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Prodi shrugs off EU scandal over missing millions and Freemason Franchet




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The Telegraph
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/
2003/09/26/wprodi26.xml&sSheet=/portal/2003/09/26/ixportal.html

Prodi shrugs off EU scandal over missing millions

(Filed: 26/09/2003)

President says no one will quit over cronyism and black accounts, writes Ambrose Evans-Pritchard

Romano Prodi, the European Commission president, brushed off the findings of a damning scandal report yesterday, declaring that none of his top team would resign over the disappearance of millions of euros in slush funds and fictitious contracts.

By turns penitent and defiant, Mr Prodi confessed to Euro-MPs that "things went off the rails" at the European Union's data office, Eurostat, but he stood behind the three commissioners in the firing line, Spain's Pedro Solbes, Neil Kinnock and Germany's Michaele Schreyer.

"I began my term with the slogan 'Zero tolerance for fraud'. I stand by that pledge. But zero tolerance does not mean summary justice. It does not mean condemning people without a proper inquiry," he said.

Claiming that the worst abuses occurred before his mandate, he said his team had "rolled up its sleeves" and "left not a single stone unturned".

A series of damning reports shown to MEPs in a sealed room late on Wednesday night painted a grim picture of cronyism and black accounts at Eurostat's headquarters in Luxembourg.

Investigators have tracked the disappearance of five million euros (?.5 million) of taxpayers' money into black accounts, but fear worse as they continue to comb through suspect contracts.

The complete lack of an audit trail made it impossible to find out what happened to the money. It is known that slush funds were used to pay for dinners, illicit trips abroad, a riding club and other perks for the Eurostat elite, but the full records from these accounts are missing. Mr Prodi's defiant stand came as the Conservatives stepped up demands for heads to roll in a mushrooming scandal with echoes of the mass resignation of Jacques Santer's commission on nepotism charges in 1999.

David Davies, the shadow deputy prime minister, said Mr Kinnock should step down as commissioner in charge of administration. "It is high time we ensured that hard-working taxpayers' money in the commission's hands is not siphoned off corruptly. Mr Kinnock can no longer enjoy the British public's confidence in his current post," he said.

The commission dismissed the growing calls for heads to roll. "I have not made a career of standing on the bodies of others. I would not manipulate that situation for spin," said Mr Prodi.

He insisted that his commissioners had "no cause for personal reproach" under the conventions of Brussels' "administrative culture", even though whistle-blowers had been ignored and, in one case, intimidated by Eurostat.

Where there were failures to act swiftly, it was because of "disinformation" by Eurostat's chief civil servant, Yves Franchet, a golf-loving, French freemason who ran the 720-strong agency as a personal fiefdom for 16 years.

But M Franchet, furious that he might be a scapegoat, insists that the slush funds were approved verbally by Brussels and used to help Eurostat "get the job done" despite stifling EU red tape.

The commission did not act until the scandal was revealed in the press in May. MEPs of all stripes expressed growing alarm over the existence of a parallel financing system outside any form of democratic control.

Freddy Blak, a Danish MEP and vice-president of the budget control committee, demanded the immediate resignation of Mr Solbes, the commissioner in charge of Eurostat. It is now clear that slush funds were still being winked at as recently as July.

But Mr Blak leapt to the defence of Mr Kinnock, saying he was "the only one man enough to admit that mistakes had been made. He has shown political courage".

Mr Solbes has drawn the ire of Euro-MPs by pleading ignorance. "I can't be blamed or asked to take responsibility for something I don't know about," he said earlier. The dominant blocs of socialist and conservative MEPs have agreed to hold their fire for now, pending the outcome of the final audit and anti-fraud reports this year.

While many muttered privately that Mr Solbes "had to go", they feared it could set off a domino effect in Strasbourg's complex political horse-trading.

Spanish MEPs have threatened to bring down the whole house of cards if anybody moves against their man and socialists are planning tit-for-tat exposure of conservative commissioners.

The delay may gain time for the Prodi team, but it more or less ensures an autumn of water-torture as fresh disclosures dribble out during the coming weeks.









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