Exclusive - ECB replaces Brussels head, annuls four hires after rule breach

By Francesco Canepa

FRANKFURT (Reuters) - The European Central Bank has replaced the head of its Brussels office and annulled four more appointments after staff complaints about unlawful hirings and promotions, internal documents seen by Reuters show.

The documents show repeated violations of the ECB's own rules by its executive board, chaired by Mario Draghi, and come amid staff complaints of favouritism at one of Europe's most powerful institutions.

The ECB is the bloc's top bank supervisor, in charge of cleaning up the sector and avoiding a repeat of the 2008 financial crisis. It is responsible for monetary policy in the euro zone and is spending trillions of euros to bring inflation up to its target of close to 2 percent.

Under the staff changes, Stephane Rottier, a former counsellor to chief economist Peter Praet, will no longer be the head of the ECB's Brussels office, responsible for maintaining relations with other European institutions, the ECB told staff last week.

Rottier has held the job on a temporary basis since his appointment was annulled in October due to a complaint by a staff representative that he had been handpicked, denying other candidates a chance, and given a pay rise compared to his predecessor.

ECB rules say positions need to be advertised if they are moved to a higher 'salary band', the wage range set for civil servants at the bank.

The Brussels vacancy, which comes with a basic salary of between 172,356 euros and 217,260 euros ($187,000 to $235,000) per year, was subsequently advertised. Rottier re-applied but was unsuccessful.

"On 21 March, the Executive Board decided to appoint Boris Kisselevsky as Head of the ECB Brussels Office," the ECB said in an internal memo dated March 23.

"This appointment is the outcome of a new recruitment campaign, following the annulment of the Executive Board decision to appoint a candidate directly from the reserve list."

Kisselevsky, currently in the ECB's communications department, previously worked for the bank in Moscow and Washington.

Rottier did not respond to Reuters' requests for comments.

LEGALITY

The ECB's six-person board, which runs the organisation and makes policy proposals, has also annulled four appointments in its human resources department after finding their legality had been compromised, a staff memo shows.

"The ECB re-assessed the legal soundness of the selection procedure, which revealed the existence of procedural mistakes affecting the legality of the four appointment decisions," it said in a memo dated March 20.

It said the "pre-selection" of candidates had started before a hiring committee had been formed. And when a committee was formed, its composition was "not in line with staff rules".

The four mid-level managers will continue in their roles on nine-month contracts while a new selection process is launched.

An ECB spokesperson said: "The decision regarding the human resources positions shows that our internal appeals process works. There was an internal appeal, which revealed the existence of procedural mistakes."

Global watchdog Transparency International said on Tuesday the ECB needs to become more transparent and accountable, including by overhauling its "outdated" framework for whistleblowers to denounce conflicts of interest, corruption and other wrongdoing.

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.

(Reporting by Francesco Canepa; Editing by Ruth Pitchford)