Media giant accused of smear against De Palacio

Date: 26/07/01

By David Cronin

The European Commission is accusing a leading Spanish newspaper of running a smear campaign against Vice-President Loyola de Palacio after it suggested that a report on her tenure as Spain's farm minister had been watered down, thereby clearing her of wrongdoing in a flax subsidies scam.

Madrid daily El Pais claimed last weekend that the final report by the Commission's anti-fraud office OLAF had been "decaffeinated".

According to the paper, a previous draft alleged that there had been a "generalised fraud" involving the allocation of EU aid to flax growers when de Palacio held the agriculture portfolio in 1997-98. However a leaked copy of the definitive text says that any malpractices that occurred appeared to be confined to some regional authorities.

De Palacio's spokesman Gilles Gantelet said the paper was "reheating" an old story. "It's only El Pais that is still running with this issue, not the rest of the Spanish press. They seem to be doing this for reasons that are not connected to providing information [to the public]." "The only thing that matters is the final [OLAF] report," he added. "We don't know if previous versions used the term generalised fraud."

Gantelet added that the transport and energy chief had already been vindicated in the findings of a national parliamentary inquiry into the charges. And because de Palacio has been anxious to establish the full truth surrounding them, she has referred the dossier to the country's Supreme Court, which is still examining it.

Last September, a Spanish investigator concluded there was strong prima facie evidence to suggest that officials in the national government may have encouraged flax growers to make false claims for EU grants.

The amount of the crop cultivated in Spain rose from only 185 hectares to 91,400 hectares between the early and late 1990s. Questions have been asked about why Madrid authorities invested heavily in the fibre crop sector, even though it was aware that there was little demand for home-grown flax on the domestic market.

Shortly before her appointment as a Commission vice-president in 1999, de Palacio promised MEPs that she would step down if she or her former officials were found guilty of wrongdoing. "No one has ever accused me of anything more than political responsibility and of that I have been fully absolved," she said at the time.

An OLAF spokesman said his office's report was confidential and he could therefore not comment on its findings.

Several other reports about fraud in Spanish agriculture have surfaced recently. Eleven people from three Andalucian provinces have been arrested as part of a probe against fraudulent claims for EU olive oil subsidies, while Supreme Court president Baltasar Garzon is handling a complaint against food giant Azucarero Ebro Agricolas for alleged misuse of h39 million in EU grants.

The case centres on suggestions that the company concealed surpluses in sugar production to continue benefiting from EU support.

The European Commission is accusing a leading Spanish newspaper of running a smear campaign against Vice-President Loyola de Palacio after it suggested that a report on her tenure as Spain's farm minister had been watered down, thereby clearing her of wrongdoing in a flax subsidies scam.