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Reuters: Romanian PM dismisses tax chiefs over EU funds fraud inquiry

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Romania's prime minister sacked the head of the tax authority and his deputy on Thursday, a day after anti-corruption prosecutors said they were being investigated as part of a wider probe into alleged misappropriation of European funds.

The government press office confirmed Gelu Diaconu and his deputy Mihai Gogancea-Vatasoiu had been dismissed after Prime Minister Dacian Ciolos said he was waiting for Finance Minister Anca Dragu to propose replacement tax chiefs.

"For me, what is most important is that the tax authority remains a credible institution," Ciolos told reporters.

Diaconu and Gogancea-Vatasoiu had been asked to resign by Dragu on Wednesday, but declined to so.

In a statement published on the tax authority's website, Diaconu denied any wrongdoing and described the case as "Kafka-esque". "One prosecutor's actions are destabilizing an institution that is vital to the Romanian state," he added.

Gogancea-Vatasoiu could not be contacted for comment on Thursday.

Prosecutors said on Wednesday that two Romanian lawmakers and eight other persons had allegedly defrauded two projects worth a total 27.25 million lei ($6.91 million) aimed at supporting the underprivileged Roma minority.

Prosecutors also asked parliament to approve a criminal investigation against lawmakers Nicolae Paun and Madalin Voicu in the same case. Under Romanian law, parliament must approve inquiries into sitting lawmakers.

They allege that Diaconu and Gogancea-Vatasoiu signed papers that exempted those involved in the projects from tax.

Romania's anti-graft prosecutors have been praised by Brussels for their efforts and last year had a conviction rate of over 90 percent. The tax authority has been through an overhaul aimed at helping it combat widespread tax evasion, and collection improved in 2015.

Romania is seen as one of the European Union's most corrupt states and its justice system is closely monitored by Brussels, which has suspended payment of development funds several times due to irregularities. Its reputation for graft has deterred foreign investment while tax evasion and bribery are a drain on public finances.

Anti-corruption prosecutors have cracked down hard on high-level abuses in recent years, investigating lawmakers, cabinet ministers, mayors and even former prime minister Victor Ponta.

Human rights groups have often accused Romania - home to up to 2.5 million Roma, or roughly a sixth of the population - of not doing enough to improve their living standards or job prospects. Bucharest and Brussels have earmarked funds for better integrating the Roma, Europe’s largest ethnic minority.

Paun and Gogancea-Vatasoiu have declined comment. Diaconu denied wrongdoing, according to state news agency Agerpres. Voicu said he had yet to see details of the case.

Late on Wednesday, Finance Minister Anca Dragu demanded the resignation of the two tax chiefs.

"The tax authority is one of the most important institutions in Romania and its managers must be above suspicion," Dragu said in a statement.

The investigation is the latest in a crackdown on high-level corruption in the EU state where graft has deterred foreign investment and tax evasion and bribery are a drain on public finances.

Anti-corruption prosecutors have also been paying special attention to cases that involve EU development funds. The European Commission has suspended payments several times due to irregularities.

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