* EU fraud office makes biggest ever haul
* But says tip-offs by public institutions slide
* EU parliament members unhappy about office searches
By Ethan Bilby
BRUSSELS, July 3 The European Union's anti-fraud body recovered a record 691 million euros ($870 million) last year, it said on Tuesday, but expressed concern that public bodies were getting more reluctant to tip it off for fear of damaging national reputations.
The European Anti-Fraud Office (OLAF) - which investigates fraudulent use of EU funds and wrongdoing within EU institutions - saw an increase in private tip-offs thanks to a new Internet notification system, it said in its 2011 annual report.
But information from EU institutions and member states was becoming more scarce, said OLAF's director-general.
"This decrease in information from public authorities worries us," Giovanni Kessler told reporters.
Many of the larger fraud cases concern EU Structural Funds, which pay for regional infrastructure projects and are overseen by member states. One such investigation, into the financing of road works in Italy, yielded 389 million euros in recovered EU funds last year.
Member states may under-report instances of fraud to give the appearance of better ranking in corruption tables, but the growing cross-border nature of such crimes meant that assigning national blame was not useful, Kessler said.
"It's not a European Championship in the ranking," he said, adding that organised criminals increasingly shop around for countries with lax corruption regulations or low transparency for their transactions.
Scrutinising EU institutions themselves, Kessler said OLAF had come into conflict with some members of the European Parliament (MEPs) when, during an investigation into accepting payments for adding amendments to legislation, OLAF was barred from entering their offices.
The agency eventually succeeded in gaining access, but after a considerable delay. Two of the politicians targeted by the probe later resigned, and OLAF recommended judicial action against a third.
Kessler said that although it had since been clarified that OLAF does have the power to enter the offices of MEPs, some politicians still want to limit its powers.
Ingeborg Graessle, a German Christian Democrat who is leading a parliamentary review of OLAF said access to MEPs' offices violates their parliamentary immunity.
"We asked to make clear that there is no access to members' offices to OLAF. OLAF is disputing our immunity," Graessle Told Reuters.
Normal citizens are protected from unwarranted searches and EU officials are protected by staff regulations, but members of the European Parliament are left unprotected, Graessle said.
"This makes us the least protected group within the whole European Union." ($1 = 0.7947 euros) (Editing by Robin Pomeroy)