Patten defends hiring of Franchet firm

By David Cronin

Date: 04/12/03

THE European Commission had no viable alternative to hiring a company embroiled in the Eurostat fraud scandal for work on a census in Macedonia, Chris Patten has claimed.

The external relations commissioner also revealed this week that Yves Franchet, former director-general at the EU data agency, had made a "clear recommendation" that the firm in question, CESD, should receive the contract. Franchet had set up this company himself in 1989.

Speaking to the European Parliament's budget control committee (Cocobu) on Monday (1 December), Patten acknowledged that the €1 million contract had been awarded by the Commission's EuropeAid office without an open-tendering procedure, against the advice of one of EuropeAid's senior officials.

Quizzed by MEPs on why this had not been heeded, Patten said: "It is not fair to take one piece of advice and assume it is the only piece of advice."

Other officials, he said, had agreed the contract should be given to CESD because of its previous work on a census in Macedonia in 1994.

Under the August 2001 Lake Ochrid agreement, designed to stave off a civil war in the former Yugoslav state, it was decided that another census should take place in October that year. Owing to security conditions, however, it was not undertaken until November 2002.

Patten contended the Commission could not have foreseen these delays and therefore had to act speedily in autumn 2001, adding that the work would have been delayed if it had had to go through a full tendering process. He also argued the census was vital because the Commission was anxious to ensure that the number of civil service jobs reserved for Albanians properly reflected their population.

The UK commissioner pointed out he was unaware that audit reports on Eurostat, which raised concerns about CESD, had been sent to the Commission's anti-fraud office OLAF in November 2001. These were made available to EuropeAid only in July this year.

"The Commission fully accepts that there was a clear lack of communication," he added. "But the fact is that at the time we had no reason to suspect any impropriety in the management of CESD."

A recent report by the Commission's internal audit service highlighted allegations that favouritism had been shown to CESD and other firms, stating there has been "a very significant concentration of tenders in a limited number of contractors". Since 1997, CESD has won contracts worth more than €50 million from the Commission.

Patten said: "Why did CESD get so many contracts? Because CESD was recommended by Eurostat as the best company for carrying out these contracts."

Meanwhile, Pedro Solbes, the commissioner in charge of Eurostat's activities said the EU's executive now knows that some €6 million was diverted to the unauthorized bank accounts run by Eurostat officials. But the economics and monetary affairs chief said that calculating the exact sum involved was difficult. Of the €6m figure cited, some €2m has been recovered, the Spaniard added.

OLAF sent a dossier earlier this year to a Paris public prosecutor implicating Eurostat and French company Planistat in the "vast looting" of taxpayers' money. To date, though, no concrete evidence has been published to prove that Eurostat officials were committing fraud with a view to make themselves richer - instead, it appears much of the money was used for sports and cultural activities that did not have the Commission's prior approval.

Chris Patten, European Commissioner for External Relations, appeared before the European Parliament's Budget Control Committee (COCOBU) on 1 December 2003 to explain why a company caught up in the Eurostat fraud scandal was hired to work on a census in Macedonia. Mr Patten revealed that Eurostat's former Director-General, Yves Franchet, had made a 'clear recommendation' that CESD, the firm in question, should be awarded the contract. CESD was set up by Mr Franchet himself, in 1989.