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Former EC Chief Accountant Criticizes Commission's Bookkeeping - 2002-08-01

The European Commission's former chief accountant says controls over its $98 billion budget are incoherent, insecure, unreliable and susceptible to fraud. But the Commission, the European Union's executive body, says the allegations are unsubstantiated and ill-founded.

Marta Andreasen was removed from her post last May after only four months on the job after she refused to sign off on the Commission's accounts. She says the EU's accounting system fails to conform to basic bookkeeping principles. She also alleges that the accounting department's computer system insufficiently tracks how money is spent. In her view, that makes the system susceptible to fraud.

"I cannot prove that fraud has occurred," she said. "I say that the type of accounting system that we have today, mainly the computer system, where we process our transactions, is open to fraud."

Mrs. Andreasen was speaking in London, where her allegations, coupled with the leaking of a secret draft report by the EU's Court of Auditors supporting her claims, are sure to fuel anti-EU feelings among Britain's Euro-skeptical population.

The auditors' draft, published Thursday by the Financial Times, backs up Mrs. Andreasen's claim that parts of the EU budget management process are "out of control". It says there are risks regarding the system's reliability and that those risks stem from what it calls a lack of security. And it says the European Commission has failed to take any action despite repeated warnings.

Not so, said Commission spokesman Eric Mamer. He said that over the past three years, the Commission has publicly criticized its own accounting methods and has steadily moved toward reforming them. "We're saying very clearly to the public that, yes, we have identified weaknesses in our accounting procedures and that we are intent on modernizing them," he said. "That's what Mrs. Andreasen had been hired to do."

Mr. Mamer said Mrs. Andreasen, who has been moved to a job with no responsibility, is now being subjected to disciplinary action. Other officials described her as a troublemaker and said she was suspended from her previous job with the Paris-based Organization for Economic Cooperation and Development after alleging financial irregularities there.

Why, then, did the European Commission hire her, one official was asked? "We made a mistake," was the answer.