Brazil Favors Removal of Trump-Picked Bank Chief on Ethics Probe

  • In World
  • 2022-09-22 19:23:23Z
  • By Bloomberg

(Bloomberg) -- Brazil, the second-largest shareholder of the Inter-American Development Bank, supports the removal of the lender's president amid an ethics probe into his role, according to a top government official from the South American nation.

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The administration of President Jair Bolsonaro sees the IDB's Mauricio Claver-Carone as being unable to continue leading the Washington-based bank after the investigation highlighted an alleged romantic relationship with a subordinate and apparent breaches of the bank's rules, the official said, asking not to be identified because the government's position isn't public.

The Brazilian government, which holds an 11.4% stake in the bank and together with the US and Argentina make up almost 53% of its voting power, expects a resolution of the case soon as Claver-Carone is losing internal support, according to the person. In order for Claver-Carone to be removed, the countries seeking his ouster would need a simple majority of voting shares.

The ultimate decision would be made by the board of governors, mostly finance ministers from the governments to which the board's executive directors report, though they are expected to back the recommendation of the executive board.

Brazil's Economy Ministry, which oversees the relationship with the IDB, declined to comment, as did the press office of the IDB itself.

The appointment of Claver-Carone, a former Trump administration official, to lead the development bank focused on Latin America opened a rift between the US and the region in 2020. He was the first US citizen to lead an institution traditionally presided over by a Latin American since its creation in 1959.

While Brazil at the time supported his candidacy as part of a Bolsonaro-Trump agreement, the relationship between Claver-Carone and Economy Minister Paulo Guedes has been rocky, with clashes over the Brazilian representatives to the bank, the person said.

Claver-Carone was expected to address the bank's board on Thursday to respond to the allegations in a session with the institution's executive directors, Bloomberg News reported earlier.

Read More: Trump-Picked Latin American Bank Chief to Address Board on Probe

The former top Treasury adviser, International Monetary Fund representative and foreign-policy satellite radio host from Miami has mounted an aggressive defense to keep his job. In a statement posted Tuesday on the IDB's website, Claver-Carone said he fully cooperated with the investigation and asserted that it "does not substantiate the false and anonymous allegations that were made against me or IDB staff in the press."

He said the probe itself violated IDB rules because he and other IDB staff members didn't have a chance to "review the final investigative report, respond to its conclusions, or correct inaccuracies."

The investigation found evidence -- backed by handwriting analysis, divorce records and interviewee statements -- supporting the conclusion that the pair were in a romantic relationship prior to joining the Washington-based IDB in late 2020 "and that the relationship may have continued during their employment at the bank," according to the Sept. 19 report prepared by law firm Davis Polk & Wardwell LLP at the direction of the IDB's board.

The probe also found that Claver-Carone took employment action to benefit the aide, raising her salary twice in less than a year for a cumulative 46% increase to more than $400,000.

The report hasn't been made public but has been seen by Bloomberg.

Neither Claver-Carone nor the aide fully cooperated with the probe, according to the report. Claver-Carone in interviews with Davis Polk in recent weeks denied ever having a romantic relationship with the aide, who declined to be interviewed for the investigation, according to the report. The person didn't respond to requests for comment.

Read More: Latin America Development Bank Head Decries Personal Accusations

In comments to Bloomberg, Claver-Carone said he was interviewed by investigators for more than seven hours and responded to many of their requests for information.

He said the investigation failed to provide him with due process. "The absence of basic fairness shows this process has been purely political," he said.

Davis Polk didn't respond to requests for comment.

The IDB, which is strategic to US influence in Latin America, loaned $23.5 billion last year, focusing on boosting economies and offering credit lines to buy Covid-19 vaccines for a region that was one of hardest hit globally by the pandemic. Nations experienced one of the worst economic contractions in their history in 2020, with millions losing jobs or fallen into poverty.

(Updates with details of votes and investigation and Claver-Carone's comments starting in fourth paragraph.)

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