Prodi defies MEPs' call for heads to roll over scandal

Romano Prodi, the European Commission president, last night fought off calls for the resignation of a European Commissioner over an EU fraud scandal, as MEPs backed off immediate demands for a scalp.

After a two-and-a-half hour meeting with Euro-MPs, Mr Prodi emerged from the worst crisis of his term in office with enough support to delay decisions on the fate of three commissioners in the firing line.

But the release of interim fraud inquiries into the EU's statistical agency, Eurostat, failed to resolve many questions and left a particular question mark hanging over the future of the European Commissioner responsible, Pedro Solbes.

Investigations showed how the Luxembourg-based agency acted as a law unto itself, raising and spending money outside the control of EU accountants. Around €5m (£3.5m) is unaccounted for.

One document argued that the commission is "ill-equipped to protect itself" from a repeat of extraordinary goings on at Eurostat, which colluded with private firms to create bogus or inflated contracts.

Addressing senior Euro-MPs yesterday, Mr Prodi emphasised that the vast bulk of financial irregularities took place before the current European Commission came into office late in 1999, and "would have very little chance of occurring now". Mr Solbes, he argued, "has no cause for personal reproach," adding: "There is no reason to ask any commissioner to assume the political responsibility and resign." Mr Prodi announced plans to reform Eurostat and the EU's fraudbusters, Olaf. With more detailed investigations due by the end of next month, the parliament's two biggest political groups agreed to reserve their final judgement. The stakes are high because, under pressure from the parliament, the last commission was forced to resign in 1999.

Two other commissioners have been tarred by the scandal: Neil Kinnock, the commission vice-president in charge of administrative reform, and Michaele Schreyer, the EU budget Commissioner.

But senior MEPs showed little appetite yesterday for seeing a head roll immediately. Pat Cox, president of the European Parliament, called the case a "sobering reality check" but added: "It is my own judgement that there is work to be done. It is premature to arrive at any conclusive judgement about what the parliament's view on this matter should be." Several questions remained unclear after the release of three reports late on Wednesday night. While the documentation shows that around €5m of cash remains missing, it gives only the sketchiest indications of what it was spent on. Funds channelled through hidden accounts went to fund a volleyball team, a riding centre, dinners and trips.

The lack of communication between Olaf and senior commission officials is a significant problem. The alarm over Eurostat was raised only when Olaf tipped off French police, who opened an investigation into a Paris-based firm that had contracts with Eurostat.

Finally there are question marks over the treatment of warnings given to the commission by whistleblowers, and suggestions that Mr Solbes's cabinet were informed of suspicions about Eurostat.

Mr Prodi pointed the finger of blame at the former director general of Eurostat, Yves Franchet who gave Mr Solbes "disinformation". M. Franchet faces a criminal investigation. M. Franchet has denied benefiting personally and said that the spending was legitimate. The European Commission President accepted that much of the money raised from Eurostat contracts was spent on legitimate activities.

Hans-Gert Pöttering, the centre-right leader of the largest political group in the European Parliament, reduced the pressure on Mr Solbes by saying MEPs cannot aim their political fire at him alone. "Mr Kinnock told us this would be the best administration in the world - that has totally collapsed."