Attali makes sudden exit after audit report: EBRD president and board criticised over spending - Question of golden handshake still uncertain

Peter Torday,Paul Durman
Friday 16 July 1993 23:02 BST

JACQUES Attali, the French intellectual and former confidant of President Francois Mitterrand, yesterday abruptly left his post as president of the European Bank for Reconstruction and Development, with the question of a final golden handshake still uncertain.

Formal news of Mr Attali's departure came minutes after the release of a critical report by the bank's audit committee on the lavish refurbishment of the EBRD's London headquarters and other 'excessive costs' incurred by Mr Attali and some of his senior staff. Although he tendered his resignation last month, he had intended to stay until a successor was found.

The inch-thick report is critical of Mr Attali and the bank's board but stops short of a damning indictment, giving the impression of an attempt to limit damage to the bank's name. Claes de Neergaard, the Swedish director who chaired the inquiry, said the pounds 66.2m refit of the EBRD's City headquarters was 'in many ways a success story. The end result is an attractive building which meets the practical needs of this international organisation.'

The bank was set up in early 1991 to assist the transition to free-market economies in Eastern Europe and the former Soviet Union.

Mr de Neergaard said: 'I do not feel (the report) reveals a shocking degree of excess spending.' The committee saw no evidence of fraud and did not recommend any disciplinary action.

Mr Attali's compensation has still to be agreed. But he is unlikely to receive the pounds 147,000 due under his contract because of the audit committee's concerns about his lack of co-operation with the inquiry.

Despite several requests, neither the committee nor Coopers & Lybrand, its external adviser, was given adequate explanations for seven flights specially chartered for Mr Attali or for the cheque for pounds 41,377 with which he reimbursed the bank. Mr Attali's staff said the cheque was 'temporarily mislaid' for three months, so that it was not paid into the bank's account until after the start of the inquiry.

Other mysteries include the missing transcript and audio recordings of a March 1991 meeting at which some EBRD directors remember urging that the bank should not establish certain offices without further discussion. The EBRD set up a Paris office but its board was not told of this until two months ago; the Paris office was not mentioned in the EBRD's 1991 and 1992 accounts.

There are also doubts about Mr Attali's reimbursement of expenses incurred on an unauthorised speaking engagement for a Japanese newspaper. Mr Attali also had to repay the bank pounds 30,341 of private expenses, which he had run up on his corporate credit card. He repaid the money only three weeks ago, after the inquiry had begun.

The report attacks the bank's extravagant use of chartered aircraft. Most of the 57 charters, at a cost of pounds 1.4m, were for Mr Attali's use and most came from Air Enterprise, whose Paris base helped make it 'by far the most expensive option'. The report criticises Mr Attali's 'bad judgement' on this matter.

Mr Attali and his inner circle also used Concorde, 'a particularly expensive mode of transportation', on 21 occasions last year, in contravention of the EBRD's travel policies. In 1991, Mr Attali used three different cars in the space of 10 weeks, creating 'an impression of extravagance which is inappropriate for the head of a development institution'.

Coopers & Lybrand's investigation of the headquarters refit concludes: 'The bank has not achieved a cost-effective specification or good value for money.' The EBRD's building cost pounds 1,524 per square metre. Coopers found similar projects undertaken for large international financial organisations in North America and Europe cost between pounds 320 and pounds 600 per square metre.

Higher UK construction costs were partly to blame but so were the EBRD's very high specifications. These included luxury carpet at pounds 44 per square metre (total cost pounds 1.3m) and state-of-the-art suspended ceilings (total cost pounds 5.7m or five times the tender price), which allow for flexible partitioning and air conditioning. The infamous marble cladding cost pounds 845,000.

The audit committee laid the blame on the lack of clear responsibility for the building project. Mr Attali claimed he had no decision-making role but many others involved thought otherwise.

Mr de Neergaard accepted the board was partly to blame for failing to ask for better information about the cost of the project.

Ron Freeman, the bank's first vice- president, has taken over as acting president until the shareholding governments appoint a successor to Mr Attali, expected some time next month.

(Photograph omitted)

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