Attali fends off critics with shake-up plan

JACQUES ATTALI, president of the European Bank for Reconstruction and Development, yesterday announced a big reorganisation in an attempt to defuse growing pressure to have him replaced, writes Peter Torday.

Mr Attali dismissed Britain's attempt to woo Ernie Stern, in effect number two at the World Bank, as chief executive at the EBRD. In a speech to the American Chamber of Commerce, he said Mr Stern, a German-US citizen, could not become president because the bank's articles permit only a citizen of the European Community to hold that office.

Mr Attali said his reorganisation plan would be presented to the board in the next few days. The board has launched an inquiry into the bank's pounds 55.5m spending on lavish refitting of its London headquarters. The plan will detail measures to cut costs - a bone of contention with the Western governments that are the bank's main shareholders.

Mr Stern, who was sounded out by Baroness Chalker, Overseas Development Minister, during a visit to Washington last week, is in Europe, where consultations about the EBRD are expected to continue this week.

The US, which holds a 10 per cent stake in the bank, wants to oust Mr Attali and Congress has cut off funds. But European countries hold more than 50 per cent of the bank and the US has acknowledged that a final decision is up to them. Everything hinges on the outcome of the inquiry into EBRD spending by the audit committee, due on 15 July.