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Exclusive: ECB faces 'favoritism' appeal over hiring of Draghi adviser

[April 28, 2017] By Francesco Canepa

FRANKFURT (Reuters) - European Central Bank staff representatives are appealing against the appointment of a new policy adviser for President Mario Draghi, alleging that the ECB's board broke its own rules by handpicking Roland Straub for his new role.

The appeal alleges that the "perception of favoritism" at the powerful institution, which is in charge of supervising banks and controlling monetary policy in the euro zone, risked demoralizing staff and fuelling euro-scepticism among the public.

Successful appeals lodged in recent months have led to five ECB appointments being annulled, including that of the bank official in charge of relations with other European institutions in Brussels.

"This appeal is triggered by the desire to stand against the malfunctioning affecting ECB's appointment process, resulting into widespread perception of favoritism and complaints of lack of transparency and unsound rules," appellant Carlos Bowles said in his appeal, filed in March and seen by Reuters.

The issue concerns the method of employment. Straub's qualifications are not in question.

An ECB spokesperson said: "The direct appointment of the counselor to the president of the ECB was made in compliance with the ECB rules on selection and appointment and is consistent with previous appointments to this position."

Straub did not immediately reply to Reuters' requests for comment.

The ECB has two months to reply to the appeal, after which the appellants can bring the case to the European Court of Justice.

Straub was appointed as Draghi's counselor and coordinator of the Counsel to the Executive Board in February. The position is scheduled to end with Draghi's mandate in late 2019.

In his role he advises Draghi and coordinates the work of the counsels of the five other members of ECB's board, which runs the organization and makes policy proposals.

The position was not advertised and Straub was chosen via direct appointment by the Executive Board, rather than after a recruitment process open to other candidates and held by a hiring committee.

Advisers to top European officials are often chosen this way.

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European Central Bank (ECB) President Mario Draghi addresses a news conference at the ECB headquarters in Frankfurt, Germany, April 27, 2017. REUTERS/Kai Pfaffenbach

However, appellant Carlos Bowles said in his appeal ECB rules did not allow for Straub to be directly appointed to the role of coordinator of the counsel.

Bowles added that the vacancy should have been advertised and the staff committee, which he chairs, should have been informed that the role had been moved to a lower 'salary band' coinciding with Straub's appointment.

He argued any apparent breach of the principle that ECB jobs are purely awarded on merit risked undermining the ECB's legitimacy in the eyes of the general public.

"These risks should not be taken lightly, in a context where the European project is endangered by the rise of populism, nurtured by widespread perceptions of European citizens that their governing bodies are working towards the interests of a class of happy few," he said.

In his new role, Straub receives a basic salary of between 122,268 euros and 175,428 per year, a higher range than in his previous role as counselor to board member Benoit Coeure.

In a note sent to staff on Thursday, trade union IPSO, which filed a separate but broadly equivalent appeal against the appointment, said the move was not intended as a personal attack on Straub.

"We stress that the appeal is in no way meant to challenge the professional competence of our colleague," it said. "We do not challenge the person chosen we challenge the process of selection."

The ECB was put in charge of supervising euro zone banks three years ago with the aim of avoiding a repeat of the 2008 banking crisis. It is also spending trillions of euros in a bid to boost euro zone inflation.

An ECB staff survey conducted in 2015 showed 65 percent of respondents chose "knowing the 'right people'" as a way of getting ahead at the bank, a higher proportion than chose any other factor.

Staff representatives complained last year to the European Parliament, which oversees the ECB, that dissent was discouraged at the bank, potentially hobbling its ability to spot the next financial crisis.

(.Editing by Jeremy Gaunt)

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