Euro fraud is on a 'staggering scale', says Commons watchdog

THE CLEAN-UP of the European Commission faces formidable obstacles, according to Britain's parliamentary watchdog, whose chairman said yesterday he was "staggered by the scale of the problem".

With the incoming Commission president, Romano Prodi, still working on his package of reform proposals, the extent of the difficulties he faces was underlined in a statement from the House of Commons Public Accounts Committee.

The powerful all-party committee, which acts as Parliament's financial watchdog, has made a rare three-day fact-finding visit outside the United Kingdom, interviewing officials at the Commission, the Commission's fraud- busting unit, the European Parliament and the Committee of Experts whose damning report on corruption and mismanagement provoked the resignation of all 20 commissioners - who are now carrying on in a caretaker role.

In a hard-hitting statement, the MPs called for a "culture of accountability to replace the existing culture of complacency within the European Commission", and said corrupt staff were being protected.

They added: "The European taxpayer has the right to expect fraud to be investigated speedily, the guilty punished, lessons learnt and loopholes closed." The committee chairman and former minister for Europe, David Davis, said: "In considering these issues, we have been staggered by the scale of the problem. Urgent action is needed if the culture of complacency is to be replaced with a culture of accountability."

A series of detailed proposals called for structural change within the Commission and "clear independence for the new anti-fraud office".

Since the mass resignation of the commissioners last month, Mr Prodi, a former Italian prime minister, has been trying to construct a set of proposals for reform, and to build a new team of commissioners to take over. But his nomination, which is backed by Tony Blair, needs to be approved by the European Parliament next month, and the new Commission is unlikely to be fully in place before September.

The MPs' findings may add pressure on Mr Prodi to beef up his reform ideas.

Their statement argued: "The committee has found lamentable failure on the part of the Commission to take appropriate action to rectify serious faults brought to its attention. This was due to lack of clarity of who was responsible to whom, and for what."

Moreover, they argued, the Commission lacks specific sanctions that can be taken against individuals who fail to meet proper standards.

"At present," the statement says, "incompetent and corrupt staff are protected by an outdated staff code, desperately in need of revision."

The 13-strong committee of MPs, who plan to publish a full report in the summer, call for clearer objectives to be set and sounder systems to be put in place for measuring and monitoring performance, financial information and independent auditing.