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EU undergoes fraud probe

The European Commission has launched a widespread inquiry into allegations of fraud across the EU's executive.

    Prodi (L) coming under EU parliament pressure to explain scandal

    Neil Kinnock, the EU's administration commissioner, has ordered the executive's most senior officials to answer a "fraud questionnaire" to assess the extent of the problem, according to a report in the London-based Financial Times.
    Irregularities uncovered by investigators at Eurostat, the Commission's statistical arm which supplies economic data to financial markets, may also have occurred in other departments, the FT said.
    If the inquiry reveals even more dubious practices, it could mean European taxpayers have been defrauded on a large scale and place huge pressure on the Commission.
    Fraud investigators believe the agency artificially inflated the value of contracts and siphoned off the extra money into secret "irregular reserves" going back as far as 1989. 
    Summons for Prodi

    On Wednesday, lawmakers called for EC President Romano Prodi to be questioned over the scandal.

    Dutch Socialist Michiel van Hulten said: "I think it makes sense to hear Prodi on this” and echoed demands from other members of the European Parliament's budget control committee who were questioning senior Commission officials on the scandal.
    A probe into the scandal was launched last week and initiatives under consideration include the scrapping of all Eurostat contracts with a French company and a dramatic reduction in outsourcing of Eurostat work.
    The case has prompted parliamentary criticism of the Commission led by Prodi, who took office in 1999 vowing zero tolerance of fraud after the previous commission was forced to resign in a scandal over nepotism and mismanagement.
    The head of the committee, German Christian Democrat Diemut Theato, said she would write to Prodi to request his presence at a committee meeting after the EU summer break. 
    Eurostat cutback

    Kinnock has already offered to terminate all Eurostat's 58 contracts rather than continue a suspension of them, while Monetary Affairs Commissioner Pedro Solbes vowed the Commission would sharply reduce outsourcing of contracts with the statistics office.

    Solbes faced fierce criticism from parliament members, who said his lack of awareness about the Eurostat affair was not a valid excuse for failing to act.
    "The fact that you did not know is not an excuse. In fact it is almost the opposite," said van Hulten. Another member added that in his state, ministers had been forced to resign for less.
    Last week, the Commission decided to launch disciplinary proceedings against Yves Franchet, the French head of Eurostat, and remove him and other members of Eurostat from their positions to advisory posts within the Commission.
    Some of the Euro MPs grilled Kinnock on why Franchet had not been suspended from the Commission altogether, but the Commissioner said this would be against the executive's procedures guaranteeing officials fair and just treatment.
    "Action must relate to evidence," said Kinnock.
    Kinnock said there was no evidence so far that alleged abuses were for personal enrichment although he could not categorically rule this out. He said the case had been put that the action involved was aimed at circumventing red tape.

    SOURCE: Agencies


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