BACKGROUND TO THE OWN INITIATIVE INQUIRY

1. On 16 September 2002, the Commission entered into a grant agreement with the University of Balamand in Lebanon (henceforth, the University) for the implementation of the project entitled "Strengthening the environmental legislation development and application system in Lebanon" (reference Life 02/TCY/RL/032-SELDAS). The project was jointly implemented by the UNESCO Cousteau Ecotechnie Department of the University and the Lebanese Ministry for the Environment, and lasted from January 2003 to 30 September 2005. The Head of the UNESCO Cousteau Ecotechnie Department and Vice-President of the University acted as the project coordinator. The project was concluded successfully.

2. The Commission refused to pay for certain categories of costs. More specifically, it considered to be ineligible costs related to personnel, travel, external assistance and overhead cost categories. This calculation led to the Commission on 15 May 2006 to issue a recovery order for EUR 27 686.35.

3. The main issue in connection with the costs of part-time personnel related to the salary of the project coordinator (that is to say, the complainant). In the absence of supporting evidence in the form of time-sheets, the Commission did not accept to pay for the work he had devoted to the project.

4. The complainant proposed to the Commission that these costs should have been considered eligible on the basis of both existing documentation and retroactive time-sheets which he was ready to prepare now.

5. Between 2006 and 2007, the complainant tried to reach a compromise with the Commission but his attempts were not successful. The Commission insisted on the need for him to reimburse part of the grant.

6. On 23 August and on 9 October 2007, the complainant submitted two complaints to the Ombudsman (2181/2007/VIK and 2572/2007/VIK) against the Commission. As regards the first one, the Ombudsman informed the complainant on 2 October 2007 that he could not deal with it, since the complainant had not provided sufficient evidence in support of its allegations and claims. In connection with the latter, the Ombudsman declared the new complaint inadmissible on 29 November 2007, since it had been submitted on behalf of a legal person established in Lebanon who, as required by Article 195 EC and Article 2(2) of the Ombudsman's Statute, was not considered an authorized complainant. The Ombudsman further informed the complainant that, on the basis of the evidence submitted to him, the allegations against the Commission did not appear to warrant an own-initiative inquiry on his part. Following further evidence submitted by the complainant on 30 November 2008, the Ombudsman took the view that the allegations of maladministration contained in the complaint merited further assessment. On 30 January 2008, therefore, the Ombudsman decided to open an own-initiative inquiry on the basis of the information received.[1]

THE SUBJECT-MATTER OF THE OWN INITIATIVE INQUIRY

7. Based on the information submitted by the complainant, the Ombudsman identified the following allegation:

The complainant alleges that the Commission wrongly concluded that the personnel costs for the part-time personnel and, in particular, for the project coordinator incurred in the framework of the project LIFE 02 TCY/RL/032 were not eligible.

8. The Ombudsman also identified the following claim:

The University claims that, based on the existing documentation and/or retroactive time-sheets, the Commission should accept as eligible the costs for the project coordinator as eligible and that it should not seek to recover the relevant amount.

THE INQUIRY

9. By letter of 30 January 2008, the Ombudsman opened an own initiative inquiry into the above allegation and claim, asking the Commission to submit an opinion by 30 April 2008. On 22 April 2008, the Commission submitted its opinion which was forwarded to the complainant on 28 April 2008, with a request to submit observations by 31 May 2008. The complainant sent his observations on 20 May 2008.

THE OMBUDSMAN'S ANALYSIS AND CONCLUSIONS

A. The Commission's alleged error in considering some costs not eligible

Arguments presented to the Ombudsman

10. The complainant argued that, although the Commission considered that the costs of the project coordinator, who worked for the project on a part time basis, could not be accepted, since no time-sheets had been provided, these costs should have been considered eligible on the basis of either the existing documentation or by means of "retroactive time-sheets."

11. Moreover, the complainant argued that the submission of time sheets was alien to Lebanon's tradition.

12. The complainant further argued that the Commission had failed properly to explain the issue of time-sheet requirements during the project implementation and had brought the matter to the complainant's attention only after the project had been concluded. He added that these omissions had ocurred notwithstanding the fact that a group of EC consultants had reviewed the project in December 2003, and that the Commission had accepted the interim project's report and made the corresponding payment in January 2005. He pointed out that, in his correspondence with the Commission, in particular in the latter's letters of 19 November 2004 and 31 January 2005 concerning a number of outstanding issues pertaining to the project, no mention had been made to the need for time sheets to be submitted.

13. Lastly, the complainant underlined that, in other projects, all carried out in Lebanon between 1993 and 2005 (projects LIFE 00 TCY/INT/021 - SEA; LIFE02 TCY/INT/000034 and LIFE03 TCY/RL/044 - SISPAM), the Commission had accepted "retroactive time-sheets" based on staff personal agendas and performance records.

