EU:Belgian police have arrested three Italians in connection with a multimillion euro fraud involving the award of public tenders for EU representative offices abroad.
The three men are being questioned about allegations that they fixed building leases and security installation contracts awarded by the European Commission over many years.
Belgian prosecutors revealed yesterday they had arrested a 46-year-old commission official, a 60-year-old adviser to a member of the European Parliament and a 39-year-old director of several private companies. All three men are resident in Belgium.
"The investigation involves suspected bribery of European civil servants, forming a criminal organisation, violating professional secrecy, breaches of public tender laws and forgery," said a spokesman for the prosecutor. "There were bribes of millions of euros for more than 10 years . . . It seems to be a very big case of corruption."
The prosecutor's office did not reveal the identity of the three individuals, although their names were circulating freely around the EU quarter in Brussels yesterday. The commission, which has become embroiled in several corruption cases in recent years, said it was co-operating fully with the police and had "zero tolerance" towards corruption.
A commission spokesman added that the EU executive had initially referred the complaint to the EU's anti-fraud division, Olaf, in 2004 under the previous commission headed by Italian prime minister Romano Prodi.
In a statement Olaf said it was difficult to assess the possible financial impact on the EU budget as the services due under the various contracts had been delivered, even though it is suspected they may have been awarded in an "irregular manner".
The investigation was initiated following a complaint made by an unsuccessful party involved in a tender run by the commission for overseas offices.
The commission's external relations department maintains 132 delegation offices overseas on an operating budget of about €500 million. It spends about €20 million on security services in a year and a further €56 million on buildings.
A spokeswoman for the external relations commissioner said the department had reformed its own rules regarding public tenders in 2003 in an attempt to prevent corruption. She said a special committee, known as the Camar committee, had been set up under the Kinnock reforms to oversee tenders worth more than €50,000.
In a series of police raids on Tuesday in Belgium, Luxembourg and France, prosecutors seized documents and began questioning suspects and witnesses. More than 30 EU buildings, banks, company offices and homes were searched in the raids.
The potential for fraud in the administration of the EU's annual €125 billion budget is significant given the number of agencies involved in awarding contracts. The Court of Auditors has repeatedly refused to sign off on the EU accounts, although this is usually because of the failure of member states to monitor aid programmes effectively.
Two significant examples of corruption within the EU institutions are the Cresson Affair in 1999, which forced the resignation of the entire Santer commission, and a multimillion euro fraud at Eurostat in 2003.
In the latter case investigators uncovered evidence that several million euro of EU funds were mismanaged when several private contractors were given favourable treatment by the EU's statistics agency. Several senior managers at Eurostat were suspended in 2003.