Prodi backs De Palacio in flax case fight

Date: 08/02/01

By Simon Taylor

EUROPEAN Commission President Romano Prodi will next week defend Loyola de Palacio against MEPs who had threatened to call for her resign after a probe into alleged abuse of EU subsidies.

Prodi will tell MEPs he has full confidence in his vice-president, pointing to a parliamentary inquiry in Madrid that cleared her of responsibility relating to the case, which dates back to her time as Spanish agriculture minister.

Spanish Socialist deputy Juan de Dios Izquierdo Collado accused De Palacio of changing her tune over the affair in an appearance before Spain's top judge last Friday. "For one and a half years she repeated that all the scandals were invented by the Socialist opposition," he said. "Now her position is that there were crimes and we must prosecute those responsible."

De Palacio, who initiated the legal proceedings herself as the plaintiff, told the supreme court judge that if there was proof of fraud those involved should be brought to justice quickly.

The Spanish authorities have found that processors sought subsidies for more flax than was being grown and the country's public prosecutors have since opened proceedings against 42 individuals.

But Commission officials say the case background underlines De Palacio's argument that she was not to blame for any fraud despite Socialist claims that "generous Community subsidies for flax production had encouraged the emergence of premium hunters, including some senior officials in the Spanish ministry of agriculture".

The Commission insiders stress that flax production began "well before 1997", the year that De Palacio became the minister.

They also say they accept the Commissioner's argument that the "responsibility for examining producers' applications for Community aid and for checking and disbursing such aid" was with Spain's regional authorities. However, Socialist MEPs are expected to step up calls for De Palacio to go if a separate inquiry by the Union's anti-fraud unit, OLAF, finds evidence of fraud in a report expected at the end of February.

Centre-right MEPs have warned that if De Palacio is unfairly pressured to resign they will force the present Commission to quit en masse.

Prodi will dismiss that possibility out of hand in his response to questions from Socialist MEPs, who have asked him to clarify what he will do if OLAF uncovers evidence of wrongdoing by De Palacio.

"The Commission has no reason to feel threatened," he will add.