Latin America development bank axes chief after ethics probe

The governors from the IADB’s 48 members had until Tuesday to vote electronically on whether to sack Claver-Carone following a unanimous recommendation last week by the bank’s board to fire of the first American to lead the bank in its 63-year history.

But enough ballots had been cast by Monday afternoon to meet the necessary quorum. The IDB in a statement said that in accordance with the bank’s charter Executive Vice President Reina Mejia would take over as acting president until a new leader is chosen.

An investigation conducted at the board’s request determined that Claver-Carone violated ethics rules by giving a 40% salary increase to his chief of staff, with whom it said he likely had a romantic relationship from at least 2019, when both worked at the White House, according to a copy of the report obtained by the AP.

Claver-Carone has denied ever having a relationship with his top aide and said that the investigation, conducted by New York law firm Davis Polk, was seriously flawed.

In an interview Monday, Claver-Carone said he is considering legal action against the international financial institution for allegedly defaming his good name and violating provisions in his employment contract. He also lashed out at the Biden administration for not standing up for the due process rights of one of its citizens.

“The Bank has failed to meet the mark as a rules-based institution,” he wrote in a parting letter to the governors, complaining that he was never formally notified of the anonymous complaint that triggered the probe or allowed to correct inaccuracies in the investigators’ confidential report. “The future of the Bank is at stake. Moving forward it will be essential to ensure that the ad hoc and arbitrary disregard for rules and procedures are never repeated.”

The bank’s executive board lost confidence in Claver-Carone’s leadership as a result of evidence including a “contract” he and his aide purportedly drew up on the back of a place mat in the summer of 2019 while they dined at a steakhouse in Medellin, Colombia. Both were there attending the annual meeting of the Organization of American States.

In it, they allegedly outline a timeline for divorcing their spouses and getting married. There is also a “breach clause” stating that any failure to fulfill the terms would bring “sadness and heartbreak” that could only be mitigated by “candlewax and a naughty box” from an oceanfront hotel in Claver-Carone’s native Miami.

While investigators found no evidence that Claver-Carone broke the bank’s travel policies to cover up the purported romance, it faulted him for not fully cooperating with their probe by refusing to hand over his work phone and providing access to communications from his personal phone and email. It also said he likely violated the bank’s conflict of interest policy, which bars managers from employment decisions on behalf of individuals with whom they have an intimate relationship, when he unilaterally awarded his aide a 40% salary increase.

The findings recall accusations of ethical lapses against another Republican atop a multilateral institution, former Secretary of Defense Paul Wolfowitz, who resigned as head of the World Bank in 2007 for arranging a generous pay raise for his girlfriend.

The Inter-American Development Bank is the biggest multilateral lender to Latin America, disbursing last year a record $23 billion to alleviate poverty made worse by the coronavirus pandemic in the region. The U.S. is the largest shareholder, with 30% of voting rotes.

Claver-Carone was elected president in the final months of the Trump administration despite grumblings from Democrats and some others in the region. While at the bank, he worked to curtail the influence of China, which joined the bank in 2009, and to boost engagement with Taiwan, which Beijing considers breakaway province.

According to bank rules, Executive Vice President Reina Mejia, a Honduran national who spent most of her career at Citibank in Central America, will take over from Claver-Carone until a new president is elected.

Follow Goodman on Twitter: @APJoshGoodman