The former president of the European Investment Bank (EIB) says he played no part in negotiations over a €1 million package he signed off on for a departing employee that is now the focus of a massive corruption probe, Politico reports.

Werner Hoyer, who retired from his post as head of the EU’s lending arm at the end of last year, admits he endorsed the confidential settlement with Henry von Blumenthal, a senior official, in April 2023, but told Politico on Friday he had no personal relationship with him and there was no misuse of public money.

Hoyer and von Blumenthal are both suspected of corruption and abuse of influence, as well as misappropriation of EU funds. The European Public Prosecutor’s Office (EPPO) made the case public in June and their names were confirmed to Politico by their lawyers.

Politico has now learned that the €1 million settlement has become central to the investigation. It was seen as “beyond the usual” by the EU’s anti-fraud agency, OLAF, which passed the matter onto the EPPO over potential criminal offenses, according to a person familiar with the case who is not allowed to speak publicly.

The EIB is one of the largest multilateral borrowers and lenders in the world. When Hoyer stepped down he was replaced by Nadia Calviño, a former Spanish economy minister.

Hoyer’s lawyer, Marcel Leeser, told Politico the agreement had to be signed by the president under EIB rules but that “he was never involved in the negotiations surrounding the employee’s departure,” and the package was “based on a recommendation by the director general [of] Human Resources and the secretary general.”

The deal, worth €940,000 after tax, allowed von Blumenthal, a deputy dean in the EIB’s philanthropic arm, to leave 34 months before his official retirement. The revelation was first reported by website Follow the Money.

As part of the probe, police in Germany and Luxembourg have searched the homes of Hoyer and von Blumenthal, the person familiar with the case said.

In addition to the payment, which was meant to cover the 34 months of salary before Blumenthal’s retirement, it was also agreed he would receive his pension for three years — meaning that he was getting a double income every month during that period, the person said.

OLAF suspected this was part of a history of previous settlements between von Blumenthal and the EIB and other financial and career advantages, the person said.

Blumenthal’s lawyer, Frank Rollinger, did not respond to questions about the €1 million settlement but previously said his client “energetically and formally denies having committed anything that could constitute a criminal offense as part of his departure from the EIB.”

Asked about the investigation, the EPPO, OLAF and the EIB declined to comment.

The investigation has rocked the Luxembourg-based EIB, which agreed €88 billion of financing last year.

The scandal compounds previously reported internal problems at the EIB and comes at a difficult time for Calviño, who is having to spearhead the EU’s plan to fund the ramping up of defense projects amid Russian aggression.

Two former colleagues of von Blumenthal told POLITICO that the alleged deal came as a consolation prize because he did not get a senior job at the EIB, which was instead given to a woman. Von Blumenthal could have sued the bank if it had constituted gender discrimination and this concern seems to be at the heart of the alleged agreement, two people familiar with the situation said.

“Absurd and unfounded”

Hoyer’s lawyer said the reason the former president is involved in the investigation is because he signed off on the deal. He “had no reason to doubt” the recommendations of his staff and that nothing between him and von Blumenthal “went beyond the strictly professional.”

In a statement previously issued to Politico through his lawyer, Hoyer said the allegations against him were “downright absurd and unfounded.”

“I now expect them to be fully investigated and clarified and ask the EIB to co-operate fully with the EPPO,” he said. “I am also co-operating fully with the EPPO and demand a full clarification of the facts from there.”