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Murphy, Bishop, Morgan, and Taylor among speakers at Calgary conference
By Sonja Dieckhoefer
Bloomberg News Service
Wednesday, April 7, 2004
http://quote.bloomberg.com/apps/news?
pid=10000100&sid=aSuJGLaN3Vgc&refer=germany
FRANKFURT -- Bundesbank President Ernst Welteke agreed
to take leave of absence after a 7,661-euro ($9,336) hotel
stay paid by Dresdner Bank AG for him and his family sparked
a probe by Frankfurt prosecutors and the German central bank.
Welteke, 61, will leave today, the Bundesbank said in a
statement after a board meeting that lasted at least seven
hours. The central bank's vice president, Juergen Stark, 55,
will assume his duties temporarily, the Frankfurt-based central
bank said. It didn't find sufficient reasons to fire him.
Welteke, who earns 350,000 euros a year at the Bundesbank,
this week repaid Dresdner Bank half of the four-night hotel bill
at Berlin's Hotel Adlon that he incurred together with his wife,
two sons, and a girlfriend of one of the sons at an event
celebrating the introduction of euro notes and coins in 2002.
The Bundesbank repaid the other half of the bill.
Dresdner Bank, a unit of Allianz AG, is one of the German
banks that the Bundesbank helps oversee. Some officials at
Dresdner Bank are also being probed by prosecutors.
Welteke's terms of employment at the Bundesbank state
that he is prohibited from deriving personal gain from his
position.
Welteke said repeatedly that he didn't see a reason for
resigning. In an interview with the ARD television channel
late Tuesday, he said: "It is always difficult to draw the line
between a business trip and a private trip."
After the Bundesbank recommended that he take a leave
of absence, Welteke agreed, the statement said. Under
the statutes of the European System of Central Banks, the
Bundesbank could only fire Welteke in the case of a "gross
error."
Appointed by Chancellor Gerhard Schroeder's government
in September 1999, Welteke represented Europe's largest
economy on the ECB's 18-member governing council, which
sets interest rates for the dozen nations sharing the euro.
Schroeder wants Deputy Finance Minister Caio Koch-Weser
to replace Welteke, German business daily Handelsblatt
reported, without saying where it got the information.
Koch-Weser, 59, is responsible for international finance at
the ministry. Stark is a member of the opposition Christian
Democratic Party.
Schroeder's government has so far distanced itself from the
probe, saying it would wait for the Bundesbank to finish its
investigation. Schroeder, who turns 60 today, is currently
on vacation in Italy and has been in contact with the
government about Welteke, his press office said.
Finance Minister Hans Eichel said on Monday that cabinet
rules wouldn't permit any of Schroeder's 14 ministers to
remain in office after conduct such as Welteke's. Two
months ago, Florian Gerster was fired as head of the
Federal Labor Agency after weeks of criticism from
opposition parties for awarding consulting contracts that
were not put out to tender.
Of 3,005 people polled by German television channel N-TV
on Monday and Tuesday, 74 percent said Welteke should
resign because of the hotel stay. Daily tabloid Bild Zeitung
yesterday offered Welteke a free trip to Majorca if he steps
down.
A jovial, portly figure, Welteke served in the Hesse
government in various positions, including finance minister,
before joining the Bundesbank as head of its Hesse branch
in Frankfurt in 1995. Eichel was his former boss and prime
minister in Hesse, the state where the city of Frankfurt is
located.
Welteke scored 4.5 points in a so-called Bloomberg News
"Hawk-o-Meter" survey conducted in July 2000, making him
the most pronounced "dove" on the ECB's governing council
-- the central banker most likely to vote in favor of lower
interest rates to spur economic growth.
When Oskar Lafontaine, Eichel's predecessor as finance
minister, drew criticism for his repeated calls on the ECB
to cut interest rates, Welteke defended him, saying the
new SPD-led government should be free to lobby the
ECB if it wanted to.
Before the advent of the euro in 1999, the Bundesbank was
one of the world's three most powerful central banks.
Attracted by Germany's low inflation record and strong
currency, European countries pegged their exchange rates
to the deutschemark and moved interest rates in line with
the German central bank.
Born in Korbach, Germany, in 1942 to a bank clerk,
Welteke has had a diverse career. The youngest of four
children, he advanced from a farm machinery mechanic
to a regional politician to an international central banker.
He studied economics at the Universities of Marburg and
Frankfurt between 1965 and 1971, before entering politics
in his home state of Hesse.
When the euro lost about a fifth of its value against the
dollar in its first two years in existence, hitting a low of
82.69 U.S. cents on Oct. 25, 2000, he still managed a joke.
"For the majority of the population only the euro's value
at home is important, not its value abroad," Welteke said
in a speech to savings banks in Kassel four years ago.
"One does not necessarily have to spend the holidays in
the Rocky Mountains. The Kassel mountains are also
very attractive."
When traveling abroad, Welteke has sidestepped official
agendas. At a March 2003 meeting of central bankers at
the Bank of International Settlements in Basel,
Switzerland, he got up at 3 a.m. to witness a nocturnal
lantern parade, part of the city's carnival festivities.
Welteke, whose grandmother had roots in Iowa, learned
his first words of English as a boy after the World War II
when he asked U.S. soldiers: "Have you chocolate? Have
you chewing gum?"
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