European Bank in nuclear split

EBRD chief accused of bias towards French on Slovakian project

THE troubled European Bank for Reconstruction and Development is facing a fresh embarrassment, this time over allegations of French "bias" in plans to fund a nuclear power station in Slovakia.

The row has flared up after an Englishman heading a valuation of the Mochovce plant was kicked off the project and replaced by a Frenchman.

Now, all the key personnel deciding whether the London-based EBRD should back the completion of Mochovce are French, right up to Jacques de Larosire, the president of the Bank.

Should funding be approved as is widely expected, Electricit de France will win the lucrative £570m contract.

The allegations of French "sleaze" come as the EBRD recovers from the scandal over the costs of its London headquarters, which were fitted out with marble by its former president, Jacques Attali.

He was ousted 15 months ago, but the bank is still struggling to live down its reputation as "the glistening bank".

The Slovakia project, the EBRD's biggest proposed funding so far, looks set to push the bank back into the spotlight. The treatment of the ousted Englishman, Martin Blaiklock, who was responsible for energy projects in eastern Europe, has outraged many staff.

Initially he was kicked off the Mochovce project, and in the last few days he has left the bank in mysterious circumstances.

Colleagues say that Mr Blaiklock, who originally came from City bank Kleinwort Benson, was a respected member of the EBRD.

They say that the only reason for him being replaced - by Alain Pilloux - is that he was not pushing the project in a way that suited French interests. They add that it is not the first time this has happened.

"Martin Blaiklock was perfectly good at his job. The fact that he has now left is totally out of order," says one senior official at the bank.

Apart from Mr Pilloux, the French have another key official in the shape of Thierry Baudon, who is in charge of all projects within the EBRD and is known to favour Mochovce. A third French official working on the valuation is a junior member of staff paid for by the French government. Furthermore, Mr de Larosire is actively canvassing support for the scheme.

Evidence is also mounting of a deliberate attempt by the bank to distort studies on the cost of completing Mochovce, which is 85 per cent built.

It has been lying in this semi-finished state since Slovakia ran out of money a few years ago. But many people believe that a new gas-powered station would be cheaper and safer to build.

Consultants Putnam Hayes and Bartlett were asked to carry out a "least cost analysis" of the two options.

The assumptions used by the consultants were repeatedly altered. Each time they were changed, they made the nuclear option look more attractive. Eventually, the report concluded that completing Mochovce was fractionally cheaper than a new gas station.

However, the Ako Institute in Germany was commissioned by Greenpeace to make another study on Mochovce, which came to markedly different conclusions. This report argues that the nuclear option fails to take into account the difficulty of forecasting electricity demand and future gas prices. It says that safety questions have not been satisfactorily answered.

Antony Froggart, who is heading the Greenpeace campaign against the Slovakian plant, said: "The Oko Institute study casts serious doubts on the EBRD figures. It shows there are other cheaper and safer options. But the EBRD is determined to push Mochovce through."

Opposition to the project has been fierce in Austria, which is threatening to quit the EBRD if the project is approved.

Criticism of Mr de Larosire is now out in the open. Profil, the Austrian weekly magazine, wrote recently: "The French old boy network is alive and well. All the key people on the Mochovce project are French right up to de Larosire."

Mr de Larosire has focused attention on the way French companies win a large number of private projects in eastern Europe. A few months ago, he campaigned for Insead, the business school near Paris, to get $10m (£6.3m) to fund students from eastern Europe through its programme. A number of directors opposed the scheme, but Mr de Larosire eventually managed to get his way at the third attempt. The directors who voted against him were extremely angry at the outcome.

"It was blatant French bias," one EBRD director said. "Why weren't other business schools from around the world also allowed to participate?".