Inter-American Development Bank votes to oust Trump-era president

The governors of the biggest multilateral bank focused on Latin America have voted to remove its president after an external investigation found that he had conducted an undisclosed intimate relationship with a subordinate to whom he gave two large pay rises.

The decision to oust Mauricio Claver-Carone, a controversial Trump-era appointee, as president of the Washington-based Inter-American Development Bank, was reached early Monday afternoon, three sources with knowledge of the matter told the Financial Times.

The IDB later issued a brief statement confirming that Claver-Carone “will cease to hold the office of President of the Bank, effective on September 26, 2022”. Executive vice-president Reina Irene Mejía would act as president until a new leader was chosen, it added.

Claver-Carone, who served as ex-president Donald Trump’s top adviser on Latin America, has consistently denied the accusations and described the governors’ vote as a “political circus”.

“I’m on the cusp of being removed and to this day . . . I have yet to have the legal counsel or anyone else at the bank reach out to me formally to present me the original accusation, the report, what rules I’m subject to,” he told the Financial Times. “The bank has failed to live up to its responsibility as a rules-based institution.”

The IDB, which facilitated $23bn in lending to Latin America and the Caribbean last year, hired US law firm Davis Polk to probe accusations from an anonymous whistleblower.

That person alleged that Claver-Carone had failed to disclose a “romantic and inappropriate relationship” with a subordinate, incurred excessive hotel costs when travelling with her and retaliated against bank employees who reported the alleged violations.

The confidential 19-page report, a copy of which was passed to the Financial Times, found it was “reasonable to conclude” that Claver-Carone was in a relationship with the woman before she joined the bank and had violated bank policy by failing to disclose it and by taking employment actions to benefit her.

It also said that he and the woman had failed to co-operate fully with the investigation and that the pair on at least 15 instances had stayed in hotels that exceeded the bank’s cost limits. It did not uphold the complaint about alleged intimidation of whistleblowers.

Claver-Carone and the woman have both denied failing to co-operate with the investigation, which has set Latin American diplomatic circles in Washington abuzz. In a “final statement” sent to the FT on Monday evening, the IDB president lashed out at what he called “old-guard bureaucracies” in the region that are “stuck in a cycle of populist ideologies and political patronage”.

“Despite the report clearing me and my staff of all the anonymous allegations and wrongdoing, they have now claimed a lack of co-operation and allowed falsehoods to be manipulated and misconstrued in what was supposed to be an investigation of ‘the highest standards’,” he said.

The investigation found that within days of the woman joining the IDB on a salary of $287,000, Claver-Carone requested and approved a pay rise for her of around 20 per cent. Ten months later, she received another 20 per cent pay rise, taking her salary to $420,000, and a new title.

The Davis Polk report was sent to the bank’s 14 executive directors on September 19. By last Thursday, they had voted unanimously to recommend Claver-Carone’s removal and put the matter to a vote by the full board of the IDB’s 48 member nations, which include 16 European nations, Korea, China and Japan as well as those in the Americas.

A US Treasury spokesperson said last week that Claver-Carone’s “creation of a climate of fear of retaliation among staff and borrowing countries has forfeited the confidence of the Bank’s staff and shareholders and necessitates a change in leadership”.

Following Monday’s board vote, the IDB’s member nations will start to consider possible successors. Costa Rica’s former president Laura Chinchilla, who ran against Claver-Carone to lead the IDB in 2020 before withdrawing, is among the candidates favoured to succeed him, diplomatic sources say.