EC rocked by fraud claims

Neil Kinnock, who is in charge of internal EU reform, Pedro Solbes, responsible for the Eurostat statistical office, and Michaele Schreyer, who handles the EU budget, were expecting to face questions after accusations from the commission's audit chief Jules Muis of accounting errors in the overall EU budget.

Muis said in a leaked internal memo that the commission had been 'overstating its assets' and giving a false picture of the quality of the 2001 accounts generally. '[It] could be held in contempt,' he said.

Meanwhile MEPs have been angered by the commission's failure to come clean over Eurostat, where it is alleged that contacts have been maintained with the French firm Planistat, which is suspected of fraud.

The commission had agreed to a statement in response to demands from the Christian Democrat group in the European parliament, but then withdrew this.

According to Jean-Yves Loog, spokesman for the parliament's budgetary control committee, the commission 'wanted to know the outcome of the hearings by the committee first'. The committee 'wants to know exactly what is going on here', Loog said.

The commission has also come under renewed criticism over its accounting systems and treatment of assets in the annual report by the European Court of Auditors. It noted that the commission will struggle to meet its plan to introduce full accruals-based accounting by the start of 2005, as it does not have a comprehensive enough framework or an integrated computerised accounting system capable of automatically generating all the figures required for accruals accounting.

The findings, which were reported to parliament by head of the National Audit Office Sir John Bourn, additionally recommended urgent action to deal with -persistent weaknesses in the commission's accounting systems, particularly the lack of reliable information on the completeness of assets held'.

The court did, however, note that progress had been made by the commission in implementing its strategy of financial management reforms.

For more, see www.europarl.eu.int