MEPs furious over missing millions

JACQUES SANTER, European Commission president, bowed to mounting political pressure yesterday for an independent unit to investigate European Union fraud, after an embarrassing string of multimillion- pound financial scandals.

As MEPs threatened to block the Commission's budget over the fraud allegations, Mr Santer assured them that "everything must be brought right out into the open".

Mr Santer angered some MEPs by describing one set of financial irregularities as administrative "acrobatics".

His intervention follows an admission by the Commission that up to $1bn, from two years of aid programmes, was never properly accounted for. Police in Luxembourg are investigating a separate case in which fraud was detected in four aid contracts worth a total of $2.9m.

The controversy has engulfed Edith Cresson, former French prime minister and now an EU commissioner, who is accused of employing a dentist from her home town as a scientific consultant on an HIV-Aids programme.

Mrs Cresson's spokesman has admitted she employed the dentist, but denied any wrongdoing. She is taking legal action against French newspapers which reported the case in more detail.

Amid concern that the series of cases is tarnishing the image of the EU, Mr Santer has tried to defuse the row by proposing reforms to UCLAF, the in-house fraud-busting unit.

Mr Santer said that "if the Commission's fight against fraud is questioned, or even denigrated", it would be better to give the unit greater independence. It is unclear, however, whether Mr Santer has satisfied the assembly. Several MEPs are refusing to lift the threat to block the budget.

Mr Santer angered other MEPs by defending staff involved in one set of financial irregularities that came to light at Echo, the Commission's humanitarian office.

Although some fraud was detected, much more of the cash meant for aid programmes in Africa and the Balkans was diverted to so-called "submarines". These were the extra staff in the understaffed Echo office who did not appear on the official payroll.

Mr Santer said that although this practice should not be condoned, MEPs ought to "consider the reasons why some departments were forced to look for ways of administering their funds flexibly, not to say acrobatically".

Edith Muller, a German Green and member of the EU parliament's budgetary control committee, replied: "I have heard something new when we just call these things `administrative acrobatics'." Ms Muller said the scandals "have led to a real crisis", and she called on the Commission president to admit political responsibility.

Edward McMillan-Scott, leader of the Conservative Euro-MPs, said: "Santer must act over the next weeks to honour his pledge today to review UCLAF." He added: "EU tax-payers have waited too long for a proper EU-wide fraudbuster free of bureaucratic bullying".

Mr McMillan-Scott has been a staunch critic of the Commission's controls on spending since he criticised irregularities in the Commission's tourism unit in 1990. In 1995 he called in the Belgian police to investigate the allegations.