LOOKING FOR BEAM IN ONES EYE OR CORRUPTION IN EUROPE

EKA RAZMAZISHVILI

European Commission President Romano Prodi is prepared to face questioning about a ballooning scandal over alleged fraud at the European Union’s statistics office, Eurostat, his spokesman said on Thursday.

“He is always ready to go before the European Parliament to explain the Commission’s position,” spokesman Reijo Kemppinen told reporters.
Kemppinen was responding after the European Parliament’s powerful budgetary control committee asked Prodi on Wednesday to testify about the alleged fraud at Eurostat, which is responsible for publishing statistics on behalf of the Commission, the EU’s executive arm.
Last week the Commission launched disciplinary proceedings against Eurostat’s director general and two other senior officials over the alleged diversion of public funds totalling 900,000 euros (one million dollars) into a bank account in Luxembourg, where Eurostat is based.
The European Commission claims there has been a breakdown in its financial management controls but insists it increasing anti-fraud measures in the wake of fresh scandals over missing funds. More than half a million pounds of EU taxpayers’ money is alleged to have gone missing from Eurostat, the Luxembourg-based office which produces EU statistics. “It is a more serious and large-scale infringement than expected”, – concluded the internal audit service of Euro Commission who have been studying documents of Eurostat for about a year. This very blame made the leadership of Brussels to launch investigation of the case of director general of Eurostat Franchet and director Daniel Byk. The list of their offenses is quite an impressive one: starting from double accounting to fictitious contraband. The price of contracts was artificially inflated, the rest money was transferred to secret bank accounts. At the same time, some tenders declared for Eurostat contracts turned out to be a fraud ? the statistics office of Euro Union chose companies for tender.
This follows the launch of a French criminal investigation into claims that both men were involved in diverting funds into a private account.Franchet and Byk deny any involvement, and the EU’s own anti-fraud watchdog, OLAF, is still conducting its own internal investigation.But now the Commission is accused of knowing about the looming scandal for years, but failing to act on warnings. The Commission President’s spokesman denies Romano Prodi failed to act swiftly on his long-standing pledge to wipe out fraud and corruption.
And three senior Commissioners – vice-president Neil Kinnock, Monetary Affairs Commissioner Pedro Solbes, and budget Commissioner Michaela Shreyer, told Euro-MPs they could not go into details while inquiries were still going on.
The suspected irregularities are believed to have involved Eurostat awarding contracts worth more than 40 million euros to a private company in Paris called Planistat and setting up bank accounts outside the control of the EU’s budgetary authorities to manage part of that huge sum.
The accusations are the latest in a string of fraud allegations levelled at Eurostat in recent months. Most of the suspected irregularities are thought to have occurred several years ago. The parliament – the EU’s directly elected assembly – announced Thursday that its budgetary control committee would ask Prodi to attend its first meeting in September after the summer recess.
“The decision to invite Mr Prodi was taken at an extraordinary committee meeting on Wednesday convened in reaction to measures the Commission announced last week on the basis of preliminary findings that ‘serious wrongdoing’ had taken place at Eurostat,” it said.
European Commissioners Neil Kinnock and Pedro Solbes were grilled about the Eurostat scandal at length by the budgetary control committee on Wednesday.
The European Commission said Wednesday it was severing contracts with four companies linked to the Eurostat statistics agency, which is being probed for possible fraud and double book-keeping. A spokesman said the commission, the executive arm of the European Union, was giving two months’ notice to end its relationship with major French statistics-gathering company Planistat and three smaller companies.
The commission earlier this month opened disciplinary proceedings against the French head of Eurostat and two other top officials over suspected fraud. The investigation focuses on the alleged siphoning off of 900,000 euros (about one million dollars) of public funds into separate bank accounts in Luxembourg, escaping the commission’s normal budgetary control procedures. Neil Kinnock, the commission’s vice president in charge of administration, asked other commissioners to confirm with the directors of their departments that similar “irregular financial envelopes” did not exist. The former director general of Eurostat, Yves Franchet, and the two top aides now under investigation, have repeatedly proclaimed their innocence. Planistat, which has done 40 million euros worth of business for Eurostat in the past 10 years, insists it has done nothing wrong.
