EC fraud row shakes OLAF

The future of the new independent European audit unit, OLAF, was thrown into doubt this week following publication of a damning report on financial management at the European Commission from the Committee of Independent Experts.

The 150-page report – which was followed by the resignation of all 20 European Commissioners – slammed the apparent squabbling between the commission’s internal audit function, DGXX, and UCLAF, the other fraud-busting body, while also recommending that there should a substantial increase in the number of internal auditors.

One member of the Court of Auditors said: ‘The paper mentions reports we filed years ago and the problem now is that there is very little parliamentary time to push through changes before the elections in May.’

UCLAF’s position within the commission, as one of the bodies responsible for combating fraud and irregularities, was highlighted as ‘less than clear’.

The report also gave the clearest signal yet that calls made by the European Institute for Internal Auditors for more training would be heeded. The majority of UCLAF staff ‘do not have the requisite professional skills’, according to the report.

Head of the English ICA’s Brussels office Julian Paleson said that a strong hand would be needed to guide the establishment of OLAF, or the whole concept risked being shelved.

‘I am hoping OLAF will be established even quicker, but it is hard to imagine with even (European Commission president Jacques) Santer in disgrace,’ he said.

‘At the very least, the report should be seen as an excellent boost to the profession as they will have to take accountants far more seriously,’ he added.