EU accounting worse than Enron, says whistleblower

Ian Black and Michael White
August 3 2002

The Guardian

The European Commission is embroiled in a furious row with its suspended chief accountant, Marta Andreasen, who claimed its $US98 billion ($181 billion) budget was "massively open to fraud" because it lacked even Enron's accountancy safeguards.

Ms Andreasen, who accused the commission of a cover-up, said in London: "Unlike the issues surrounding Enron and WorldCom, where you can at least trace transactions and accounts, you cannot do so within the EU accounts as there is no system in place for tracing adjustments and changes to figures presented.

"Fraud can, therefore, lie hidden within the system, undetected and untraced."

The commission, which suspended her in May, launched a ferocious counter-attack, saying it had been a mistake to employ her in the first place.

Ms Andreasen was speaking at a Westminster press conference organised by Conservative members of the European Parliament eager to condemn the commission in general and the commissioner in charge of reform, Britain's Neil Kinnock, in particular.

Her main thrust was withering. After ignoring the complaints of the court of auditors, the EU's most powerful watchdog, for years, the EU still did not have a global-standard double-entry book-keeping system, its computers were inadequate and there were no qualified accountants supervising it, she claimed.

Mr Kinnock was unavailable for comment, but Michaele Schreyer, the EU budget commissioner, whom Ms Andreasen accuses of "discouraging me from alerting others", said it had been "a mistake" to employ an accountant whose "unsubstantiated" allegations had generated "extreme ill-feeling" among staff.

Ms Andreasen, 48, was suspended four months after starting work and faces disciplinary proceedings liable to lead to dismissal, after complaining about commission working methods, first to her superiors, and later in public.

Brussels said weaknesses in accounting systems had been reported since 1999 and examined by the court of auditors, governments and the European Parliament. Ms Andreasen agrees, but says the auditors' complaints have been ignored.

Mr Kinnock has had three years to deliver on promises of reform in Brussels and getting spending under control. His crusade was thrown into question by Ms Andreasen's claims that he tried to suppress her damning findings. Ms Andreasen accused Mr Kinnock, a former Labour leader and political mentor of Tony Blair, of a cover-up.

She says she was harassed and subjected to a campaign of character assassination by senior Brussels officials.

Asked if she thought that Mr Kinnock, who became vice-president of the EC after a corruption scandal in 1999, had failed in his mission to clean up the Brussels bureaucracy, she replied: "Yes."

Her claims were supported by an unpublished report, compiled by the court of auditors in February. It said the EC's accounting system had "obvious risks as regards its reliability".

Ms Andreasen, a softly-spoken Spaniard who in January became the first professional accountant appointed to the post of budget execution director, was sacked from the £80,000-a-year ($230,000) job five months later after making her allegations.