The appointment of Jacques Santer to head an arm of the euro zone's bailout fund drew fire from critics on Tuesday who said he was ill-suited for the job because of his disastrous tenure as president of the European Commission.

Supporters rallied around, however, saying Santer was a capable and solid servant of the European Union.

A former prime minister of Luxembourg, Santer was president of the EU's 20-person executive in 1999 when it was forced to resign en masse over allegations of corruption.

Detractors said Santer, who was not accused of wrongdoing, presided over a Commission lacking in control over where taxpayers' money was going. It was arguably the biggest scandal to befall the EU since its founding.

Jean-Claude Juncker, the current prime minister of Luxembourg and chairman of the group of euro zone finance ministers, dismissed criticism on Monday, when the head of the bailout fund announced Santer's appointment.

The 74-year-old will head a special purpose investment vehicle designed to raise funds to defend the euro zone economy.

He served both Europe and his country in the best way possible, Juncker responded when asked if Santer was the most suitable candidate for the job.

As news spread of Santer's appointment, EU critics and anti-federalists fired out words of condemnation.

There was a huge smell in the Commission at the time, and he did nothing to take action, said Martin Callanan, chairman of the European Conservatives and Reformists group in the European Parliament.

Marta Andreasen, a member of the European Parliament's economic and monetary affairs committee, said many people would be stunned at the news.

I am sure we could find a lot of people who could do a better job than him, said Andreasen, a former EU chief accountant and now member of the anti-EU UK Independence Party.

But Luxembourg Christian Democrat Frank Engel, who was an assistant to Santer from 1999 to 2001, said Santer was a man of the utmost integrity and, as Luxembourg's finance minister for a decade, had proven success in managing a budget.

He was president of the Commission when the position was in no way comparable to what it is today. His hands were bound from the moment the problems cropped up, he said.

Prompted to defend Santer at a late night press conference on Monday, Olli Rehn, the European commissioner in charge of economic and monetary affairs, tried to make light of it, saying journalists only became critical of Santer after Commission officials beat them in a football match in late 1998.

Andreasen, however, was not inclined to be light-hearted about the appointment, saying she regarded it as an unbelievable joke that showed the weakness of the EU.

This move shows, in glorious technicolour the utter contempt from those running the EU towards the public they claim to serve, she said.

Attempts to reach Santer for comment were unsuccessful.

(Reporting by Philip Blenkinsop. Editing by Jeremy Gaunt.)