Timesonline,  Nicola Smith and Jon Ungoed-Thomas, 8/6/2008

Two Tory MEPs have resigned in a week, but the trouble has not stopped there for the Tory leader

THE former Tory minister Sir Robert Atkins had every reason to be satisfied at the American wedding of his son James in November 2006. His flight to New York had been paid for from his official travel allowance as an MEP.

As he surveyed the happy event in Montclair, a town a few miles from New York, he might also have given the Brussels bureaucrats thanks for the opportunities they had afforded his family. His wife Lady Dulcie Atkins worked for him as a secretary in the European parliament and his son James had worked for him in Brussels until 2004.

Atkins’s expenses, along with those of the rest of his colleagues, are now under scrutiny after Giles Chichester resigned as Conservative group leader over his own payments. The Sunday Times revealed last week how Chichester had channelled £445,000 of parliamentary funds through a family firm.

The disclosure caused particular disquiet at Conservative headquarters because Chichester had been tasked by David Cameron to ensure Tory MEP expenses were beyond reproach. Cameron will now send Hugh Thomas, the party’s head of compliance, to Brussels this week to scrutinise MEPs’ expenses, which can be worth up to £280,000 per year a member.

Atkins, 62, has defended the use of public funds for the wedding trip, which were approved by the parliamentary authorities. He says it coincided with the congressional mid-term elections and he was invited to America by the Republicans.

He also defends putting his family on the Brussels payroll, saying his wife is a qualified secretary and also worked for him as an MP and minister. He says he hired his son after he left university, but he was subsequently head-hunted.

Like many MEPs, Atkins pays his employees via a “paying agent”. He says he uses an independent firm of chartered accountants, but is not required to disclose the firm’s identity or to publish any accounts. He also pays two unidentified “service providers”, companies or consultants paid for parliamentary work.

Atkins, a former transport, sport and Northern Ireland minister, declares Lady Dulcie is currently paid £30,000-£40,000 for her secretarial services. Internal European parliamentary accounts for 2002 show she was paid £5, 269 in one month – a figure denied by Atkins – while the couple’s son James was also paid £2,513 in one month.

Atkins has not broken any rules, but the European parliament faces growing questions about the number of MEPs’ relatives employed in Brussels and the opaque role of the paying agents and service providers. The abuse of the system by some MEPs was highlighted in February in a confidential report by the European Union.

According to the report, one MEP paid a Christmas bonus to an assistant which was 19 times larger than his salary. The report also reveals an MEP’s allowance was paid to a company where the business appeared to be trading in timber.

“This report is dynamite,” said Chris Davies, the Liberal Democrat MEP. “Let’s be quite honest. I think the allegations within this report should lead to the imprisonment of a number of MEPs. I think it’s embezzlement and fraud on a massive, massive scale.”

Labour MEPs have largely been free of controversy because since 2000 their allowances have been paid through an independent auditor.

While in Westminster MPs have been repeatedly challenged over their expenses, the European parliament’s largesse with public funds has been on such a spectacular scale that allegations of waste or misuse have often been greeted with some indifference. It has long been an accepted practice of some British MEPs to fly to Brussels on a budget airline ticket and claim back the cost of a more expensive flexible return ticket.

In March this year, The Sunday Times revealed how Chichester and Den Dover, the Conservative chief whip in Europe, were paying relatives as employees through family firms. Chichester used his family company Francis Chichester Ltd, a map supplier, for the payments. The company is based at his family’s residence in central London. When Chichester was asked to explain the services a map company could provide an MEP, he replied, “I don’t think I need to.”

Last weekend, The Sunday Times revealed how money had been channelled through his family company for “secretarial and assistant services for the European parliament”. Chichester subsequently admitted it was a “technical breach” of the rules because MEPs are not permitted to pay staff via a company in which they have an interest.

The MEP, who is the son of the yachtsman Sir Francis Chichester, said in a television interview on Wednesday: “It is embarrassing, not least because I have introduced a new code for my Conservative colleagues for expenses. Here I am leading that process for the last couple of months and – whoops-a-daisy – I am shown to have made a mistake.”

On Thursday, Chichester, 61, MEP for southwest England, resigned the leadership of the European Tory group, saying he needed more time to demonstrate that monies were “properly spent and accounted for”. By then, Dover, the party’s chief whip, was also facing questions about the financial arrangements for his expenses.

Dover, 70, the MEP for northwest England, has paid up to £750,000 to his family company MP Holdings, which is based at the family home in Borehamwood, Hertfordshire. The directors are his wife Kathleen, 68, and his daughter Amanda, 40.

Kathleen Dover is paid at least £30,000 per annum for secretarial work for the European parliament and Amanda is paid about £20,000. According to parliament’s register of assistants, neither are registered to use official buildings in Brussels or Strasbourg and it was reported yesterday that Amanda also works as a part-time travel agent.

Dover, who says he has not broken any rules, said: “They get market rates, but they put in two or three times the number of hours – they just never stop, and I pay tribute to their hard work. Therefore I am totally innocent of any charges.”

Over the past eight years, MP Holdings has spent £56,411 on motoring expenses, £19,073 on travel and £75,397 on postage and stationery. The company has also spent about £32,000 on repairs, which are believed to have been carried out on Dover’s family home. He has not disclosed whether these were paid for out of parliamentary funds.

Neighbours have been suitably impressed with the improvements to Dover’s detached home. One of them, Michael Jachimowicz, said the renovations included a large new porch, a loft and secure garage extension. “There is no one house equal to that around here,” he said. “It is quite phenomenal.”

Dover was replaced as the Tory chief whip on Friday. The Conservatives said the move was unrelated to his expense claims.

A third Tory MEP, John Purvis, who represents Scotland, has also been revealed to be using a firm in which he has an interest for allowances. Purvis, an MEP since 1999, has been paying staff allowances of up to £120,000 per annum through a consultancy, Purvis & Co, in which he is a partner.

Purvis said he had asked the European parliament for clarification “as far back as January 2007” on his staffing arrangements, but had not received a response. He is entitled to receive profits from the consultancy firm, but does not believe he has done anything wrong.

Purvis & Co is based at the sprawling farming estate where Purvis lives in St Andrews, Fife. The property has its own tennis court and is reached via a tree-lined driveway in one of the country’s most exclusive areas.

The disclosures are likely to lead to a closer scrutiny of MEPs’ expenses, not least by their political masters in London. Hugh Thomas, a former ethics supervisor at Deutsche Bank, who is being sent to Brussels by Cameron to check Tory expense procedures, faces a tough task.

If any MPs are found guilty of serious misconduct, the Conservative party’s most serious sanction would be deselection. The European elections are in 2009 and MEPs will be anxious to ensure they keep their seats.

Other MEPs from other parties also face investigation over their expenses. Tom Wise, a UK Independence party MEP is being investigated by police over allegations first revealed in The Sunday Times that he claimed £36,000 a year in the name of a researcher paid a fraction of that sum.

MEPs are also unlikely to call for any significant changes to the allowances system. “The reformers are always voted down,” said Chris Davies, the Lib Dem MEP.

A survey by The Sunday Times in February showed that about one third of all UK MEPs employ a family member, but few are willing to provide financial details.