The scandal surrounding Bundesbank president Mr Ernst Welteke took an unexpected twist last night when the board ordered Mr Welteke to take a leave of absence following a marathon eight-hour meeting in Frankfurt.The board said there were insufficient grounds under Bundesbank rules to remove Mr Welteke permanently.
However, a spokeswoman said Mr Welteke would stand down if Frankfurt prosecutors found his stay at a luxury Berlin hotel, paid for by a private German bank, had breached rules banning civil servants from accepting gifts.
Until then, the Bundesbank will be led by its vice-president, Dr Jürgen Stark.
But pressure for Mr Welteke to resign from the Bundesbank continued to grow after a government source in Berlin said that Mr Welteke's replacement had already been lined up.
Mr Welteke is refusing to resign despite letting Dresdner Bank pay a hotel bill for nearly €8,000 for a four-day trip that combined an event to launch the euro, in which he participated, and a holiday in Berlin for himself and his family in January 2002.
It was clear last night that the government believes that, in letting Dresdner pay the bill, Mr Welteke ignored potential conflicts of interest as a result of his role in regulating the commercial banking sector.
Mr Welteke said on Tuesday that he "no longer ruled out resigning", but appeared to change his position yesterday, saying he would not resign voluntarily but would abide by the decision of the Bundesbank board.
He attempted to defuse the row earlier this week by splitting the €7,661 hotel bill, paying half back to Dresdner Bank out of his own pocket and letting the Bundesbank pay the rest in business expenses.
The scandal continued to grow yesterday, with reports that the Austrian central bank paid for a visit to Vienna by Mr Welteke and his wife to attend the Press Ball, Austria's most exclusive social event where tickets cost more than €7,500.
"Mr Welteke was not by any means invited to a paid holiday or anything like that," said Mr Klaus Liebscher, the governor of the Austrian National Bank. He said Mr Welteke and his wife were guests, as was the former president of the European Central Bank, Mr Wim Duisenberg.
