welteke, who resigned as president
of Germany's Bundesbank after he accepted hospitality
from a bank he supervised, agreed to pay 25,000 euros
($30,400) to charity to end a criminal probe into his
conduct.

Welteke and the Frankfurt prosecutor agreed to end more
than two months of criminal investigations into whether he
illegally accepted a benefit when he allowed Dresdner
Bank AG to pay a 7,661-euro hotel bill, said Welteke's
lawyer, Rainer Hamm, in an e-mailed statement. Welteke
in return agreed to make a donation to a charity that
provides education for prisoners, Hamm said.

"The defense and the prosecutor agreed on this procedure
but made clear that this doesn't mean that there was any
criminal conduct," said Hamm. "Mr. Welteke -- along with
his two lawyers -- are convinced that he didn't commit a
crime."

Welteke, 61, resigned in April after confirming press
reports that he accepted the hospitality of Dresdner Bank
for an event celebrating the introduction of euro notes and
coins in 2002 and was joined by his wife, two sons, and a
girlfriend of one of the sons. Prosecutors started
investigating the case even after Welteke agreed to repay
Dresdner Bank half of the bill for the four-night stay at the
Hotel Adlon in Berlin.

Dresdner Bank, a unit of Allianz AG, is one of the German
banks that the Bundesbank helps oversee as part of its
banking-supervision responsibilities.

Welteke's lawyers argued in 10 pages they submitted to
the prosecutor that even under Germany's new corruption
rules, Welteke hadn't done anything illegal, Hamm said.
It is "absolutely far-fetched" to think that the bank could
have expected any advantage in return for its invitation,
Hamm said.

The law punishing "the acceptance of a benefit" was
changed in 1997 to facilitate the work of prosecutors, who
had trouble in the past to proving a crime had been
committed, law professors have said.

Welteke later repaid the full hotel bill and stepped down as
head of the German central bank without "any legal
obligation," Hamm said. By paying 25,000 euros to the
prisoner education center, Gefangenen-Bildungs-Werk
Dr. Fritz-Bauer e.V., Welteke is seeking to put an end
to an "unpleasant" discussion about the Bundesbank,
Hamm said.

Welteke's resignation was "appropriate'" in view of the
hotel stay and "new allegations" that also surfaced about
his behavior, Germany's Finance Ministry said in April.
Welteke also spent a night on a boat chartered by
BMW at the Monaco Grand Prix last year, an event
that wasn't part of the probe, Hamm has said. Welteke
was replaced by Axel Weber, 47, previously a government
economic adviser.

Following the incident, the Bundesbank adopted the
European Central Bank's code of conduct, as it is more
specific than the bank's previous rules and doesn't allow
ECB council members to accept gifts "in excess of a
customary or negligible amount, whether financial or
non-financial." As Bundesbank president, Welteke was
a member of the ECB council.

Bundesbank ethics adviser Theodor Baums, appointed
the day Welteke resigned, said in May an internal audit
had found that the German central bank's other board
members are complying with corporate governance rules.

Appointed by German Chancellor Gerhard Schroeder in
1999, when Germany lost control of European
interest-rate policy, Welteke had previously served in the
Hesse state government in various positions, including
finance minister, before joining the Bundesbank as head
of its Hesse branch in Frankfurt in 1995.

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