EC heads set to roll

A second probe into fraud and financial mismanagement in the European Commission could spark a mass wave of resignations of senior officials when the report is made public in September, Accountancy Age has learned.

The first report by the Committee of Independent Experts in March led to the high-profile resignation of the entire commission.

But insiders are predicting the second investigation – which focuses on the second tier of the commission’s hierarchy and is due to report on 9 September – could lead to a significant number of senior figures being forced out.

It is feared this could cause further instability in the EC at a time when Europe is trying to build a single capital market to rival the US.

One source said: ‘There will be a pretty big re-organisation. There were probably a lot of people who felt that they were unfairly savaged by the last report and who are looking forward to revenge.’

He added that both the first and second reports provided an excellent opportunity for the accountancy profession to gain prestige in the commission due to the fact that financial mismanagement lay at the heart of its problems.

Very few of its current auditors are trained accountants.

The establishment of the new anti-fraud office, OLAF, becomes legal on 1 June. It will be given the support of a supervisory committee and a director who will report regularly to the European parliament and the council on the findings of the investigations.

Insiders warned that any director will need to be extremely strong-willed in order to avoid the internal squabbles which have dogged previous attempts to put finances in order.

The first report highlighted the power struggles between the two existing fraud-monitoring bodies.

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