Exclusive-Probe into IDB chief backs allegation of relationship with staffer - sources

© Reuters. A man stands next to a screen with the logo of Banco Interamericano de Desarrollo (BID) at the Atlapa Convention Center in Panama City March 13, 2013. REUTERS/Carlos Jasso

By Cassandra Garrison and Andrea Shalal

MEXICO CITY/WASHINGTON (Reuters) -An outside firm hired to investigate whistleblower allegations found evidence that Inter-American Development Bank President Mauricio Claver-Carone engaged in an intimate relationship with a staffer, three sources briefed on the probe told Reuters.

The report also cited examples of abuse of power by Claver-Carone, including his dismissal of some bank employees that investigators believed were in retaliation for various personal conflicts, said the sources, who spoke on condition of anonymity because the process is still under way.

Claver-Carone said the investigation did not "substantiate the false and anonymous allegations" made by the whistleblower. Claver-Carone has "not yet formally received the report," but was able to informally review a copy on Tuesday, his spokesperson told Reuters.

"I would welcome the opportunity to officially respond to the investigation's findings in accordance with Bank rules and international standards," Claver-Carone said in a statement.

One of the sources, a former senior U.S. official, said it was highly unusual to post such a document on the institution's website, given the ongoing investigation. "He's being accused of misusing bank resources, and in defending himself, he is doing just that - misusing bank resources," the former official said.

Legal firm Davis Polk presented the findings of its investigation to the bank's directors on Monday. The IDB's board hired the firm to investigate allegations leveled against Claver-Carone in a whistleblower email at the end of March.

It concluded that Claver-Carone had an intimate relationship with a senior staffer who previously worked with him at the White House under former President Donald Trump, according to the three sources with knowledge of the findings. Reuters has not seen a copy of the report.

A relationship between Claver-Carone and someone he directly managed at the bank would appear to violate the IDB's ethics code. One of the sources said the report also noted that Claver-Carone had failed to disclose the prior relationship.

The staffer, in written testimony submitted to investigators, denied "all allegations that suggest any violation of the staff code" and said she had not received any written notification of any allegations.

The Washington-based IDB is a development bank that, while far smaller than the International Monetary Fund or World Bank, is a major provider of development funding in Latin America.

The bank's 14-member board of directors reviewed the report for hours on Monday and met again on Tuesday to consider next steps, the sources said. It will meet again Wednesday with representatives from all 48 member countries.

The United States, the largest shareholder in the bank, was "closely reviewing" the report but would refrain from further comment until the review was complete, a spokesperson for the U.S. Treasury Department said.

The board had offered to share the investigation's findings with Claver-Carone before they were presented on Monday, but only under certain conditions, including that no retaliatory action be taken against participants in the investigation. Claver-Carone declined, one source said.

A letter to the bank's law firm from Claver-Carone's attorneys, seen by Reuters, said the terms of the offer were unacceptable, and that Claver-Carone had repeatedly been denied the opportunity to know the allegations against him and speak in his own defense.