High Time To End High Living At The EBRD: Scandalous Gold-Plating Demands New Oversight

It was somehow tragically fitting that the IRA bomb which devastated part of London’s financial district last week-end rocked the building housing the European Bank for Reconstruction and Development (EBRD) as delegates gathered for the Bank’s annual board meeting. After all, the edifice and the lavish sums its president, Jacques Attali, has squandered on it are at the center of an increasingly explosive controversy — one that threatens to do more than break a few windows at the EBRD.

Attali’s ‘Life of the Rich and Famous’

According to a series of extraordinary investigative reports filed in the Financial Times, the EBRD under Attali — a protege of French President Mitterand –has lavished millions of the Bank’s taxpayer-supplied resources on itself instead of its mission, namely the invigoration of the movement toward free market economies in Eastern Europe and the former Soviet Union.

Indeed, since the Bank’s began operating two years ago, Attali has approved the expenditure of twice as much on the EBRD’s building, staff and overhead as the Bank has paid out in loans in its 25 client countries in Eastern Europe and the former Soviet Union. Some $312 million has gone to furnishings, staff and perks; by contrast, needy project recipients have secured only $157 million in disbursed EBRD loans.

Evidence of the EBRD’s skewed spending priorities under Monsieur Attali’s "leadership" may be found in the following:

• So far, over $87 million has been spent to refurbish and furnish the headquarters at One Exchange Square in London’s financial district. Interestingly, the architect assigned the task was none other than Jean-Louis Berthet, the man who designed Saddam Hussein’s presidential palace.

 

• At a cost of more than $1.2 million, the Travertine marble in the EBRD’s lobby has been replaced with imported Italian Carrara marble. According to the bank’s budget director, Pierre Pissaloux, the reason for the switch was that "[The original marble] didn’t give us the right feeling. It was too complicated."

 

• Custom-made carpeting was requisitioned "to ensure that it appears to be the same color regardless of lighting."

 

• 600 Italian-designed desks made of steel and glass were purchased at a cost of close to $1,000 a piece.

 

• The Bank features nine dining rooms, including one called the "Mozart" — featuring paintings of the composer, custom wall-to-wall carpeting and custom-designed chairs and tables.

 

• A designer bar was installed furnished with 100 chairs, each representing different European design periods.

 

• A new auditorium is being constructed at a cost of $1.5 million.

 

• $900,000 has been spent to rent private planes for Attali who says without the slightest hint of regret "I am sorry I cannot do without [them]." Some $600,000 is budgeted for Attali’s rental of jets this year — a cost of roughly $33,000 each time an aircraft is chartered.

 

• $78,000 was shelled out for an extravagant Christmas party for EBRD executives and staff.

Clinton Administration Requesting Millions More for EBRD

Unfortunately, Monsieur Attali’s high living and expensive tastes are not merely abusing the largesse of the European governments that were instrumental in creating the EBRD three years ago. Indeed, the United States — read the American taxpayer — has the largest single national membership share, having supplied 10 percent of the Bank’s capital.

In light of this substantial stake, Washington insisted that an American be assigned the number two position in the Bank’s leadership. Accordingly, the job of First Vice President has, since the EBRD’s founding, been occupied by Ron Freeman, [a former investment banker with Solomon Brothers]. While Freeman has publicly flacked for Attali in the wake of the recent bad publicity — suggesting, among other things, that "The approach which we adopted and the result which we achieved in establishing our new headquarters will stand up to objective scrutiny" — one conclusion seems inescapable: The U.S. government had to know about the scandalous abuse of EBRD resources before the story was made public by the Financial Times.

The Clinton Administration has, nonetheless, seen fit to request an additional $70 million for the EBRD as part of its 1994 budget request to Congress. If the executive branch is untroubled by the prospect that this money too might wind up primarily supporting Jacques Attali’s extravagant life-style, at least one key legislator has served notice that he intends otherwise.

Senate Appropriations Foreign Operations Subcommittee Chairman Patrick Leahy (D-Vt) asked Treasury Secretary Bentsen in hearings on 27 April: "I want to know why we should entrust another dime of the public’s money to Mr. Attali. It’s almost like this money that has gone in there is a slush fund for personal use." Sen. Leahy has pledged to block congressional funding for the EBRD until the Bank’s operations are governed by the sort of priorities it was created to promote, namely assisting free market entrepreneurism in Eastern Europe and the former Soviet Union.

Bottom Line

The Center for Security Policy has had profound reservations about the European Bank for Reconstruction and Development from the Bank’s inception. The Center was particularly concerned at the April 1990 decision to permit the then communist Soviet Union to draw on EBRD funds and agreed with AFL-CIO President Lane Kirkland who noted that such an arrangement would invite "the diversion of resources that should instead be available for the emerging democracies of Poland, Hungary, Czechoslovakia, and the Republic of Lithuania."(1)

The latest revelations about the diversion of EBRD’s resources — i.e, to allow the "gold-plating" of the institution and its staff — should serve as a "final straw" not only for ridding the Bank of its present leadership including its coopted American representative. It also afford an excellent opportunity for a thorough reexamination by the U.S. executive and legislative branches of the EBRD’s effectiveness in fulfilling its mandate of promoting free market entrepreneurial activity in the former Soviet bloc. Not "another dime" should be appropriate by the Congress for the EBRD until it is fully satisfied that all those responsible for this institution’s tragic "false start" have been expunged from the scene — unceremoniously.

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1. See the Center for Security’s press release "Center Cheers AFL-CIO Opposition to Soviet Membership in EBRD, " (No. 90-P34, 11 April 1990).