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Prodi Denies Responsibility for Fraud by EU Agency - 2003-09-25

European Commission President Romano Prodi has rejected calls for resignations over charges of fraud at the European Union's statistics agency and has defended a senior colleague.

In a speech to the European Parliament in Strasbourg, France, Mr. Prodi said neither he nor any other member of the EU executive agency bears responsibility for the alleged misappropriation of millions by officials of the EU statistical agency.

Some Parliament members had demanded that Economic Affairs Commissioner Pedro Solbes, who has general responsibility for the statistics agency, Eurostat, step down. But Mr. Prodi argued that Mr. Solbes was the victim of a trusted subordinate who had betrayed his confidence.

Mr. Prodi said that Commission reports on the scandal clearly implicate Eurostat director-general Yves Franchet, who was earlier removed from his post, even though he denied wrongdoing.

Commission reports released Wednesday allege that senior Eurostat officials siphoned off millions of dollars into secret bank accounts in the 1990s through suspected double accounting. The reports put much of the blame on Mr. Franchet. However, they also highlighted failings at the Commission.

Mr. Prodi said the problems at Eurostat occurred mostly before he took over the European Commission several years ago, following the resignation of the previous Commission in 1999 because of charges of nepotism.

Meanwhile, European Parliament President Pat Cox, in reaction to Mr. Prodi's presentation, said the Eurostat case is a warning, and the issues it raises need to be addressed.

"I believe that the Eurostat case does not offer us a clear judgment on the financial reform process but it does offer us a very sobering reality check," he said. "And that sobering reality check as revealed clearly gaps in governance inside the European Commission, between the Commission and agencies, between cabinets and Commissioners, and that governance gap will have to be addressed."

As for the claim that Mr. Solbes was the victim of a subordinate who violated a confidence, Mr. Cox said that there must be more vigilance over financial matters.

"Members of parliament who spoke appreciate that trust is necessary but expect that in the new financial environment that you trust but verify. Where was the but verify part of this? I think too would be one of the areas to look at," he said.

This is the worst crisis to hit Commission President Prodi since he took office pledging zero tolerance for fraud. He said he stands by his pledge.