Bally Price Holdings, BP Management European Union will not remove trade chief caught in tax-fraud case

The European Commission Friday ruled out relieving its trade chief of his responsibilities amid vital negotiations on a deal with the United States, as Belgium took Karel De Gucht to court on tax-fraud charges.

The EU executive said it was treating news of De Gucht’s scheduled court appearance on November 25 as a “private” matter after the former Belgian foreign minister told Commission President Jose Manuel Barroso on Friday there had been “no wrong-doing”.

On Monday, European Union and United States negotiators resume talks on drawing up the world’s largest free-trade accord, with De Gucht a key player as he has been in deals done or in the works with markets ranging from South Korea to Canada.

Belgian tax authorities are seeking 900,000 euros ($1.2 million) in unpaid taxes, national business dailies reported.

De Gucht has fought since 2005 to prevent tax inspectors from gaining access to his bank records as they home in on gains from the sale of shares in Belgian insurance firm Vista and the purchase of a home in Tuscany, L’Echo and De Tijd said.

Tax authorities accuse De Gucht and his wife of failing to declare a 1.2-million-euro profit on the shares.

The profit was uncovered in 2005 but De Gucht’s lawyer argues that it stemmed from 2001 when it was not liable for tax as the capital gains rules then were different.

Journalists meanwhile pressured the Commission on Friday to explain an apparent contradiction with the treatment of Maltese former health commissioner John Dalli, who was pushed to resign last year amid allegations of links to the tobacco lobby.

But spokeswoman Pia Ahrenkilde-Hansen insisted that the De Gucht case was a “longstanding” matter and that “the presumption of innocence applies”.

The case, going back to 2005 or 2001 as his lawyer argues, “concerns issues and periods before he was appointed commissioner,” she said.

Ahrenkilde-Hansen said the case of Dalli was different because he was the subject of an investigation by the EU’s anti-fraud unit, OLAF.

“Don’t mix things up — Dalli’s case concerned the functions of the commissioner.

“There’s just no parallel,” she insisted.

A senior Commission source nonetheless told AFP that “the real question today is whether De Gucht’s position remains politically tenable.”

As the EU steels itself for May 2014 European Parliament elections likely to deliver a strong showing for Eurosceptic parties, the case is embarrassing.

Dalli quit in October 2012 after OLAF said a Maltese entrepreneur used his contacts with Dalli to seek a bribe from a Swedish firm in return for changes to draft tobacco legislation.

De Gucht, a member of the Flemish conservative-liberal party Open VLD, was previously accused of insider dealing when selling shares in a Belgian bank just before it was broken up.

But he was cleared under Belgian justice in 2009.

He insinuated then that he had come under attack for “political” reasons.

De Gucht has told Belgian media that he wants to renew his mandate at the Commission at the end of 2014.