Bank president quits as ties with government 'destroyed'

Bundesbank President Ernst Welteke stormed out of office yesterday with a fiery letter of resignation in which he blasted the government for attacks on the central bank's independence and his own integrity.

Ending a remarkable two week public battle, Welteke quit and filled a eight-sentence statement with angry broadsides against the government that pressured him to go because he let a bank he regulated, pay for a stay in a luxury hotel with his family.

In unprecedented fashion, Welteke slammed the Berlin government for usurping the independence of the central bank, in violation of the constitution, and for twisting arms on the Bundesbank's eight-member executive board to force his ousting.

When German officials resign, their letters are customarily filled with courteous remarks and never with criticisms of their adversaries - real or imagined. Even former Finance Minister Oskar Lafontaine, who later turned into a fierce critic of the government he left, quit with a simple and polite letter.

But Welteke took a different tack. "The relationship of trust between the Finance Ministry and me has been irreparably destroyed," Welteke wrote in his letter of resignation to the executive board in Frankfurt, which was also obtained by Reuters.

"My integrity and that of the Bundesbank was being constantly violated by the distorting and false claims. And I still don't know what anonymous letters the Finance Ministry received and what is being continuously leaked to the media."

Welteke, 61, had repeatedly refused to bow to the government's pleas that he resign. Embarrassed by the media reports of Welteke's hotel bill, the government found it hard to make a public case for its welfare and jobless benefit cuts.

Under the unrelenting pressure from Berlin, which has no authority to fire the central bank head, Welteke went on a leave of absence last week - while state prosecutors examined whether he broke the law by letting Dresdner Bank pay a €7,661 bill for a four-day hotel stay in 2002.

As head of the central bank, Welteke was responsible for regulating German banks.

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, Germany's highest-paid civil servant earning €350,000 a year, later apologised for creating the impression he was not living up to ethical standards. Welteke and the Bundesbank also paid back the cost of the hotel bill.