Fraud Haunts E.U. Anew

For years European citizens have stashed cash in secret Luxembourg bank accounts. Now it seems that members of the European Commission's statistical agency, Eurostat, have been doing the same thing. According to a Commission audit released last week, Eurostat officials have secreted away close to $1 billion of taxpayers' money. The Commission replaced longtime Eurostat director Yves Franchet, who'd held the job for more than 15 years. (Belgian Michel Vanden Abeele will take his place.)

The alleged scheme involved "irregular reserves" from inflated subcontracts Eurostat issued to consulting companies. The money was deposited in Luxembourg bank accounts, some under fictitious names. "What we have is evidence of possible irregularities on a wide scale and over a considerable period of time," said Commission Vice President Neil Kinnock. Fraud is a nasty byword in Brussels; the last Commission was forced to resign in 1999 in the wake of a corruption and nepotism scandal.

Whether last week's moves will satisfy the European Parliament — in an election year — remains to be seen. As the Eurostat scandal unravels, the Commission must be afraid that it will unravel, too.