EU anti-fraud authorities are investigating alleged corruption in the wine alcohol trade. They are looking into whether traders have been manipulating the system under which excess production distillation wine is auctioned off.
 
European wine alcohol is used in the US by companies such as Archer-Daniels-Midland Co. to make ethanol. The EU investigators confirmed to the Wall Street Journal that it was investigating allegations made in the US Congress that ADM colluded with other bidders at European wine auctions.
 
The European Anti-Fraud Office said it started its investigation in 1998 and "is investigating suspicions of fraud and possible manipulation of the market."

In addition to the corruption of EU officials, sources suggested the probe could also be investigating whether some of the wine alcohol had been doctored and sold as regular wine in the Caribbean, where some of the distilled wine destined for the US is processed.

The wine alcohol business is key to the EU's system of dealing with overproduction in areas such as Spain, Italy and France. Surplus low quality wine is distilled to 95% pure alcohol and auctioned off several times a year. The auctions take place under the auspices of the Wine Management Committee of the European Commission.