Latin American development bank ousts chief, ex-Citi banker takes over

The governors of the Inter-American Development Bank voted unanimously Monday to oust Mauricio Claver-Carone as president of the multilateral lender, according to an official statement, after a probe into a romantic affair he was having with a subordinate found that he likely violated ethics rules by treating the woman more favorably, including by raising her salary.

Claver-Carone, whom the Trump administration nominated to lead the Washington-based institution in 2020, has been fighting to keep his job and has rejected all the accusations against him.

He and his defenders have tried to portray him as a bulwark against China. Claver-Carone’s appointment was an anomaly, as the post normally goes to a citizen of Latin American nations — not the United States, which is the largest shareholder of the bank’s 48 members, with about 30% of the voting rights.

U.S. backing: The United States supported Claver-Carone’s dismissal, according to a spokesperson for the U.S. Treasury. The spokesperson said the now-former president had failed to fully cooperate with the investigation against him and accused him of creating a "climate of fear of retaliation" at the bank, both for staff and borrowing countries.

Who’s in charge now: With Claver-Carone’s ouster Reina Irene Mejía Chacón takes over as interim president, moving up from her role as executive vice president, per protocol. She’s a longtime banker in the private sector who worked for Citi, a major global bank based out of the U.S., for a quarter century before joining IDB in 2020.

In addition to her work in finance, Mejía was the treasurer of the Honduras chapter of Operation Smile, which provides surgeries for children to correct cleft lip and palate.

An election for the bank’s next president is likely to take place within the next two months, per internal rules, a source familiar with the process told Devex.

What’s next: Claver-Carone has been defiant. In an interview with Reuters, he vowed to sue his now-former employer. “They have yet to be able to substantiate one single rule that I violated," he told the news agency.

In a statement he posted on the IDB website last week, Claver-Carone launched into accusations that the bank had fallen under Beijing’s sway during the Obama administration and that the Biden administration was following this path. The statement was later removed from IDB’s website.

The background: Claver-Carone is accused of having an affair that dates back to his time serving on the United States’ National Security Council during the Trump administration.

The Associated Press last week reported on a confidential investigative report that alleged the affair was a national security risk, and quoted Biden administration officials as saying Claver-Carone was not cooperating with investigators and needed to go.

A source familiar with the U.S. position on Claver-Carone’s dismissal pointed to the probe's finding that he had an undisclosed relationship with a staffer to whom he gave raises totaling 45% of base pay in less than a year. The source said Claver-Carone's denials of the evidence could not be sustained and that he had refused to make available phone and other records.

The IDB: The IDB is a major investor in Latin America and the Caribbean. Under Claver-Carone’s leadership, the institution set a record with its financing in 2021, reaching $23.4 billion in new funding approvals, commitments, and private sector mobilizations. In an interview with Devex in February, he said he wanted the bank to be a “matchmaker” in the region that mobilizes corporate investment in areas such as public infrastructure.