EU's top court hears dispute over EU Commissioner Dalli

John Dalli categorically rejected the EU anti-fraud body's findings

The head of the European Commission has told the EU's top court that the entire Commission's reputation was at stake when a Maltese member of his team was found to have acted improperly.

Jose Manuel Barroso was defending his treatment of ex-Health Commissioner John Dalli, who left his job in 2012.

Mr Dalli had been accused of improper links to tobacco lobbyists.

Mr Barroso told the EU Court of Justice that he had little choice but to tell Mr Dalli to go.

The former health commissioner told the judges in Luxembourg that his resignation amounted to a dismissal and that he had been treated unfairly by Mr Barroso.

"It was not a meeting, it was an ambush," Mr Dalli said, referring to a key meeting with Mr Barroso on 16 October 2012. That was when Mr Barroso read out allegations against him contained in a secret report by EU anti-fraud agency Olaf.

"The facts were manipulated. I did nothing wrong," Mr Dalli told the court, alleging that the presumption of innocence had been violated and that he had been denied sufficient time to argue his case.

Mr Dalli is demanding compensation from the Commission for loss of earnings. In his plea to the court he also wants an annulment of Mr Barroso's request for his resignation and a symbolic award of one euro (£0.80; $1.4) in damages for the reputational harm he says he has suffered.

Tobacco links

Mr Barroso (centre) says there was a political imperative for Mr Dalli to resign

According to Olaf, a Maltese businessman friend of Mr Dalli had sought a "considerable" payment from a Swedish producer of oral tobacco, called snus. Under the proposal Mr Dalli would then lift an EU ban on the product. Currently only Sweden has an exemption from the ban.

Olaf said it had "unambiguous and converging circumstantial pieces of evidence" that Mr Dalli knew of the alleged bribery attempt by businessman Silvio Zammit.

In his statement as a witness in the case Mr Barroso said: "I told Mr Dalli it would be better for him to resign on his own initiative, to clear his name.

"If he did not follow that path, I told him that as president of the Commission, I would have to ask him to resign in keeping with Article 17 (6) of the Treaty."

He accused Mr Dalli of having had "strange contacts" with the tobacco industry "outside the Commission - many thousands of kilometres outside - without any officials being present".

Question of integrity

Mr Barroso said that as a lawyer he believed in the presumption of innocence, but that "here we are speaking about political conditions... it was no longer tenable for him to continue".

He said that in his 10 years as Commission president he had never experienced a similar situation, with such "serious allegations against the integrity of a commissioner directly related to the exercise of his duties". "And I never experienced a similar loss of confidence!" he added.

He said the Commission's integrity had been put at risk, in a way that could have been as damaging as the scandal in 1999 which forced Jacques Santer's Commission to resign en masse.

The judges' verdict is not expected before the new Commission takes office in October.

In 2012 Mr Dalli was preparing tough new EU legislation - a reform of the Tobacco Products Directive - to make smoking less attractive. It would also affect snus.

Tobacco producer Swedish Match said it had been asked to pay 60m euros (£49m; $79m), and in return the commissioner would water down the new legislation.

Mr Dalli was replaced in November 2012 by fellow Maltese politician Tonio Borg.