The More Things Change...

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As a non-state with grand ambitions, a skeptical public and a byzantine institutional architecture, the European Union always grapples mightily with the sticky issue of political control. But never is it stickier than when scandal rears its head, as it did last week. Appearing before a closed meeting with European Parliament leaders, European Commission President Romano Prodi fended off calls for high-level resignations over the misuse of funds by Eurostat, the E.U.'s Luxembourg-based statistical office.

But his defiant stand did little to extinguish smoldering doubts over the Commission's ability to account cleanly for its 100 billion euro annual budget. On the contrary, his testimony seemed to leave the Union mired anew in its own version of hell: straddled between the demands of bureaucratic procedure and political courage; torn between secrecy and transparency, and nervously awaiting, as always, yet another report. "To the average E.U. citizen, this looks like another big European mess," says Joost Lagendijk, a Green MEP from the Netherlands.

No one can say they didn't see it coming. The Eurostat scandal has been brewing for years. One Eurostat official says a letter was written to the Commission as early as 1997 detailing financial abuses there. The allegations center on Yves Franchet, a Frenchman who was director general of Eurostat for 13 years until he was removed from the post earlier this year. For eight years, with the approval of the Commission, he also served as an official of Eurocost, one of several outside firms set up to gather and sell E.U. statistics to third parties; no proper accounting of its revenues was made. "It's outside the rules everywhere in Europe for an official to give funds to a company he is running himself," says the official.

An inquiry was launched into this and other alleged improprieties in 2000 by the European Anti-Fraud Office, OLAF. In 2002 it transmitted information on several cases to French and Luxembourg legal authorities, which have launched criminal investigations. But until a change of regulation after the scope of the Eurostat scandal became public in May of this year, OLAF was not obliged to inform the Commission itself-the ultimate paymasters of Eurostat-of its concerns. When OLAF was set up in 1999 after the last Commission resigned en masse under a cloud of fraud and nepotism allegations, the idea was that it should be isolated from political influence. But once the Eurostat allegations were aired, the Commission looked at best derelict and at worst complicit for allowing many of the questionable practices to continue. "I can't be blamed or asked to take responsibility for something I didn't know about," Commissioner Pedro Solbes, who as head of economic and financial affairs is responsible for Eurostat, told the European Parliament's budget committee in July.