Eurostat probe condemns Solbes over fraud scandal

Date:25/09/03

By Dana Spinant, David Cronin and Martin Banks

PEDRO Solbes stands accused today of failing to maintain proper control over Eurostat, the EU data collection agency at the centre of serious fraud allegations.

Critics of the economic and monetary affairs commissioner were given vital ammunition last night when a select group of MEPs received three reports into the controversy. The most damning came from the European Commission's internal audit service (IAS).

Seen by European Voice, it states there was "little evidence of adequate transparency and communication" between Solbes and Yves Franchet, who was moved from his post as Eurostat's director-general earlier this year.

Worse, it says that the commissioner's cabinet knew about allegations of secret bank accounts run by the Eurostat hierarchy before July 2002. Yet Solbes insisted he only became aware of the claims in May this year, when he was quizzed by the Parliament's budgetary control committee (Cocobu) before the summer break.

The unauthorized accounts were confirmed in a draft report sent to Solbes' cabinet by Eurostat, but the IAS inquiry found that the reference was removed from the final version. "The reasons for this omission remain unclear," the IAS said.

The inquiry, headed by Dutch official Jules Muis, concludes "it must be analyzed" how action was only taken by the Commission against senior Eurostat figures when the political controversy "escalated to the required level".

This was despite evidence of irregularities in 14 audit reports on Eurostat completed since 1995 - most of them after Romano Prodi's Commission took office in 1999.

The IAS findings are likely to intensify pressure on Solbes, who faced calls to resign over the affair when he appeared before Cocobu in July.

The leader of the Liberal Democrats in the Parliament, Graham Watson, had previously made it clear that he thought Solbes should go.

However, last night he said MEPs should wait until publication of a final IAS report on the affair, which is expected next month, before making a definitive decision.

But a number of MEPs are in no mood to wait until then.

Jens-Peter Bonde, head of the Europe of Democracies and Diversities (EDD) group, said last night: "What I have seen today is the biggest scandal in my 24 years in the European Parliament. It is not about one, two or three crooks but about an illegal system of financing.

"Since Solbes is the commissioner responsible for Eurostat, he should take responsibility and leave."

Dutch Socialist Michiel van Hulten said "there is absolutely no doubt these reports do not put Solbes in the clear".

The leaders of Parliament's two main political groups, however, sounded a note of caution. European People's Party chief Hans-Gert Pöttering commented: "I have the impression from the IAS report that everything concentrates too much on Solbes. This is a bit short-sighted. The responsibility is broader. I'd like to see more information about the responsibility of the commissioner in charge of administrative reforms [Neil Kinnock] and the commissioner in charge of managing the budget [Michaele Schreyer]. This triangle of responsibility must be re-established.

"I would like to see Mr Prodi making proposals to make the Commission's administration better; but to kill someone politically and leave things as they are is not appropriate."

His Socialist counterpart Enrique Barón Crespo is in a delicate position because Solbes, a minister in Madrid's left-leaning government during the 1990s, is an ally. "I don't believe in the death penalty - even for commissioners," Barón quipped.

Officials admit both the EPP and Socialists fear the scandal widening into a general witch-hunt, with high-profile casualties on both sides of the political spectrum. Questions were raised by Cocobu this week about two conservative commissioners. Chris Patten, in charge of external relations, was criticized over the award of a foreign aid contract to a firm under investigation by OLAF.

Viviane Reding, the education and culture commissioner, has also come under fire for suspected wrongdoing at the executive's publications office.

The OLAF report submitted to Cocobu last night confirmed evidence of a clear conflict of interest on the part of then Eurostat chief Yves Franchet. As well as heading the EU data agency, he ran private firms awarded contracts by Eurostat.

One firm, CESD-Communautaire received a total of €31.6-million worth of contracts in 1996-2001.

OLAF states that Franchet "could not have been unaware of the many irregularities detected which harmed the European Commission. What makes the matter more serious is that the loss incurred by the Commission is irrecoverable".

It also found that more than 50% of the turnover at Eurostat's datashops had been channelled into secret reserves.

A third report, drafted by a task force of officials specially appointed by the Commission to investigate Eurostat, was milder in its criticisms. But it also confirmed that the problems at Eurostat, which is currently celebrating its 50th anniversary, persisted after Romano Prodi's tenure as Commission president began in 1999.

Disciplinary proceedings are under way against Franchet and two other former senior figures in Eurostat, Daniel Byk and Photius Nanopoulos.

A select group of MEPs has received three reports into the controversy over fraud allegations at Eurostat, the European Union's statistical body. The most damning report comes from the Commission's internal audit service (IAS) and claims that there was 'little evidence of adequate transparency and communication' between Pedro Solbes, European Commissioner for Economic and Monetary Affairs, and Yves Franchet, who was moved from his post as Director-General of Eurostat in May 2003.