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Last Updated: Thursday, 25 September, 2003, 15:48 GMT 16:48 UK
Prodi rules out EU resignations
Romano Prodi
Prodi pledged to stamp out fraud
European Commission President Romano Prodi has said there is no need for any senior members of his team to resign over alleged fraud at the European Union's statistical agency, Eurostat.

Mr Prodi was addressing a committee of European Parliament leaders at a closed-door hearing in Strasbourg.

"After careful thought and in full awareness of the issues, I consider there is no reason to ask any Commissioner to assume the political responsibility and resign," said Mr Prodi , according to the text of his speech, released to journalists.

Members of the European parliament (MEPs) are openly calling for the resignation of the commissioner in overall charge of Eurostat, Pedro Solbes.

Laying blame

But Mr Prodi stood firmly behind the economic and monetary affairs commissioner saying that "Mr Solbes has no cause for personal reproach".

I am convinced, based on the facts in the investigation reports, that the most serious instances of malpractice uncovered at Eurostat and which originate in the 1990s, would have very little chance of occurring now
Romano Prodi

Instead, according to the AFP news agency, he blamed former Eurostat chief Yves Franchet for the debacle, in which million of euros disappeared into fictitious contracts and secret bank accounts.

Although initial reports into the scandal released on Wednesday show no evidence of wrongdoing since 1999 - a year before Mr Prodi took office - they are sharply critical of management at Eurostat.

Working to change

Mr Prodi defended his commission saying it had been hard at work to rectify serious shortcomings in the way the EU managed its finances in the past.

"I am convinced, based on the facts in the investigation reports, that the most serious instances of malpractice uncovered at Eurostat and which originate in the 1990s, would have very little chance of occurring now," Mr Prodi said.

Pedro Solbes

But the BBC's Chris Morris in Strasbourg says there are a host of unanswered questions about political responsibility and efforts to clean up the system.

Parliament, with an eye on European elections next year, is looking for a scapegoat, our correspondent adds.

Ten new member states will soon join the European Union, which is about to begin final discussions on a new European constitution, putting issues of public trust high on the agenda.

Our correspondent says many parliamentarians are worried that fresh allegations are threatening to undermine confidence in European institutions.

"The responsible Commissioner has only one thing to do. He must resign," Freddy Blak, a Danish MEP and vice-chairman of the committee which investigated the affair, said of Mr Solbes.

Fictitious accounts

Mr Prodi took over as Commission president with a pledge to stamp out fraud and corruption.

Most members of the previous commission, led by Jacques Santer, were forced to resign over allegations of nepotism and failure to deal with corruption.

The EU's statistic agency, producing official data
Sells databases and other products to the private sector via a network of firms
Over 700 employees in 2001
Based in Luxembourg, but some of those suspended in the investigation worked in Paris
Budget of 141 million euros

The Eurostat affair allegedly involves cases of double accounting and fictitious contracts, allowing sums of around one million euros to bypass normal budgetary controls.

Personal profit was not thought to be the motive and no current commissioners are accused of profiting from the misuse of Eurostat funds.

The reports have been prepared by a commission task force and by EU auditors.

According to leaked details, auditors had found that before 1999 officials at Eurostat had set up a system under which they channelled money into financial reserves.

But AFP quoted the report as saying: "No further evidence has been found of the above mentioned past reserve practices beyond 1999".

However, the details of the reports have not been made public - a fact that has already prompted anger from an Austrian MEP with an anti-fraud mandate.

"As the standing rapporteur (against fraud), I refuse to take part in a procedure where I read something in a locked room and then keep my mouth shut," said Herbert Boesch, a deputy chairman of the parliament's powerful budgetary oversight committee.

"We get the impression that covering up is still preferred to uncovering."

The BBC's Chris Morris
"This is a story that goes to the heart of many people's fears about Europe"

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