14. The complainant argued that the project could not have been a success without his active involvement as the coordinator. In spite of that, his costs had not been considered eligible. In addition, the President of the University had accepted that the project coordinator would devote 45 % of his full-time contract to the project, a fact known to the Commission.

15. In its opinion of 22 April 2008, the Commission argued that beneficiaries, on accepting a grant, are bound by the associated financial and administrative conditions and that, lack of knowledge of these rules, cannot be accepted as a reason for non-applying them. The obligation to keep time sheets was clearly set out in the Commission's grant agreement of September 2002 (Article 4) and its annexed standard administrative provisions [SAP] (Article 21.2).

16. Furthermore, the Commission argued that, in its letter of 19 November 2004, which contained the evaluation of the interim report, and which it annexed to its opinion, its services expressed concern over the complainant's salary, and requested further detail concerning this matter. In a further response of 31 January 2005, the Commission highlighted that its services clearly stated that they might question, at a later stage, the statement of expenditure. Thus, the interim report could not be considered to have been definitely approved before the final payment. In fact, the Commission did indeed identify the lack of timesheets during a second project visit in March 2006.

17. The fact that its external consultant team did not raise this matter while monitoring the project in December 2003 by no means implied that the Commission accepted the practice because such consultants did not have any role in the management of financial resources. As set out in Article 8 SAP, the external monitoring team was only responsible to advise on the follow-up and the assessment of the technical progress. It did not have any executive powers.

18. The Commission concluded that neither the lack of comments by the consultants nor the payment of an interim instalment had given the University an expectation that the lack of timesheets could be acceptable.

19. The Commission refused that time sheets prepared on a retroactive basis had  been accepted in any other project, although it acknowledged that other detailed personal probative documents (such as staff personal agendas, project/personal diaries, and performance records) had been accepted as evidence of time spent on a project. In this case, however, the University had not presented documents of sufficient probative value in respect of the time the project coordinator had spent on the project.

20. In the Commission's view, its services had adopted an equitable and consistent approach in dealing with the University. this approach was demonstrated by its letters of 28 November 2005, 21 February 2006 or 12 April 2006, in which evidence on the work of the project coordinator had repeatedly been requested. Although the institution had had a lengthy correspondence with the complainant, no evidence had been submitted by him, which might have proved, beyond mere estimates, the time he spent on the project. In conclusion, the complainant did not supply any alternative probative documents to support time spent on the project. Therefore, the Commission properly differentiated this project from others and proceeded to issue a recovery order.

21. The Commission concluded that the matter had been "settled" in December 2007 by way of a set-off to which the complainant had not objected.

22. In his observations on the Commission's opinion, the complainant acknowledged that he was fully aware of the duties and responsibilities under the grant. In his view, the relevant provision in the contract's SAP, namely, Article 21.2, could be interpreted in a way that gives discretion to the University as to the way it wishes to establish the content of a time-sheet.[2] The Commission took, however, a different view.

23. The complainant insisted that the same criteria used in other projects as regards evidence accepted in order to prove time actually worked on the project should also be applied in this case. He annexed a number of documents which, in his view, constituted evidence of the time he had worked on the project. Although, once in the past, the Commission had already rejected these materials, the complainant considered that it should reconsider its position by exhibiting the same proactive approach it had showed in other projects.

24. Lastly, the complainant noted that he had not agreed to the set-off referred to by the Commission. He pointed out that the settlement of the recovery order by the offsetting operation executed in December 2007 was a procedural administrative matter in which he had had no input. He noted that such a solution should be temporary and open to review.

The Ombudsman's assessment

25. The rules governing the contractual relation between the Commission and the University, represented in this instance by the complainant (the beneficiary), were laid down in the contract signed between the parties on 30 September 2002[3] a document which was part of the original complaint. Article 4 of that contract provides that the administrative and financial management of the project must comply with the Standard Administrative Provisions (SAP) set out in Annex II. As laid down in Article 4.6 SAP, the beneficiary has a duty to keep all appropriate supporting documentation concerning expenses carried out in the course of the project, including time sheets, and must supply these records to the Commission.[4] Furthermore, as regards eligible personnel costs, Article 21.2 of Annex II states as follows:

"[...] The project working time of each employee (including national civil servants and governmental agency employees working for the project) shall be registered using time sheets established and certified by the beneficiary and its eventual partners."(emphasis added)

26. On the basis of the above provisions, the Ombudsman considers that the Commission was legally entitled to request that the University, which had agreed to the contractual obligations, should justify costs claimed concerning work undertaken by the project's part-time employees (such the complainant) by time sheets, which should be regarded as supportive evidence of such expenditure. It appears uncontested, however, that the University, in reply to the Commission's specific demand, never established any type of time sheet and, as a result, the complainant failed to submit such evidence in order to prove the costs related to his work for the project.

