In a scathing report published today, the Public Accounts Select Committee called for urgent reform of the Commission's financial management and anti-fraud systems. The report says MPs were "staggered" to find that the Commission's pounds 7.9bn annual budget was still susceptible to organised crime despite recent revelations of large-scale impropriety.
All 15 European commissioners were forced to resign in March after a team of independent investigators found widespread fraud, irregularities and mismanagement.
The resignations marked the biggest upheaval in the EU's history, but the select committee's own inquiry has now found that the response in Brussels had been "alarmingly" slow and inadequate.
The comprehensive criticism of the Commission follows a fact-finding tour by MPs in April during which they questioned commissioners, staff, MEPs and auditors.
The report, Financial Management and Control in the European Union, is most scathing about Brussels' vulnerability to fraud and points out that it took several major scandals to prompt any real interest in combating the issue.
It concludes that the new fraud-prevention office set up in the wake of the scandals is insufficiently independent and lacks collaboration with member states' own anti-corruption teams.
Procedures to protect whistleblowers were also inadequate, inefficient auditing failed to give a clear picture of the EU's finances and staffing and management codes were outdated, the MPs added.
"There is a lack of clarity about who is accountable to whom and for what. It is very alarming that, until their resignation, the commissioners were reluctant to acknowledge any personal responsibility for the Commission's actions," the report said.
To combat the problem of a lack of accountability, there should be a new post of Vice-President with specific responsibility for financial management, the committee recommended.
Poor performing or corrupt staff should face disciplinary proceedings instead of being allowed to retire on healthy pensions and legal immunity should be lifted swiftly from commissioners found guilty of wrongdoing.
The Commission was also plagued by a "myriad" of small financial schemes and a tendency to turn a blind eye to the employment of temporary staff to work on them.
Worse still, it had failed repeatedly to respond to complaints about poor accounting from the Court of Auditors and the European Parliament.
The MPs concluded that despite claims of a new era under Commission President Romano Prodi, there was no will to implement change.