MEPs back Balkan agency plagued by corruption allegations
20 November 2004

By Lisbeth Kirk

The European Parliament on Wednesday (17 November) renewed a mandate for the European Agency for Reconstruction (EAR), despite allegations of corruption surrounding its work.

The activities of the Belgrade branch have recently caught the attention of police in Serbia as well as in Germany.

A consortium of the German companies Siemens and Lurgi Lentjes Service is suspected of having obtained a 49 million euro contract for the overhaul of the power plant Nikola Tesla A3 near Belgrade by bribing an employee of the EU Agency, according to German news magazine Stern.

The bribery allegation was firmly denied by the companies.

German offices raided

In October 2003, the EU anti-fraud office OLAF forwarded a report on the case to the Prosecutor's Office (responsible for this case), in Wuppertal, Germany. The prosecutor initiated a large investigation involving the Siemens Company�s Karlsruhe offices.

In September, 60 policemen raided offices in the two companies and searched employee'�s private homes to secure evidence in the case.

Stern also reports that Siemens and Lurgi had been accused by officials at the EAR of presenting fictious invoices. But the Agency decided not to forward this information to the OLAF.

In a related case, the Serbian police arrested in August a French British citizen working for the European Agency for Reconstruction in charge of the electric power system in Kosovo.

Amongst other things, the man was providing help to Lurgi Lentjes Service to win the Nikola Tesla contract. He allegedly received 498,000 euro in return, one percent of the contract value.

The man later threatened to destroy the German company�s world market credibility if he was not paid the additional sum.

A meeting was set up for 24 August 2004 in the Hotel Hyatt in Belgrade, but instead of the money, Serbian police, tipped off by the German companies, met the man.

Two more years
Despite the problems, the European Parliament has now ensured that the agency will be able to continue its work until the end of 2006 by adopting a report, drafted by Danish liberal MEP Anders Samuelsen.

"The process by which we have come to the point of prolonging the Agency for Reconstruction's mandate does not deserve high marks for artistic performance", admitted Mr Samuelsen in his speech to the House.

The Commission'�s request for prolongation came at a very late moment, he complained and added that the Commission did not follow a request from MEPs to present an evaluation report on the status of the agency.

"In general things are working very well at the Agency, but of course where a lot of money is involved there is also the risk of fraud. This is why the MEPs have asked to have more frequent information on the status," Anders Samuelsen told the EUobserver.

The European Agency for Reconstruction is responsible for the management of the main EU assistance programmes in Serbia and Montenegro (the Republic of Serbia, the Republic of Montenegro, UN-administered Kosovo) and the former Yugoslav Republic of Macedonia.

It was established in February 2000 and has its headquarters in Thessalonica, and operational centres in Belgrade, Pristine, Podgorica and Skopje.

The Agency operates with an annual budget of 2 billion euro and is seen as a crucial part of the EU's strategy for rebuilding the Western Balkans and offering assistance to Northern Cyprus.