Bundesbank hit by fresh perks row

Axel Weber is coming under pressure just weeks into his new job

Germany's central bank has found itself mired in a fresh scandal, only weeks after its chief was forced to resign for accepting unauthorised perks.

Axel Weber, the new Bundesbank head, is to testify to the parliamentary budget committee later on Thursday.

Lawmakers want him to explain why the bank bought and built some 4,700 flats and houses for its staff.

Germany's Government is on an austerity drive, and wants to avoid accusations of wasting taxpayers' money.

Minor mishap

The government and the Bundesbank have been at pains to play down the affair.

Mr Welteke's largesse is no longer welcome at the Bundesbank

The finance ministry has already rejected calls to increase central supervision of the bank.

And Bundesbank vice-president Juergen Stark told Handelsblatt newspaper that help with accomodation was a normal perk for workers in state institutions.

Although the properties were rented to staff at rates far below the market norm, workers were liable to tax on the rent they saved, and had to give up the properties after leaving the bank.

Money worries

Nonetheless, the issue has been an embarrassment for Mr Weber, who only took the top job in April.

His predecessor, Hans Welteke, was forced to quit for having accepted free hotel accomodation, paid for by a bank he was supposed to regulate.

Any reports of extravagance in official circles are big news at present in Germany.

The government of Chancellor Gerhard Schroeder is desperately seeking to reduce state expenditure, as Germany strives to reduce its budget deficit.

Welfare has been cut, something that has sparked anger among the government's core supporters in trade unions.