The European Commission today sought to quash allegations that senior officials failed to act promptly against widening fraud allegations at the EU's statistics agency.
However, the EC acknowledged suspected financial irregularities at the Luxembourg-based Eurostat appear much worse than first expected.
The charges focus on alleged irregularities in granting contracts to outside firms to help gather or distribute Eurostat data and that almost €700,000 in funding was siphoned off to private bank accounts.
Investigations are under way by judicial authorities in France and Luxembourg, as well as by the EU's own anti-fraud office known as OLAF.
At their own requests, the head of Eurostat, Mr Yves Franchet, and another leading official, Mr Daniel Byk, have been relieved of their posts as the investigations continue.
EU Commission President Romano Prodi denied a report in the Financial Timesclaiming he and other top officials were aware of the problems at Eurostat for years but failed to take action.
However, the acknowledgement that the allegations run deeper than expected is an embarrassment for Mr Prodi's team which took over the EU head office in 1999 on promises to root out corruption after a scandal brought down the previous European Commission.
PA