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Business

Bundesbank President Resigns

The head of Germany's central bank, Ernst Welteke, resigned Friday after further revelations he accepted freebies from BMW.

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Welteke's reign as Bundesbank president is now tainted by scandal.

Welteke, 61, offered his resignation to the Bundesbank's executive council, the central bank said in a statement. The board accepted his resignation, saying the step was "appropriate in view of the bank's reputation and the perception of its duties."

Last week, Welteke took a leave of absence with pay from his job, although the bank's board said at the time that it did not find reason enough to ask for Welteke's resignation.

Welteke, Germany's highest-paid public official and the country's representative at the European Central Bank, came under fire when it emerged that Dresdner Bank, a commercial bank, had picked up the tab for a four-night stay for him and his family in Berlin's luxurious Adlon hotel during celebrations marking the introduction of euro notes and coins on January 1, 2002. The hotel bill came to €7,600 ($9,200).

But the straw that broke the camel's back appears to be a further revelation that Welteke attended a Formula 1 race in Monaco at the invitation of German auto manufacturer BMW, according to a report in the German news weekly Der Spiegel which appeared on Friday. This particular case proved more problematic for Welteke, because it took place in the Spring of 2003 -- after the European Central Bank, whose rules Welteke is subject to, issued a code of conduct forbidding the acceptance of such gifts. The Dresdner Bank incident took place before that.

Scandal angered Germans

The hotel scandal first came to light when the newsmagazine Der Spiegel reported that Welteke had ignored potential conflicts of interest, given that the Bundesbank is partly responsible for regulating the German banking sector.

The free stay for the banker angered many Germans, especially since Welteke earns €350,000 ($421,000) a year. Mixing business with pleasure, the central banker confirmed that he, his wife and their three-year-old son, as well as his 25-year-old son and his son's girlfriend, had stayed at the hotel. In an attempt to make amends, he paid for two nights of the stay himself, while the Bundesbank covered the days Welteke was working during the trip.

Government wanted resignation

Members of the ruling Social Democratic Party, of which Welteke is a member, made little secret of the fact they wanted him to resign over the affair. German Finance Minister Hans Eichel said it was up to the Bundesbank, which enjoys considerable independence under German law, to review the case, but added that the conduct would have been unacceptable if Welteke had been a government minister.

There has been no immediate word on a successor, who under German law must be appointed by the government. Speculation has centered on Bundesbank Vice President Jürgen Stark and Caio Koch-Weser, the deputy finance minister.

Koch-Weser has plenty of international financial experience from his years at the finance ministry and his time at the World Bank in Washington. He was nominated by Germany to take over the International Monetary Fund in 2000, but his candidacy was vetoed by the U.S. government at the time, saying the post should go to someone with a higher profile.

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