ECB taken to court over hiring of Draghi's top aide

By Francesco Canepa

FRANKFURT (Reuters) - A staff representative has taken the European Central Bank to court over the hiring of President Mario Draghi's closest adviser, escalating a conflict over alleged favouritism at the top of the euro zone's mightiest institution.

In the complaint, seen exclusively by Reuters, staff representative Carlos Bowles said the ECB's Executive Board had acted unlawfully by not advertising the job, denying others a chance to apply.

The adviser, German economist Roland Straub, who was appointed in February, plays a key role in formulating policy proposals and also coordinates the aides to the ECB's five other directors.

Bowles's appeal marks the first time an ECB appointment at such a senior level has been challenged.

Straub's qualifications are not questioned in the appeal, which focuses on the mode of employment for the dual role of adviser to Draghi and coordinator of the other aides.

Bowles, who has obtained the cancellation of five hirings in the past year, said direct appointments risked making ECB staff seek their superiors' favours as a means to obtain promotions.

"The contested decisions violate the principles of publicity, transparency, equal access and non-discrimination," said Bowles, who chairs the ECB's staff committee.

Asked about Bowles' move, an ECB spokesman said: "The ECB has not been notified of any complaint. We would welcome the opportunity to confirm that this appointment was made in full compliance with ECB rules."

Straub, who has published more than 50 papers and articles, was not available for comment.

INTERNAL APPEAL REJECTED

The ECB's board rejected Bowles' internal appeal against Straub's appointment in May on the grounds that it did not affect the staff representative personally and was in line with the bank's hiring rules and practice.

The case will now be investigated by the General Court of the European Union, the highest authority in cases against the ECB and the EU's other institutions.

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.

The ECB is also under scrutiny from Europe's ethics watchdog over the participation of Draghi and other top officials in a closed-door forum with bankers and fund managers.

Bowles alleged the handpicking of Straub, previously an adviser to director Benoit Coeure, was indicative of a tendency at the ECB to promote employees who are close to board members.

ECB rules allow for certain positions, including that of counsellor to a board member, to be filled by direct appointment rather than via an open recruitment process. But Bowles said the rules do not allow for Straub to be handpicked as a coordinator.

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 ECB, a higher proportion than chose any other factor.

(Editing by Gareth Jones)