Bundesbank 'homes for executives'

GERMANY'S Bundesbank has been hit with a fresh scandal involving past bosses just weeks after the government claimed the scalp of the president for accepting a lavish party invitation.

Ernst Welteke resigned in April for taking a free hotel stay from one of the commercial banks that the Bundesbank supervises. The bank, Dresdner, paid for a four-day, e7,661 (£5,100) stay for him and his family at the Hotel Adlon in Berlin over New Year 2002.

Now it transpires that former central bank chiefs Ottmar Emminger, Hans Tietmeyer and Karl-Otto Pohl enjoyed lavish lifestyles in villas built at the central bank's expense near Frankfurt. Another four directors of the bank benefited from luxury houses at Konigstein, 14 miles from Frankfurt.

Germany's Euro Magazine said the perks extended 'well beyond their terms in office'. Now the Federal Audit Office has launched a probe into what has been dubbed 'the luxury villas affair'.

The magazine said that new villas were built for people in high office at the bank. It was unclear today why the executives did not have to vacate the mansions once their jobs came to an end.

The central bank admitted: 'In some cases the Bundesbank acquired or built houses in the past for its presidents and vice presidents to use when there was no alternative suitable accommodation.'

It added that the residents of its mansions paid local rents but it would not reveal what they were. Tietmeyer is known to have bought his house in Konigstein after he left. However, the Bundesbank refused to say how much he paid for it.

'Bundesbank management under pressure,' said business bible Handelsblatt today as it reported on the 'cheap living' the bosses enjoyed in the villas with views of some of the best countryside in Germany.

In a separate editorial, the newspaper said it was time for a 'house cleaning' at the Bundesbank.

Because it is essentially taxpayers' money that is being seen supporting fat-cat lifestyles at a time of chronic joblessness, welfare cuts and a moribund economy, the scandal has the potential to take on vast political dimensions.

The house cleaning at the Bundesbank may come sooner rather than later.