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EU: Eurostat Scandal Threatens To Rock Commission

This week saw an escalation in the controversy around Eurostat, the statistics-gathering arm of the European Commission, some of whose managers appear to have embezzled millions of euros in EU funds. On 16 July, senior EU commissioners faced hostile questioning in the European Parliament, in scenes reminiscent of the downfall of the previous commission in 1999 over similar charges of mismanagement.

Prague, 18 July 2003 (RFE/RL) -- Four years ago nearly to the day, the incoming president of the European Commission (EC), Romano Prodi, said his was to be a reign of "sweeping reforms" ushering in "a new era."

Prodi's predecessor Jacques Santer had been brought down after an independent inquiry launched by the European Parliament documented "endemic" fraud, mismanagement, and nepotism at the commission.

Yet four years into Prodi's term there is a feeling history may be repeating itself in Brussels.

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.