Try Google’s “EU scandals” and you will promptly be regaled with multiple references pointing furtively to a locally brewed scandal aka “Dalligate” and the questionable Olaf connection. Without taking sides over who is right or wrong, one could be excused for asking whether this publicity does any credit to the integrity of the George Cross Island that fought so gallantly in WWII and won with honour against the tyranny of the Swastika scourge that vowed to sink it.

Perhaps it is relevant to reproduce the Google result in my search for EU scandals by quoting the opinion of the BBC regarding the abrupt resignation of Mr Dalli as it recounted how “The EU Commissioner for Health, has resigned after an anti-fraud inquiry linked him to an attempt to influence tobacco legislation. The EU’s anti-fraud office (Olaf) found that a local businessman had tried to use his contacts with Mr Dalli for financial gain.” It continued by saying that this businessman had tried to influence future EU legislation on tobacco products, asking the cool price of €60m.

However, when Mr Dalli was confronted by EU President José Manuel Barroso, he categorically rejected the investigation’s finding. It is strange, now that our general election result is out and the dust has started to settle, that nobody from the PN party has come to Dalli’s rescue and, in fact, even in the thick of a six-week-long election campaign, PN apologists stayed clear of discussing his case or trying to help him regain his integrity.

Mr Dalli was a government minister with the PN and for a long period was responsible for finance. In 1994, he cleverly engineered a plan in a ‘big bang’ approach to introduce 20 new fiscal laws (including the introduction of VAT) resulting with the setting of a solid foundation for an emerging financial services industry. During this period he was the right-hand-man of Prime Minister Eddie Fenech Adami and, with the retirement of the latter, he contested for the vacant post of prime minister, which he lost to Laurence Gonzi.

For a short period he served as Health Minister but resigned at the request of Dr Gonzi on the strength of an anonymous report by a private investigator which, in time, was proved in court to be false. Mr Dalli was reinstated a few months before the general election in 2008 and accepted the post of consultant to Dr Gonzi. Following his re-election, Dalli resigned as a member of parliament when he was offered the position of Malta’s EU Commissioner, which he accepted.

He was appointed Commissioner for Health and Consumer Affairs by the European Commission – a post from which he was forced to resign last October, following the revelation of an Olaf internal investigation. This was based on what was described as “circumstantial evidence” involving giant tobacco company Philip Morris, which operates a joint-venture with Swedish Match, and it was the Swedish company that filed the complaint with the EC that a Maltese businessman had asked for a €60 million bribe ostensibly to interest Dalli in reversing an EU ban on the sale of snus outside Scandinavia and the United States.

With Dalli now playing the victim, a story is evolving around an alleged EU miscarriage of justice and implied corruption which, in turn, has started a campaign of vague innuendo in the international press against the entire EU institution. But while this Dalligate – a story of mystery and intrigue – continues to hit the headlines, one cannot forget that the Commission, the executive body of the European Union, has had its own murky past with its share of scandal and resignations at the very core of its top institutions.

Roll back the years to 1999 and Google will show you, in vivid detail, many tales of woe that paralysed the entire Commission at the time when the EU was headed by President Jacques Santer (former Prime Minister of Luxembourg). He, and the entire Commission, resigned on 15 March 1999 in the wake of a damning report exposing fraud, corruption and mismanagement at senior levels. Had the Commission not agreed to resign, the likelihood is that a motion of censure would have been carried in the European Parliament, with the same devastating effect.

But why is this story of Santer’s scandal and intrigue being mentioned in the context of the alleged attempt by the giant tobacco industry to bribe the former Commissioner for Health and Consumer Affairs? The answer is that, really and truly, the history of scandals revolves around top Mandarins yielding to temptation involving various levels of fraud and irregularity. Certainly, one cannot jump to conclusions but has to carefully analyse who is the victim and who is the alleged offender.

In Santer’s case, it was whistle-blower Paul van Buitenen who innocuously sent information to the European Parliament detailing cases of fraud by highlighting what he called the “incompetence and unwillingness of the administration to deal efficiently with fraud and irregularities”. Van Buitenen, a member of the Green Party, was suspended on half pay for four months for breaking staff rules and also suffered disciplinary action. For a while, he feared that he could lose his job and his pension. In retrospect, the inadequate scrutiny and increasing practice of manipulating documents led to a loss of trust that culminated in cries of indignation on the part of many MEPs saying “Santer must go”, as the majority could no longer have confidence in him, nor in his ability to restore public confidence and bring about the reforms and the fundamental change in the culture of the Commission that are universally mandated.

With hindsight, we can rejoice that the work of whistle-blower Paul van Buitenen was vindicated. In a devastating inquiry, it was reported that EU Commissioner (and former Prime Minister of France) Edith Cresson was guilty of “a clear-cut case of favouritism” by employing her home-town friend and dentist Dr Rene Berthelot, who was awarded a number of EU contracts for jobs for which he was unqualified and on which he did little work. As always, we get the déjà vu feeling that when things go wrong, the first casualty is the collapse of the internal audit and control mechanisms that fail to function.

Can one blame the Court of Auditors, which is responsible for overseeing the affairs of the EU by carrying out inspections and on-the-spot checks, while taxpayers may not be aware of the heavy cost of an audit team responsible for overseeing the finances of the Union and the bodies established by it. It does not come cheap, considering that the Court of Auditors consists of 27 highly paid members, one from each member state, assisted by a staff of around 1,000.

Equally distressing is the fact that, in 1995, the Court of Auditors refused to certify the EU’s annual accounts after discovering that nearly £3 billion was not properly accounted for, whereas in 1998 the Commission’s anti-fraud unit UCLAF revealed that some £600 million of its humanitarian aid budget between 1993 and 1995 could not be accounted for – including £1.5 million that had been intended for much-needed aid for refugees from the genocide in Rwanda and Burundi. It is a paradox how, at the time of his resignation, Santer told the BBC that “99 per cent of the people in the Commission are decent and honest and work extremely hard in often very difficult circumstances”. But so say many who are faced with serious accusations or misgivings.

Remember Rita Schembri’s claim of innocence and her insistence on having her official papers reviewed by Permanent Secretary Godwin Grima – who in turn referred them to the Auditor-General’s Office (NAO) only three months before the last general election on 9 March. Now the report is out and MaltaToday has revealed that Ms Schembri (currently on extended paid leave) was firmly supported by former Prime Minister Laurence Gonzi, who hailed her as a person of the highest integrity. The NAO discovered, much to the chagrin of the ex-Prime Minister, that Ms Schembri had indulged in the illegal use of highly sensitive and personal data for her personal gain. Readers will recall how she was promoted to the top rank of permanent secretary last September, this promotion coincidentally occurring shortly after she had completed the task of assisting Olaf in its investigation into disgraced EU Commissioner John Dalli.

This long tale of sleaze and intrigue shows how money corrupts and that, despite all the checks and balances that governments and institutions put in place, this will never be completely eliminated. Certainly, as in the case of the Santer Commission, the honourable thing was to resign when confronted by proven revelations triggered by a whistle-blower.

Back to our local turf, perhaps if the Whistle Blower Act, which was drafted by the PN government but left pending as a draft bill, had been in force, Ms Schembri’s alleged negligence as an executive responsible for the probity and proper governance of the entire civil service would have been nipped in the bud much earlier. As for Mr Dalli – only time will tell.

The writer is a partner in audit and business advisory firm PKF

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