Mr Romano Prodi and three senior European commissioners will today be drawn into the biggest financial scandal since the last commission was forced to resign in disgrace in 1999.

Mr Prodi, commission president, and at least three other commissioners knew more than they have so far admitted about a growing scandal at Eurostat, the commission's statistical arm.

In spite of promising to stamp out fraud and protect whistleblowers, Mr Prodi's team failed to act decisively in the face of warnings about wrongdoing.

French prosecutors have now opened a preliminary criminal investigation into events at Eurostat, where the commission's own fraud investigators found evidence of "a vast enterprise of looting of EU funds".

Mr Yves Franchet, Eurostat's top civil servant, and Mr Daniel Byk, a director, are suspected by the Olaf fraud team of having set up "entirely or in part" the system that allowed public money to be siphoned off using a secret bank account in Luxembourg. Both Mr Franchet and Mr Byk deny setting up the account, depositing money in it or in any way enriching themselves.

The latest allegations about Eurostat come on top of five other investigations. These amount to the most serious allegations since the collapse of Jacques Santer's commission in 1999, in the face of claims of nepotism and mismanagement.

The commission has refused to say who knew what, and when, about the allegations surrounding Eurostat. Its only public statement is that Ms Michaele Schreyer, EU budget commissioner, first saw critical internal audit reports in February and May this year. But according to Mr Franchet, speaking in an unscreened television interview, he kept Mr Prodi informed of events, along with Mr Neil Kinnock, administration commissioner, and Mr Pedro Solbes, monetary affairs commissioner.

Ms Schreyer was particularly well briefed. "She was aware of all the problems, and we talked about them a lot," Mr Franchet said. Ms Schreyer is already under pressure over her failure to crack down quickly on serious flaws in the commission's accounting system, publicised by the suspended EU chief accountant Ms Marta Andreasen

Ms Gabriele Stauner, a German conservative MEP, said: "Either Ms Schreyer knew of the problems at Eurostat and did nothing, or she was not informed by her officials, in which case she has no control over her department." Mr Prodi was also aware of serious problems at Eurostat. In a letter written last September, he says the commission raised concerns about possible wrongdoing at the department in June 1999.

Mr Kinnock, Ms Schreyer and Mr Solbes will today face questions about their role at the European parliament's budgetary control committee. Yesterday the commission refused to comment. - (Financial Times Service)