Danish right-wing party hurt by EU fraud investigation

The right-wing Danish People's Party (DF) is the second largest party in parliament and the biggest ally of the Liberal government but its popularity has fallen from an all-time high of 21 percent at national elections in June last year to 16.6 percent, according to the survey by Epinion for state media.

The poll of 1,596 voters suggests that the anti-immigration DF, would loose eight of its 37 seats in Denmark's 179-seat parliament if elections were held today, Epinion said.

The European Anti-Fraud Office (OLAF) has confirmed it is investigating two pan-European political groups that DF belonged to, the Movement for a Europe of Liberties and Democracy (MELD) and Foundation for a Europe of Liberties and Democracy (FELD), to see if they misused grants paid by the European Parliament.

DF says it has tried to reimburse the parliament around 400,000 euros, some of which it used for domestic campaigning rather than at the European level.

The parliament says it cannot take the money until OLAF finishes its investigation, which could lead to legal or disciplinary action.

At centre of the controversy is DF member Morten Messerschmidt, the biggest vote-winner in Danish history at the 2014 European elections, who was part of MELD's management in 2012-15 and, as its president, approved some of the spending.

In August, Messerschmidt stepped down as party chair in the EU and has since been ousted from the party's management. He has also been reported to the police for identity theft by a fellow party member who says he appointed her to the MELD board without her knowledge.

Messerschmidt, who has gone on indefinite sick leave, was unavailable for comment.

DF group chairman, Peter Skaarup, said of the OLAF investigation: "We think it's good, that this is being thoroughly investigated to get a completely clear picture of what has happened."

"We did not have things under control regarding the EU grants. It affects the Danes when a political party seems to be in disarray," Skaarup told Reuters.

Danish voters have reacted badly to the whiff of scandal, Kasper Hansen politics professor at Copenhagen University said.

"The reason this hits the party so hard is, that the party itself has run a hard-line policy against fraud and bureaucracy in the EU, and then they get caught red-handed themselves," Hansen told Reuters.

"We know that voters punish political hypocrisy very hard."

(Reporting by Nikolaj Skydsgaard; Editing by Jacob Gronholt-Pedersen and Robin Pomeroy)