THE attempts by Neil Kinnock to sort out European Union cheating suffered a serious setback last week when the European commission’s senior auditor announced he was resigning, saying it was proving impossible to curb fraud and waste.

Jules Muis, head of the internal audit service, said he was leaving because it was time for the commission “to have a different face and a different voice”. He expressed frustration at his failure to conduct sweeping audit inquiries, saying that he had been “steered into the trees” and was “spinning (his) wheels”.

“I look forward to the commission (defining) what it wants with the Internal Audit Service (IAS), because that is not clear even to me,” he said.

Kinnock pledged to introduce more accountability and transparency in Brussels and has been pushing for reforms to reduce inefficiency and waste. But he has already suffered a scandal over Marta Andreasen, the commission’s chief accountant, whom he suspended after she alleged that the EU’s spending controls were inadequate.

Muis’s resignation follows the disclosure earlier this year in The Sunday Times of a confidential memo that he wrote to Kinnock supporting Andreasen’s allegations of poor spending controls. In it Muis said Andreasen should be supported because she had struggled against an “intrinsically hostile work environment” beset by “a profound lack of qualified staff, a host of vacancies and absentees, an entrenched mindset”.

To remove Andreasen “would be a serious blow to reform”, Muis warned. Although Muis did not directly attack Kinnock or the commission, it was clear from evidence he gave to the European parliament that he felt unable to carry out audit inquiries on a scale necessary to cut waste. Muis told the parliament that pledges of reform were not always matched by action. “It is one thing to have a good language of reform,” he said. “It is another thing to implement it.”

Muis said the EU seemed unable to break free from a culture of waste. As head of the commission’s internal audit service for three years, he had seen improvements but not the fundamental reforms required.

“We are trying to discover why we can’t get out of the doldrums in terms of the present too-low quality of controls within the commission,” he said.

Muis said the problems of fraud and waste were deep-rooted in the EU’s culture.

Last week Kinnock was forced to take drastic action in an effort to curb the latest fraud scandal, launching disciplinary charges against three senior officials in Eurostat, the EU’s data office, after evidence emerged of double accounting, falsification and kick-backs.

Speculation about Muis’s motives for resigning was fuelled when he announced that he was leaving on the day when the commission said he could not have the funds for an in-depth audit investigation into the Eurostat affair.

In his evidence to the budgetary control committee of the European parliament, Muis denied he had resigned because he was unable to carry out an inquiry into Eurostat, but confirmed his frustration at the lack of funds. “It is very simple,” he said. “When the new financial regulation came in we were told there were no resources (for an inquiry into Eurostat). In the spirit of reform, we at the IAS decided that we cannot do the work.” In another memo, leaked last month, Muis told the director-general of the commission’s budgets department that the commission was pretending that its budget figures were far more precise than they were.

“The commission could be held in contempt of due diligence by having continued the practice of overstating knowingly the quality of the accounts for 2001,” he said.

Each year about 5% of the commission’s £62 billion budget is estimated to be lost through fraud, according to the court of auditors, a spending watchdog. The European parliament has regularly refused to sign off the commission’s accounts because of inadequate spending checks.

The biggest losses are in agriculture, where millions are siphoned off in illegal subsidies. The problem is set to get worse when 10 new member countries join the EU next year.

Conservative MEPs have accused Kinnock of not doing enough to get to grips with waste and fraud. Chris Heaton-Harris, a senior member of the budgetary control committee, said Muis’s criticisms showed that reforms were botched and he called on other MEPs to refuse to sign off the commission’s accounts. “MEPs who supported signing off the 2001 accounts should be ashamed they fell for the commission’s spin,” he said.

A spokesman for Kinnock said: “Mr Muis is the first to recognise that reform is a process. Indeed his own internal audit service is a deliberate product of that process.

“The direction of reform in personnel policy, resources policy and financial management is absolutely clear and changes are being implemented. But it could not be completed in three years. That is not the real world.”

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