It may be a (relatively) small scandal in a (relatively) obscure part of the European Commission's empire, but the allegations of fraud at Eurostat have caused acute embarrassment for European Commission president Romano Prodi.
Prodi was appointed to sweep away the corruption, fraud and mismanagement that marred the tenure of his predecessor Jacques Santer.
He told a closed-door extraordinary meeting of the parliament’s conference of presidents last week, attended by budgetary affairs committee members, that he had ‘no reason to ask any commissioner to assume political responsibility and resign’ over the Eurostat affair.
And he added defiantly: ‘I began my term of office with the slogan “Zero tolerance for fraud”. I stand by that pledge.’
The scandal involves allegations of double accounting and fictitious contracts, allowing sums of around (TM)1m to bypass normal budgetary controls.
Calls have been made for economic and monetary affairs commissioner Pedro Solbes to fall on his sword, as he is responsible for Eurostat.
Prodi, however, declared the most serious instances of malpractice uncovered at Eurostat ‘would have very little chance of occurring now’, following the introduction of recent accounting reforms.
However, he warned that progress would take time, and while he had ‘left not a single stone unturned’, the commission was ‘not a little sailing boat that can tack on a pull of the tiller. It is a big ship that takes time and distance to come about’.
Already there have been consequences. At a meeting earlier this month, the European Parliament budgetary committee recommended the freezing of 50% of Eurostat’s operational funds and one quarter of its administrative funds.
This scandal is one of the greatest challenges to face Prodi. The Italian law graduate has an impeccable academic background, specialising at the universities of Milan, Bologna and the London School of Economics.
He was also a visiting professor at Harvard University and Stanford Research Institute. While lecturing, he actively pursued his research work, initially in two areas that have since become mainstream topics in industrial economics: the development of small and medium-sized enterprises and industrial areas, and antitrust policy.
Other research took in analysis of the relationships between the state and the market, privatisation policies, the key role played by education systems in promoting economic development and social cohesion, the process of European integration following the collapse of the Berlin Wall and the dynamics of the different capitalist models.
A long career in Italian politics followed where he put his privatisation theories into practice.
He led the government for two years until October 1998 and in March 1999 was appointed president of the European Commission by the European Council, an appointment that was confirmed in September 1999 by a vote of confidence in the European Parliament.
It would be an exaggeration to say that the Eurostat scandal could bring that career to an early close. But Prodi will not want to see anything similar occur on his watch. That might be one scandal too many.
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