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EDITIONS
Thursday, 3 October, 2002, 14:08 GMT 15:08 UK
EU accounts 'open to fraud'
Marta Andreasen met the BBC's Tim Andersen
Marta Andreasen met the BBC's Tim Andersen
Marta Andreasen, the former chief accountant of the European Union says that flaws in the EU accounting system leave it vulnerable to fraud on a massive scale.

In an interview for BBC HARDtalk she warns that the EU is open to potential frauds worse than the recent scandals at Enron and WorldCom.


She says: "I mean it's immeasurable, you don't have a system to record transactions properly.

"You have a balance sheet that the commission presents every year with its assets and liabilities that is built on the aggregation of spreadsheets - have you ever seen this?

"I think the shop on the corner doesn't have this type of accounting system."

Reform

Ms Andreasen was appointed by the EU in January 2001 to reform its accounting practices. She was the first qualified accountant to be appointed to the post.

European Commission building in Brussels
The European Commission
But she was removed from the job in May 2002 after she raised her concerns in public.

She said the Commission's systems failed to meet even the most basic accounting standards.

In August this year, a leaked report from the EU Court of Auditors found that the 63 billion a year budget was open to fraud and abuse.

The report warned that the EU systems were "out of control" with "obvious risks as regards liability".


It's like going to a bank and somebody telling you the safeboxes are open

Marta Andreasen
Ms Andreasen said she believed that a lack of security left the system open to fraud at any time which could not be traced.

She said: "It's like going to a bank and somebody telling you the safeboxes are open. You have to prove if somebody took the money away, but the fact they are open makes it easy to have fraud or money going away."

Scandal

In 1999 the entire European Commission resigned after fraud, corruption and mismanagement were exposed at senior levels.

European Commission Vice-President, Neil Kinnock
Kinnock: Promised to clean up the EU
In the aftermath of the scandal Neil Kinnock was appointed European Commission Vice-President.

At the time he promised to shake up the "management and mentality" of the Commission.

But Ms Andreasen criticises his failure to make any progress in reforming the European Union's accounting methods.

She says: "I think Kinnock has failed first of all to implement reforms because he failed after three years to have a coherent and secure accounting system."

But she denies that it was her exposure of flaws in the system that had made things worse.

She says: "I think I have surfaced the problems, maybe made people more aware and made people aware that there is the need for urgent reform. This is not making trouble."

The interview can be watched in full on Thursday 3 October on BBC World and BBC News 24 at the following times:

BBC News 24 (times shown in BST) 0430, repeated 2230

BBC World (times shown in GMT) 0330, repeated 0830, 1130, 1530, 1830, 2330



HARDtalk with Tim Sebastian is broadcast Mon - Friday on BBC World and BBC News 24
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