The move is an embarrassment to Ms Cresson, who had insisted that any problems within the Leonardo programme - administration of which had been contracted to a company called Agenor - were limited to mismanagement.
The news comes at the worst possible time for the former French prime minister, who is battling to save her job as commissioner with responsibility for science, research, youth and education. She has been the prime target for critics of mismanagement and nepotism in Brussels, after revelations that she employed a dentist from her home town as a scientific adviser on Aids.
The development increases the pressure for Ms Cresson's resignation, less than a month before a committee of experts is due to deliver an interim report on the European Parliament.
Last night Pat Cox, leader of the parliament's third largest group, the Liberal Democrats, said the revelations were significant and left Ms Cresson "potentially in the line of fire".
The Commission also announced that it had terminated the contract of Agenor. The Belgian-based private company earned a pounds 70,000 annual management fee for administering Leonardo, a youth exchange and training project with a pounds 400m-plus budget.
The allegations relate to overcharging and false invoicing by Agenor staff.Reuse content