THE European Commission last night faced a call for a parliamentary inquiry into the "systematic cover up" of fraud within its tourism unit.
A Tory MEP, Mr Edward McMillan Scott, made his demand in light of new evidence on the scale of corruption and mismanagement among officials in charge of millions of pounds of tourism grants.
The Commission's annual report on the fight against fraud revealed that police investigations into the tourism unit uncovered "large payments to members of Commission staff in return for the award of grants".
Mr McMillan Scott, MEP for North Yorkshire, who for years has campaigned for an investigation into how cash to promote tourism went astray, said it was the first time the Commission had admitted that officials had taken backhanders.
The same report gives a first clear indication of the scale of corruption, announcing that the EU is taking action to recover £1.1 million from 15 recipients "on the basis of initial controls".
A separate report by the EU's spending watchdog, the Court of Auditors, condemned "serious irregularities" in tourism spending and said the problems stretched back to 1990. In 1993 alone, more than 40 per cent of contracts signed under the £16 million 1993-95 Tourism Action Plan were "problematic".
It accused the Commission of being slow to act after it received evidence of irregularities in grants made.
Information available in June 1992 should have triggered immediate action, but it was not until July 1994 that it informed its fraud busting unit.
The Commission did not in form its auditors about the irregularities and the Court of Auditors only discovered the problem after an on the spot visit.
The former head of the tourism unit, Mr George Tzoanos, who was responsible for administering its £6.4 million a year budget, is awaiting trial, along with his wife and a French Commission official, Mr Pascal Chatillon.
They were among seven people arrested after Mr McMillan Scott called in the Belgian fraud squad to investigate the scandal.
He accused the Commission of blocking the inquiry by refusing to lift the diplomatic immunity of three other officials police want to question: Mr Heinrich von Moltke, head of DG23, the directorate in charge of tourism; his predecessor, Mr Alan Mayhew; and Mr Rene Guth.
He claimed: "A Commission cover up is exposed I first made my concerns known in early 1990 Since that time a systematic attempt by the Commission to hide gross mismanagement of public funds from the court and parliament as well as criminal activity has been organised and condoned.
"The European Parliament must now hold an inquiry. In natural justice, the Commission should now lift its block on allowing the case against the accused to be completed."