Commissioners under threat from EU sleaze revelations

Four years after a sleaze row destroyed the previous European Commission, prompting its unprecedented mass resignation, the nightmare has returned to haunt its successor.

Tomorrow an official report will explain how as much as €920,000 (£640,000) was allowed to vanish from EU records and be channelled into a secret slush fund.

The case, which was described as the "looting" of Eurostat, the EU's statistical office, uncovered a catalogue of failings and provoked calls for the Spanish commissioner Pedro Solbes Mira - who is ultimately responsible for Eurostat - to resign.

The office had been under investigation by Olaf, the EU's fraudbuster, since 2000 but not until May this year, when Olaf tipped off French police, did European commissioners learn of the looming scandal.

A host of contracts were hurriedly cancelled or suspended and the three most senior Eurostat officials, Yves Franchet, Daniel Byk and Photius Nanopoulos, were moved to different posts. All deny having benefited personally. Tomorrow European commissioners will view the findings of a task force, which investigated the case, and an interim report from the Internal Audit Service.

The information is so sensitive that it is not being circulated to officials in advance - the usual practice - and, when MEPs see the findings the following day, they will do so in a sealed room without a photocopier. On Thursday Mr Prodi will face questions from the MEPs. Among the issues yet to be resolved are whether Eurostat officials benefited personally, why the commissioners failed to act sooner, and crucially whether the problems date from the period of the previous or the present Commission.

Yesterday Chris Patten, the European commissioner for external relations, said that dubious practices had not been "initiated after the arrival of the new Commission" and added that there appeared to be no evidence that "these off-budget funds were going to pay for mistresses' furs or villas in the south of France".

But the scandal has revealed faults such as proced-ures so cumbersome that officials circumvent them simply to fulfil their tasks and obsessive secrecy at Olaf.

Many MEPs believe this is simply not good enough. Chris Heaton-Harris, a Conservative MEP on the Parliament's budgetary control committee, says that at least three whistle-blowers had pointed to potential problems at Eurostat, whose difficulties featured in European Court of Auditors reports dating from 1993.

"There was so much noise around I find it hard to believe that they did not know something was wrong," he said. "Either there was such a breakdown in communication that they are incompetent, or they are complicit in something dodgy."

In 1999 the previous Commission was forced to resign en masse after an inquiry concluded it was "becoming difficult to find anyone who has even the slightest sense of responsib-ility". Four years later no one seems willing to take the rap.

There are differences between the cases, however. In 1999 the allegations were directed against commissioners, notably Edith Cresson who hired her dentist as a scientific adviser. This time commissioners are in the dock over what they failed to do.

In 1999 the entire Commission resigned because Ms Cresson refused to fall on her sword. Like all members of the current Commission, Mr Solbes pledged on appointment to resign if asked to by Mr Prodi. With limited political support in Madrid, Mr Solbes is vulnerable, the more so since he infuriated MEPs with a complacent observation that he could not be held responsible for things of which he knew nothing.

Mr Prodi, who is expected to return to Italian politics next year, has every incentive to show firm leadership and prove he is whiter than white - by sacking his Spanish commissioner if necessary.

The risk is that doing so might encourage critics make targets of two other commissioners: Neil Kinnock, the Commission vice-president in charge of administrative reform, and Michaele Schreyer, the budget commissioner.

For the European Commission president it is a far cry from the heady days of 1999 when he came into office pledging "zero tolerance" on fraud and malpractice. That is a promise he may be regretting.