German economy ministry official leaves post amid nepotism scandal

By Riham Alkousaa and Christian Kraemer

BERLIN (Reuters) - A senior official in the German economy ministry is leaving his post after a nepotism scandal, Economy Minister Robert Habeck confirmed on Wednesday.

Patrick Graichen, who served as deputy minister for energy, came under fire several weeks ago when it emerged he had facilitated the recruitment of a friend, who was best man at his wedding, as head of the German Energy Agency without initially making their relationship known.

Habeck previously backed Graichen, saying the recruitment decision had been a mistake, but the ministry started an internal investigation.

Graichen's family ties to a research organisation - Oeko-Institut - that the ministry commissions for studies and reports subsequently came under scrutiny from opposition parties who demanded his resignation.

Habeck on Wednesday said there had also been a violation of internal compliance rules regarding government funding for a national climate protection project in which Graichen's sister was involved.

Graichen, who was a director of Berlin-based Agora Energiewende think tank before taking the ministry job, was involved in the approval process.

"People make mistakes ... it was one mistake too many," Habeck told a news conference, adding that it had been a difficult decision and that a successor would be found - ideally before the parliamentary summer break.

Graichen's brother and sister work at the institute and his sister is also married to Secretary of State for Economic Affairs Michael Kellner, but Habeck said that relationship had been known when the coalition government took over.

"The mistakes don't stand alone, they can be seen in the overall picture ... Overall, Patrick Graichen has made himself too vulnerable to be able to exercise his office effectively," Habeck added.

Chancellor Olaf Scholz said he had been informed of Graichen's departure.

Bild newspaper named Klaus Mueller, the head of Germany's network agency, as a possible successor, citing sources.

Graichen admitted making mistakes during his 17-month stint in the ministry but said the issues of climate protection and energy transition should not be overshadowed by the nepotism debate

"The challenges we face are too great to continue to be overshadowed by debates about myself and my family," Graichen said.

Both Habeck and Graichen are from the Green party, which has seen popularity slump in polls over Germans' wariness‮ ‬of how much the Greens' climate policies will cost them.

Support for the Greens fell by a third to 12% in the state of Bremen on Sunday compared with the last election in 2019, according to projected results. The vote reflected a drop in support at a federal level too, to around 15% in opinion polls from a peak of 23-24% last year.

Graichen was the architect of the ministry's heating transition draft bill which aims to effectively ban oil and gas heating systems and was criticized by the opposition and within the coalition as being too costly and complicated.

The conservative Christian Democrats (CDU) opposition party said Graichen's resignation was overdue, and called for Habeck to go as well.

"We urgently need a change of course in economic policy from Habeck's state dirigisme and bureaucratic inflation back to the social market economy," CDU Parliament Secretary Thorsten Frei told the Rheinische Post newspaper.

(Reporting by Christian Kraemer, Markus Wacket and Riham Alkousaa, Writing by Friederike Heine, Editing by Rachel More, Friederike Heine and Christina Fincher)