EU commissioner resigns in tobacco-lobby dispute

The case concerns Swedish Match, a Stockholm-based firm which produces snus, a mouth tobacco.

Swedish Match complained to Brussels in May that a "Maltese entrepreneur" had asked it for money in return for using "his contacts" with Dalli to influence an EU ban on snus exports.

Olaf said "no payment was made" and that it "did not find any conclusive evidence of the direct participation of Mr Dalli."

But it "did consider that he was aware of these events."

The commission noted that Dalli "categorically rejects these findings."

It added the Olaf report has been sent to the attorney general of Malta and the Maltese judiciary will decide whether to follow up.

Internal affairs commissioner Maros Sefcovic is to take over Dalli's job for the time being.

But Maltese press reports the country's foreign minister, Tonio Borg, or its former EU ambassador, Richard Cachia Caruana, might take over in the long run.

The Brussels-based NGO, Corporate Europe Observatory, says the EU capital is a theatre of intense lobbying over the final shape of a new directive on tobacco products due to be published later this year.

Ideas include a ban on point-of-sale advertising in shops - a proposal currently being fought by the London-based PR firm Luther Pendragon and CEDT, the tobacco retailers' trade body.

Back in Malta, the news of Dalli's resignation was greeted by national media with little surprise.

Dalli in 2004 stepped down as Maltese foreign minister after allegations - later judged false - that a firm controlled by his contacts was selling airline tickets to diplomats.

Back in the 1990s, he faced accusations of corruption over the sale of Mid-Med Bank for a tiny sum to foreign buyers.