* Polish PM says bank chief Belka did not break the law
* On tape, Belka used expletive about rate-setters
* Belka heard discussing finance minister's removal
* Some investors says bank credibility dented
* Belka says to meet president on Tuesday
(Updates with Belka comments. Attention: strong language in
By Pawel Florkiewicz and Jakub Iglewski
WARSAW, June 16 Poland's central bank governor,
Marek Belka, said on Monday he had no plans to resign over a
leaked recording of him using an expletive to describe bank
colleagues and discussing the removal of the finance minister.
Pressure on Belka to quit eased after Prime Minister Donald
Tusk said the central banker had committed no crime and had made
the remarks out of a sincere desire to help Poland, the European
Union's sixth biggest economy.
The revelations on the tape, published on Saturday by the
Wprost news magazine, were seen as relatively mild by many
people in Poland, a country with a long history of scandalous
behaviour by public servants exposed in leaked recordings.
But some investors outside the country said that, even if
Belka weathers the immediate storm and stays on, the bank's
credibility as a body that defends economic stability
independently of the government has been dented.
"I am not considering stepping down," said Belka, 62, a
former prime minister and finance minister with strong ties to
Poland's political establishment.
"A true picture is slowly emerging from this media dust, and
we are getting to the essence, that this (his comments on the
tape) were rather out of concern for the state," Belka told
broadcaster TVN in an interview.
Belka said he would meet President Bronislaw Komorowski on
Tuesday and expected to discuss the tape. The president
nominated Belka to his post four years ago, though he does not
have the power to remove him. He has so far made no public
comment on the affair.
The audio recording contains extracts of a meeting in July
between Belka and Interior Minister Bartlomiej Sienkiewicz. The
conversation took place in a Warsaw restaurant called "Owl and
Friends," which is favoured by senior officials for its privacy.
Over the sound of dinner plates clanking, the two men can be
heard using frequent expletives as they share candid views on
members of the cabinet and the central bank and talk about the
government's financial problems.
Tusk, in his first detailed comments since the existence of
the tape emerged on Saturday, said: "Irrespective of how nasty
was their way of expressing their opinions, they were talking
about how to help the country, not how to harm the country,
about joint actions in times of crisis."
At a specially-convened news conference, Tusk said he agreed
with an initial assessment by Prosecutor-General Andrzej Seremet
that there was no evidence that either Belka or Sienkiewicz had
committed a crime. Tusk said he would not bow to opposition
demands for the government to resign.
Under Polish law, central bank governors can only be removed
if they are convicted of crimes or are incapacitated through
illness. Belka is four years into a six-year term and could in
theory seek another term.
Poland's zloty fell by 0.6 percent earlier on Monday on
market worries that Belka may have to quit. It recovered some of
its losses after Tusk spoke.
In the recording, Belka can be heard telling Sienkiewicz he
would be willing for the bank to help the government out of its
economic troubles on condition that Finance Minister Jacek
Rostowski was removed.
Rostowski left the government in a reshuffle in November,
though both Tusk and Belka have said that was a coincidence and
unrelated to the discussion in the restaurant.
The discussion on the tape also touched on the possibility
the rate-setting council would block the bank from helping the
"Of course, we have this fucking Monetary Policy Council,"
Belka can be heard saying. "But we are able to play with it."
The recording also has Belka making disparaging personal
remarks about one of the council members, Jerzy Hausner. Hausner
told Reuters on Sunday he had no comment.
The tape is potentially damaging because it blurred the
distinction - enshrined in Polish law - between the central bank
and the government.
Such issues are commonplace in many eastern European
economies, but investors in the past few years have channelled
their assets to Poland because they believed it had a higher
standard of economic governance than its neighbours.
Peter Attard Montalto, emerging markets economist at Nomura,
said the affair called into question all future actions of the
"Would intervention or bond-buying be independent or
quasi-political choices? Same for rate cuts," he said.
"Regardless of guilt or otherwise, the standing of the
institution and its ability to make policy decisions without
being second-guessed is what's at stake here."
The more immediate challenge for Belka is a scheduled
meeting of the Monetary Policy Council on Tuesday, when he will
have to face the members about whom he had used crude language.
Belka is chair of the 10-member council.
Some analysts said if the tape causes lingering bad blood
between Belka and the other members of the council, it could
hamper his ability to do his job, and possibly delay an
anticipated decision on cutting rates to spur economic growth.
In his interview on Monday, Belka said he was preparing for
a difficult encounter.
"I will have to tell them that I respect them and the
adjective that I used, let's forget it," he said. "The tapes are
an unpleasant incident, which we will overcome."
Belka at the weekend apologised to anyone offended by his
language. He said he had not been trying to cut any political
deals and that the extracts that were published distorted the
thrust of the conversation.
On Monday, two members of the 10-person council, Elzbieta
Chojna-Duch and Anna Zielinska-Glebocka, indicated they were
satisfied with Belka's apologies.
A third member, Andrzej Kazmierczak, said: "I'm very sorry
that I was assessed this way by the MPC chairman."
(Additional reporting by Michal Janusz, Marcin Goettig, Marcin
Goclowski and Pawel Florkiewicz in WARSAW and Marton Dunai in
BUDAPEST; Writing by Christian Lowe; Editing by Robin Pomeroy)