'Gravy train' bank chief forced out: Attali presided over lavish spending by EBRD set up to help struggling Eastern Europeans

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JACQUES ATTALI has been forced to quit as head of the European Bank for Reconstruction and Development after damaging disclosures about the bank's free-spending style which triggered a rebellion by his staff.

Set up by Western governments in 1990 to help to rebuild the shattered economies in Eastern Europe, the bank under Mr Attali's presidency has been savaged for lavishly fitting out its London headquarters and for an apparently limitless entertainment budget. Its running costs outstripped the sums it lent to its beneficiaries.

Evidence has mounted that Mr Attali, a former adviser to French President Francois Mitterrand, presided over a free-spending culture within the bank that critics have described as a gravy train. Executives and shareholders have been shocked to discover that a senior official put in an expenses claim for an afternoon's skiing by helicopter when on an official visit to Switzerland.

Though Mr Attali had nothing to do with that incident, he is understood to have been slow to reimburse the bank for the use of a private plane taking him and his family to a Caribbean holiday.

It has also emerged that Mr Attali was reimbursed twice for a first-class air ticket to Tokyo last year, where he made a speech for a dollars 30,000 (pounds 20,000) fee, breaking the bank's rules. Mr Attali says the money was given to three Jewish charities.

Insiders say a virtual stoppage of work within the bank after a collapse of morale may have been a more important factor in tipping him into a promise of resignation than stories of profligate spending, which include his heavy use of private air charters. Large numbers of key officials were this week threatening to quit unless the shareholders acted.

In the style of some recently-deposed cabinet ministers, Mr Attali blamed the press rather than his own actions for his departure. 'The bank has come under increasing negative press attention in recent months. I know of no action that I have taken that in any way could be worthy of reproach. Unfortunately this attention has begun to have a detrimental effect on the bank's work, and on its staff, and it is with the interests of the bank in mind that I have taken this decision.'

In a telephone call yesterday morning to Anne Wibble, the Swedish finance minister who chairs the bank, Mr Attali capitulated to long-standing pressure from the large industrial countries which form the bank's main shareholders. The United States has been opposed to his presidency from the beginning.

But Mr Attali will not leave immediately, leading to suggestions that he may be negotiating compensation on his tax-free contract of pounds 150,000 a year and indemnities against any civil claims arising from alleged breach of the bank's rules on travel and expenses. Mr Attali's four-year contract has two years to run but bank officials said they had no indication of whether Mr Attali was making a claim.

He was surrounded by a cabinet of like-minded French officials at the bank who are also expected to quit.

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