Revealed: OLAF fails to question Eurostat accused

Date: 10/07/03

By David Cronin and Dana Spinant

NEIL Kinnock's discovery that OLAF, the EU's anti-fraud office, has not spoken to the three European Commission officials at the centre of allegations over the "vast looting" of taxpayers' money by the Eurostat data agency prompted his move to open disciplinary proceedings against the trio.

The Commission's vice-president yesterday (9 July) won backing from his colleagues to initiate a disciplinary hearing against three senior figures at Eurostat. Kinnock said "substantive and compelling prima facie evidence" on suspected irregularities involving them had been gathered due to a probe by the Commission's internal audit service, which began on 11 June. The officials are Yves Franchet, who had been Eurostat's director-general for 16 years by the time he agreed to step down in May, his French compatriot Daniel Byk and Greek Photius Nanopoulos; the latter two have been serving as high-ranking directors with Eurostat.

The new evidence suggests it was a relatively extensive practice in Eurostat until 1999 to have "double accounts" outside the official accounting records for the agency. It is believed these were used to defraud tens of millions of euro.

The revelations come after an 18 March dossier, which OLAF sent to the public prosecutor in Paris, alleging the active complicity by fonctionnaires in a "vast enterprise of looting of Community funds". Some €920,000 is reported to have been diverted to secret bank accounts through Planistat, a French firm which has signed contracts worth €49 million with the Commission in the past decade.

Nevertheless, top-level Commission sources confirmed to European Voice last night that OLAF has not yet interviewed the three officials. The anti-fraud office has also failed to meet a 30 June deadline for providing the Commission with an interim report on its investigations into Eurostat.

One source said there is a consensus in the Commission that OLAF is operating within "lots of constraints" and that it needs to be reinforced. As a result, commissioners agreed yesterday to set up a multidisciplinary task force of 20 officials from the Commission's services to assist OLAF with its investigations.

Pat Cox, the European Parliament's president, yesterday drew parallels between the Eurostat affair and the fraud and nepotism allegations which triggered the resignation of Jacques Santer's Commission in 1999. Speaking of a "weary sense of déjà vu", Cox voiced dismay that "four years after the fall of the Santer Commission, we find ourselves again in this position".

A source who attended a meeting which Kinnock and Pedro Solbes, the economic affairs commissioner who bears political responsibility for Eurostat, held with political group leaders in the Parliament said there was a sense of determination by Kinnock, who had been a member of the disgraced Santer Commission, to "clean the house". The source referred to a clear feeling from what Kinnock had said that the "Commission could not continue to wait for OLAF to present the result of an inquiry into the Eurostat case who knows when". "He has learned the lessons from the Santer team," the source explained. "He rightly saw that there is a problem linked to Eurostat and decided to act swiftly and put everything on the table."

OLAF was formed in the wake of the previous Commission's downfall. While it is operationallyindependent of the Commission, it is politically responsible to Budget chief Michaele Schreyer.

However, Schreyer faced severe criticism when she admitted last month that she was unaware of a 1999 audit report into suspected irregularities in Eurostat until May this year.

Schreyer's statement has triggered a rethink among commissioners on improving the flow of information between them and OLAF. It was agreed yesterday that a code of conduct should be drawn up before the Commission's summer break at the end of this month.

Neil Kinnock, Vice-President of the European Commission, won backing from fellow MEPs on 9 July 2003 to initiate a disciplinary hearing against three senior figures at Eurostat, the European Union's statistical agency.