EU reports throws light on Eurostat fraud

Reports into alleged fraud at a key EU agency have shown millions of euros had gone astray in irregular accounting practices.

Reports into alleged fraud at a key EU agency have shown millions of euros had gone astray in irregular accounting practices.

The alleged fraud revolves around suspected double accounting, fictitious contracts and slush funds at the Eurostat agency.

A report by EU anti-fraud body OLAF catalogued cases of Eurostat contracts with outside firms that caused losses to the EU. In one case this loss was more than €3 million euros.

But European Commission chief Mr Romano Prodi got some comfort from the reports yesterday on problems at the Eurostat agency, as they put most of the blame on officials outside his EU executive.

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However, some members of the European Parliament, which is demanding answers from the Commission over the affair, called for the head of the EU's economic affairs commissioner, Mr Pedro Solbes, who is responsible for Eurostat.

It is the worst crisis to hit Mr Prodi since he took office, pledging zero tolerance of fraud after the previous EU executive had to quit in 1999 over nepotism allegations.

Mr Prodi faces a questioning from parliament today, when he will also formally present the three reports: one by internal auditors, OLAF's and another by a special Commission taskforce.

The audit report said officials at Eurostat had before 1999 set up a system under which they channelled money into financial reserves to fund activities at the agency.

This was before Mr Prodi's Commission took office in 2000. Apart from Mr Solbes, some MEPs have also demanded that two other commissioners be held to account: former British Labour Party leader Neil Kinnock, head of reforms, and Germany's Mr Michaele Schreyer, in charge of financial control.