Attali publicly reprimanded over EBRD's spending policy: Criticism has damaged bank's public standing, says German Finance Minister

THE GERMAN Finance Minister, Theo Waigel, yesterday publicly rebuked Jacques Attali, president of the European Bank for Reconstruction and Development - which was set up to help eastern Europe but stands accused of gross extravagance on behalf of the bank itself.

After a meeting with Mr Attali in Bonn, Mr Waigel, chairman of the bank's governors, called for a cost- conscious spending policy and greater openness. He complained that criticism of the bank's apparently spendthrift habits had damaged its public standing.

After a meeting in London next Monday greater checks are to be introduced, including the use of external auditors if necessary.

The subject of the bank's alleged extravagance is certain to come up with renewed force at its annual meeting in London next week.

The fact that Mr Waigel found it necessary to rebuke Mr Attali publicly is an indication of how worried the German government has been by the allegations of profligacy.

The ERBD spent pounds 55m on its new headquarters after laying out pounds 18m on its previous building. Last year it spent pounds 200m on itself - twice as much as was spent on loans to eastern Europe. This included more than pounds 50,000 on its Christmas party and pounds 600,000 on Mr Attali's private plane.

But Mr Weigel stopped short of calling for Mr Attali - widely seen as a protege of the French President, Francois Mitterrand - to resign. He praised the bank for its remarkably quick development of its activities despite the fast-changing political and economic circumstances.

However, the EC Commission has criticised the ERBD's seeming inability to lend money fast enough.

Henning Christophersen, the commissioner for economic affairs, said yesterday: 'We are, of course, concerned not only with the visible signs of insensitive expenditure but with the level of expenditure as a whole. The matter of low disbursement is particularly preoccupying.'

The commission has a 3 per cent stake in the bank but, with the holdings of the other European institutions and the individual member states, commands 51 per cent.

'I am concerned with the fact that the bank has given rise to too much public interest in its secondary activities instead of the primary task to support the transformation of the economies in eastern and central European countries,' Mr Christophersen added.

He said that, although the EBRD has approved operations worth almost ecu2bn since its inauguration two years ago, and should approve a similar outlay by the end of this year, the money was not being disbursed fast enough.

'It is one thing to approve a loan - it is another getting to the stage when it is safe to hand the money over to the borrower,' he said.