The EU and Malta were rocked yesterday over the announcement that the European Commissioner for Health and Consumer Policy, John Dalli, had resigned after a fraud inquiry linked him to an attempt to influence legislation on tobacco.

The OLAF report did not find any conclusive evidence of the direct participation of Mr Dalli

The EU’s anti-fraud office, OLAF, found a Maltese businessman had approached a Swedish tobacco producer, using his contact with Mr Dalli, and sought to gain financial advantage in exchange for influence on a possible legislative proposal on snus.

This is a tobacco product banned in the EU but only allowed in Sweden through an exemption.

The Commissioner, according to the OLAF inquiry, “was aware of events”, though Mr Dalli has strongly denied this claim.

Commission sources told The Times that Mr Dalli was forced to step down following a meeting with Commission President José Manuel Barroso yesterday afternoon, in which Mr Dalli was presented with the conclusions of the inquiry.

The Commission said OLAF launched an investigation following a complaint made in May 2012 by the company, Swedish Match.

“No transaction was concluded between the company and the entrepreneur and no payment was made. The OLAF report did not find any conclusive evidence of the direct participation of Mr Dalli but did consider that he was aware of these events,” the Commission said.

In its statement, Brussels also said the OLAF report showed clearly that the Commission’s decision-making process and the position of the services concerned had not been affected at all by the matters under investigation.

“After the (Commission) President informed Mr Dalli about the report received from OLAF, Mr Dalli decided to resign in order to be able to defend his reputation and that of the Commission,” the statement said.

Contacted at its head office in Sweden, Patrick Hildingsson, a spokesman for Swedish Match, said his company immediately reported the “bribery offer” to the Commission and that it cooperated with OLAF throughout.

“We were contacted directly by the Maltese businessman who told us that he was speaking on behalf of Mr Dalli,” Mr Hildingsson claimed.

“He asked us for a substantial amount of money in exchange for changes in the EU’s Tobacco Directive. We have a zero tolerance policy on these things and immediately reported this incident to the Commission.”

Asked on how much the Maltese businessman had asked for, Mr Hildingsson said: “We cannot reveal that, it was substantial, but we prefer to leave that to your imagination.”

The company, a major tobacco producer in Sweden with a reported profit of more than €400 million last year, said it has no business interests in Malta.

Mr Dalli’s resignation in Brussels was soon followed in Malta by that of Sliema businessman Silvio Zammit from his post of deputy mayor and PN councillor on the Sliema council.

‘Unfounded claims will be proved false’

When contacted by The Times, Mr Zammit declined to comment on whether he had been investigated by OLAF or whether he was in contact with Mr Dalli on the issue.

Asked why he tendered his resignation, Mr Zammit said: “For personal reasons.”

When contacted in Brussels, Mr Dalli vehemently denied his involvement in the case and rejected OLAF’s conclusions that he knew of the Maltese businessman using his name to obtain financial advantage in exchange of changes to EU legislation.

Asked whether he knew Mr Zammit, Mr Dalli said the businessman used to be his canvasser but added that he could only speak for himself.

In a statement issued in the evening, Mr Dalli said OLAF’s conclusions were based “only on circumstantial evidence”.

He was taking all actions open to him “to ensure that these unfounded conclusions will be proved completely false”.

He is currently consulting his lawyers and will take action according to their advice. He also said he knew about the investigation and had cooperated fully with OLAF.

In a statement in Parliament yesterday evening, Prime Minister Lawrence Gonzi said Mr Barroso had informed him about Mr Dalli’s resignation and about the OLAF investigation. He had not yet received the inquiry report but the Commission President had told him it would be sent to Malta’s Attorney General, who would have to decide how to follow it up.

Dr Gonzi also told Mr Barroso that Malta would soon nominate another candidate to replace Mr Dalli on the EU executive.

Sources told The Times that Foreign Minister Tonio Borg was considered by the Government to be the least controversial candidate, although other names were also being considered.

The new Maltese Commissioner will serve for another two years until the mandate of the second Barroso Commission comes to an end.

Until an appointment of a Maltese Commissioner is made, Mr Barroso has tasked Commission Vice President Maros Sefcovic with Mr Dalli’s portfolio on an interim basis.

News of Mr Dalli’s surprise resignation immediately made international headlines and was reported extensively in all major European newspapers and news portals.

Mr Dalli was the second Maltese citizen, after Joe Borg, to occupy this prestigious post since Malta joined the EU in 2004.

A contender for the PN leadership in 2004, he had to resign soon after being appointed Foreign Affairs Minister by Dr Gonzi after allegations of impropriety in the acquisition of flight tickets by his ministry from a travel agency connected to his driver and his daughter.

He was also falsely accused of corruption in a major contract related to Mater Dei Hospital by private investigator Joe Zahra, who was subsequently prosecuted for fabricating a report.

After the 2008 general election, Mr Dalli was appointed Minister for Social Policy – a post he left in 2010 to become Commissioner.

Mr Dalli has had his fair share of controversies in Brussels.

Among them was his authorisation to cultivate a genetically modified potato, the publication of a diary for schools that included holidays of various religions except Christian ones and comments made during the Libyan war that he had to retract after an admonition by Mr Barroso.

Mr Dalli’s resignation is the first by an individual Commissioner for reasons of alleged impropriety.

Back in 1999, the Santer Commission resigned en masse after French Commissioner Edith Cresson, who was tainted by nepotism allegations, could not be persuaded to resign alone.

Reforms made since then make it easier for the President to force an individual Commissioner to step down.

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