THE Budget of the European Union Is Still Beset with Fraud and Financial Mismanagement More Than Two Years after Scandals Forced the Resignation of the Entire European Commission Headed by Jacques Santer

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THE budget of the European Union is still beset with fraud and financial mismanagement more than two years after scandals forced the resignation of the entire European Commission headed by Jacques Santer. But the creation of the EU's new anti-fraud office, which was supposed to clean up the institutions, has been impeded by turf wars and procedural fights between the commission and the European parliament.

MEPs last week condemned the commission's efforts to protect the EU's financial interests and fight against fraud. They noted that the scale of fraud and irregularities established both by the EU's own anti-fraud office (Olaf) and the national authorities had risen to a record e2bn for last year.

The bulk of the fraud and irregularity takes place outside the EU institutions, although it concerns EU money. The figures include, for instance, unjustified claims for farm subsidies, fraudulent claims for regional aid and cigarette smuggling, which robs the EU of its customs duties.

But MEPs are particularly concerned about misbehaviour by EU staff and they condemned Olaf for failing to pursue cases against EU employees. In only two out of 92 cases had the accused been sentenced by national courts.

"This is not a reasonable percentage," said Herbert Boesch, the Austrian MEP who drafted a report for the parliament. "If you are an EU official, you don't run a high risk when you cheat."

In turn, the European parliament is blamed by EU diplomats for having delayed the proper staffing of Olaf, which was created in 1999. There have been disputes over how many jobs should be for temporary secondments and how many for permanent staff and what grades they should be. Only now is the parliament unblocking funding to allow Olaf to reach its full complement of 300 staff. …