June 16, 2014 / 2:16 PM / in 4 years

UPDATE 3-Polish central bank chief: I won't resign over leaked tape

* 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 paragraph 17)

By Pawel Florkiewicz and Jakub Iglewski

WARSAW, June 16 (Reuters) - 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 government.

“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 central bank.

“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)

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