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I had the same problem a few years ago in my E39 March '02 Saloon 520' SE A and got a garage to fix it. They fiddled and fussed and eventually replaced the a/c compressor!  This did nothing as later the system failed again after several months so i bought a replacement 'hedgehog' (Fan speed control module, that fits under the centre consul on the steering wheel side).  It worked again! Alas, again the following year it stopped again and i renewed the hedgehog again.  The third time I was facing the same problem I thought the fan had gone intermittent and unplugged the hedgehog to access the fan power plug/socket and inject some test volts - but I found to my amazement, that the main power contact on this small plug assembly showed burn marks and evidence of power 'fizzing', making the contact unreliable!  I cleaned the pin and socket up as much as I could and because the socket looked a little 'stretched', I inserted a very small piece of aluminium foil into the socket, overlapping the top (to stop it being pushed inside) and carefully put the plug assembly back together.  Bingo! I had no further problems.

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