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European Central Bank in crisis as interest rate cut is blocked by revolt

Section: Daily Dispatches

From Irish Public Broadcasting
(Radio Telefs ireann)
Tuesday, April 6, 2004

Germany's central bank said its President Ernst Welteke
will not resign despite drawing continuing fire from media
over a big hotel bill that a commercial bank settled for him
two years ago.

"Welteke is not considering stepping down," a Bundesbank
spokesman said, when asked whether Welteke had considered
giving into mounting pressure to quit.

Welteke, who also sits on the European Central Bank's
Governing Council, has said he and the Bundesbank would
settle the bill of almost 8,000 euros, but the move has
not silenced critics and politicians have failed to support

"If a Bundesbank head makes such a grave misjudgement
of public opinion, one is justified in asking whether he has
a better judgement of the economic situation," Financial
Times Deutschland wrote.

"He neither possesses a large amount of economic
expertise, nor does he shine with intellectual brilliance,"
the newspaper added, also calling Welteke an "awful" central

Welteke, Germany's best-paid civil servant with an annual
income of 350,000 euros, came under fire after Der Spiegel
magazine reported that Dresdner Bank paid the hotel stay
for him and his wife in a suite costing 1,717.95 euros a

Welteke's fellow Social Democrats joined in the criticism
but stopped short of calling for his resignation. The
government, which appointed Welteke in 1999, said such
behaviour would be unacceptable for a cabinet minister.

* * *

Bundesbank president will repay
hotel bill paid by Dresdner Bank

By John Fraher
Bloomberg News Service
Monday, April 5, 2004

Bundesbank President Ernst Welteke agreed to repay
Dresdner Bank AG for hotel costs he incurred during an
event at the start of 2002 after Spiegel magazine reported
that he and his family had run up a bill of 7,661 euros
($9,269) at the bank's expense.

Finance Minister Hans Eichel said cabinet rules wouldn't
permit any of Chancellor Gerhard Schroeder's 14 ministers
to stay in office after conduct such as Welteke's. The
Bundesbank should draw consequences from the issue,
Eichel said in Berlin.

Welteke, his wife, two sons, and a girlfriend of one of the
sons stayed at Berlin's Adlon hotel at the invitation of
Dresdner Bank for an event celebrating the introduction
of euro cash, Der Spiegel magazine said. Welteke
brought his older son to look after his 3-year-old son at
the hotel, the magazine said.

"My stay has led to public criticism and misunderstandings,"
Welteke, 61, said in a press release e-mailed to news
agencies. Welteke said the Bundesbank paid for the two
work-related days and he paid for the other two nights at
the Adlon, whose guests have included Robert de Niro and
Henry Kissinger.

On Saturday, Welteke still said he "assumes" that
organizations inviting him to officiate at events will pay his
costs. "Should I pay for that myself?" he told journalists at
a press conference in Punchestown, Ireland.

"Welteke has lost an enormous amount of credibility," said
Steffen Kampeter, a Christian Democratic Union lawmaker,
in an interview. He should "take the initiative to clarify the
situation and take personal consequences."

Welteke has headed the Bundesbank since September 1999,
succeeding Hans Tietmeyer. He is also a member of the
European Central Bank's governing council, which sets
interest rates for the economy of the dozen nations
sharing the euro.

Before joining the Bundesbank as head of its branch in
the state of Hesse in 1995, Welteke served in Hesse's
government in various positions, including as finance
minister. Welteke's appointment as Bundesbank president
came under, his former boss in Hesse. Both are members
of Schroeder's ruling Social Democratic Party.

Some German officials have been forced from office following
media revelations over the past two years. Gregor Gysi, the
state economics minister in Berlin, resigned in 2002 after
media reports revealed he had used air miles privately as a
federal lawmaker.

Two months ago Florian Gerster was fired as head of the
Federal Labor Agency after its supervisory board lost
confidence in him following the award of consulting contracts
that were not put out to tender and weeks of criticism from
opposition parties and German newspapers.

The Frankfurt prosecutor's office said it is currently not
investigating Welteke, according to spokesman Rainer


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