The commission also announced that it was ending contracts between Eurostat and three companies known as CESD, 2SDA and TES. A spokesman said all contracts between Eurostat and outside companies were under review and a report would be issued at the end of October. The case has been an embarrassment for Commission president Romano Prodi who has had to fend off accusations that he attempted to cover up of fraud at Eurostat. Prodi has been summoned before the budget control committee of the European parliament early in September to explain the affair. Following the resignation of the entire European Commission in 1999 over charges of fraud, nepotism and lack of control, Prodi established a policy of “zero tolerance” for graft, and Kinnock has sought to overhaul creaky administrative and budget procedures. The commission has set up a 20-member task force to assist the EU’s anti-fraud office, OLAF, in investigating Eurostat. A commission spokesman has rejected the possibility that senior officials at the EU executive will resign over the affair. “That is nothing but pure speculation at this stage,” he said. The similar scandal has not happened in Euro Union for the first time. Misuse of authority was observed already in 1997. In March, 1999 20 Euro commissars, chairman of Euro commission Jacque Santer were compelled to leave their posts after the report on the fraud and incompetence in higher echelons of the organization was published. An EC department — Eurostat — has become the focus of serious allegations of fraud dating back a decade. But the EC appears to be doing little to punish those responsible. And once again, the European Parliament is vowing to take action.
On 16 July, members of the parliament’s powerful budget committee summoned two top commissioners to testify, Vice President Neil Kinnock and Economic Affairs Commissioner Pedro Solbes. Solbes is directly responsible for Eurostat. At the hearing, Christopher Heaton-Harris, a British Conservative deputy, spoke for many of his colleagues in directly evoking the spirit of 1999.
“But who is actually taking responsibility within the college of commissioners for this? Where does the buck stop? The ‘wise men’s’ report [results of an independent inquiry] following the fall of the last commission stated: ‘It was difficult to find someone with the slightest sense of responsibility within the Commission.’ Mr. Kinnock, you were in that last commission. Are you willing to take responsibility now?” Heaton-Harris says.
The list of charges is long. The EC says allegations of fraud in Eurostat surfaced years ago, and that the EU’s anti-fraud office, OLAF, has been investigating the case since 2000. Yet no commissioner admits to knowing about the affair until a few months ago. Officials accused of siphoning off nearly a million euros were only removed from the posts a few weeks ago. And they continue to serve in an “advisory capacity” pending the results of an internal inquiry.
A hastily composed EC report reveals that Eurostat has a long history of questionable contract awards, and several hidden accounts have been uncovered. Many members of the European Parliament (MEPs) and observers alike feel Eurostat could just be the tip of the iceberg.
The case also evokes last year’s sacking of the EC’s chief accountant, Marta Andreassen, after she refused to approve the EU’s accounts, complaining that the current system made it almost impossible to keep accurate records and fight fraud.
So far, the EC professes ignorance. Heaton-Harris’s direct question did not receive a direct reply. Commissioner Kinnock — specifically charged with reforming the EU’s executive — said the fact the EC is now dealing with the matter means it is taking responsibility.
Solbes, for his part, said he had to trust his top officials and could not be held responsible for being unaware of what went on behind his back. “I accept responsibility for everything I’ve done. I accept responsibility for what I have not done but should have done, but I can’t be blamed or accused or asked to take responsibility for something I didn’t know about,” he said.
There is little sign that the parliament’s budget committee may lose interest in the case once it returns from its summer recess in September. This week, intensive consultations are taking place between the EC and the parliament, which wants to see EC President Romano Prodi himself address the assembly on this issue.
Observers note that many members of parliament may be motivated in their quest for truth and justice by upcoming elections, scheduled to take place in June next year.
Should parliament’s interest in the issue persist, the otherwise relatively powerless body has a number of ways to make its feelings known. As in the Santer case in 1999, a quarter of its members could vote to initiate a potentially damaging independent inquiry. Or, the parliament could choose not to “discharge” the EU’s already completed budget for 2002 — a very potent threat that could lead to legal proceedings.
If the parliament does succeed in forcing the EC into admitting full political responsibility, Prodi’s mandate allows him to avoid a full-scale resignation of the commission and selectively fire any commissioner he personally deems culpable. Nevertheless, such an act would cast an inevitable shadow on the entire Prodi tenure