EU: An extensive network of fraud at Eurostat, the EU's statistical office, has cost European taxpayers millions of euros, according to reports released to the European Parliament last night.
The reports, by a Commission task force, an internal audit service and OLAF, the EU's anti-fraud agency, describe false accounts, inflated contracts and a conflict of interest between Eurostat officials and companies tow which they contracted work.
The Commission President, Mr Romano Prodi, is determined to resist calls to sack one of his Commissioners when he meets MEPs to discuss the reports in Strasbourg today. But the reports, which run to more than 150 pages and were read by MEPs in a sealed room in the European Parliament, raise questions about how much Mr Pedro Solbes, the Commissioner with ultimate responsibility for Eurostat, knew about the scandal.
"The reports confirm our worst fears about the position at Eurostat," said Mr Michael Hulten, a Dutch MEP who saw the reports.
"One thing that emerges clearly is that Mr Solbes' cabinet was aware of the problems at Eurostat from 1999 onwards. It's too early to pass judgement but if Mr Solbes was hoping that these reports would put him in the clear, he's mistaken." Eurostat officials had secret accounts to hold reserves built up from false claims for funding from the Commission and from inflated contract prices. The agency gave favourable treatment to a number of contractors, often awarding them tenders at inflated prices. Eurostat's director general was a director of some of these companies.
The reports conclude that most of the wrongdoing at OLAF took place before 1999, when Mr Prodi took over from Mr Jacques Santer, whose entire Commission was forced out of office by a corruption scandal. The internal auditors' report found that, although Eurostat's management improved after 1999, little was done to establish what happened to the illicit reserves.
"This is evidenced by the total lack of audit trail, the fact that no supervision or monitoring took place to ensure effective and timely implementation and the absence, at least as far as we have found, of any records in Eurostat concerning those reserves and their subsequent liquidation," the internal auditors' report said.
The reports found no evidence that Eurostat officials gained any personal enrichment from their fraudulent activities, although some of the funds were channelled to Commission sports clubs and other leisure activities. OLAF found, however, that the Commission lost more than €3 million because of mismanagement of the relationship between Eurostat and one of the companies in which its director general had an interest.
The internal auditors found that a request by Mr Solbes' cabinet last year for information on Eurostat's activities produced incomplete information.
"Key issues regarding the constitution and use of reserves were raised in the draft initially submitted to the Cabinet but were omitted in the final version. The reason for the omission of this key information remains unclear," the report said. Despite expressions of outrage last night, MEPs in Strasbourg appeared to lack the stomach for a full-scale confrontation with the Commission and Mr Prodi was said to be resolute in his defence of Mr Solbes.