27. The Ombudsman is mindful, however, that, as the complainant argued, time sheets as a means to justify costs seem to be alien to the local culture, and do not form a part of the University or of its partners' verification procedures. It could thus not be excluded that, when signing the contract, the concept of "time sheet" was foreign to the University. The fact that the University failed to submit any type of time sheets, even if it was free to establish their content pursuant to the above Article 21.2 SAP, reasonably shows that the University was unclear as to the probative nature of this kind of document as a means of establishing work effectively carried out. It is common knowledge that, in certain cultures, declarations of honour in contractual relationship can prevail over any other probative documents.

28. In this context, it is also worth mentioning that, when doubt exists concerning the meaning of a contractual term which was not individually negotiated, but was imposed by one of the parties (the Commission includes the SAP to this kind of contracts as a matter of principle) its interpretation could be done contra proferentem, that is to say, it can be construed against the party that imposed its inclusion in the contract in case such term is ambiguous.The Ombudsman recalls however that a binding interpretation of the present contract can only be given by the Community courts.[5]

29. Moreover, it appears that the Commission did not explain the concept of time sheets to the University, when signing the contract. The Ombudsman notes that the Commission only brought the matter of time sheets to the complainant's attention in its letter of 28 November 2005, once the project had been completed.[6]

30. Neither the external monitoring team which assessed the project in December 2003, nor the Commission, in its 31 January 2005 review of the interim report submitted by the beneficiary on 10 September 2004, made reference to the need for time sheets. As the Commission has argued, the Ombudsman acknowledges both that the role of the external monitoring team, as laid down in Article 8.1 of the SAP, is only to assess the project's progress at a technical level without any involvement in the management of financial resources; and that the Commission's letter of 31 January 2005 included a safeguard provision whereby it had the right to question any matter related to expenditure at a later stage and before final approval. Nevertheless, the Ombudsman considers that it would have been in the interest of both parties had the Commission identified the problem at an early stage, so that an explanation of the nature of time sheets could have been envisaged at the time.

31. The Ombudsman notes that the Commission has declared its willingness to consider other supportive evidence, instead of time sheets, which might prove that the costs in question corresponded in fact to work effectively devoted to the project. In this connection, it has referred in particular to probative means such as staff personal agendas, project/personal diaries, and/or performance records. On the other hand it appears reasonable in terms of sound financial management not to include among such probative means "retroactive" time sheets.

32. The Ombudsman notes that, in reply to this offer, the complainant has submitted a number of documents which, in his view, provide the evidence requested to prove the complainant's work on the project. Yet, the Commission took the view that these documents were merely an "estimate" of the time worked on the project, and did not prove the actual time spent on it. It therefore concluded that they could not be used to justify certain costs.

33. The Ombudsman has carefully reviewed the above documents prepared by the complainant and enclosed with both his complaints and observations. These materials include, (i) an email from the complainant to the President of the University in which he indicated that he expects that his role for the project "entails committing 45% of my time to the Project"; (ii) a one-page break down of the tasks he undertook as project coordinator from August 2001 to April 2006, distributed under five different time periods (August 2001-November 2001; December 2001-August 2002; September 2002-February 2003; March 2003-September 2005; and October 2005-April 2006); and (iii) a one-page table entitled "Time Estimation Per Task" which apportions a number of hours to each of the tasks undertaken for the project.

34. In view of their contents, the Ombudsman considers that the Commission's position on the documents in question appears reasonable, since these materials can only be viewed as a general ex-post estimate which neither provides evidence of actual time devoted to the project nor can be used as a basis to infer such evidence with an adequate degree of certainty. It appears, therefore, that such documents cannot reasonably be equivalent to "staff personal agendas, project/personal diaries, and performance records" that have been accepted by the Commisison instead of the time sheets in other Lebanon projects.

36. In view of the above findings, the Ombudsman does not consider it necessary to pursue further inquiries in this case. He finds it useful, however, to draw the Commission's attention to the fact that, in the interest of fairness and equitable contractual relations, it may consider instructing the other party to a contract who is not familiar with the European legal culture on the meaning of some potentially contentious legal terms included in the contract, such as the requirement of time sheets in the present case. That would avoid similar problems from happening again in the future.

B. Claim for the payment of the costs incurred by the project coordinator

Arguments presented to the Ombudsman

37. The complainant claimed that, based on the existing documentation and/or retroactive time-sheets, the Commission should accept as eligible the costs for the project coordinator as eligible and that it should not seek to recover the relevant amount.

38. The Commission argued that the claim was not justified for the reasons set forth in points 15-21 above.

The Ombudsman's assessment

39. In view of the above findings, in particular the conclusions reached in points 26 and 35-36, whereby the Ombudsman concluded that the position taken by the Commission does not appear to be unreasonable, the Ombudsman does not consider that the complainant's claim can be sustained.

C. Conclusions

On the basis of his inquiries, the Ombudsman does not consider it necessary to pursue further inquiries. The Ombudsman therefore closes his own-initiative inquiry.

The complainant and the Commission will be informed of this decision.

 

P. Nikiforos DIAMANDOUROS

Done in Strasbourg on 10 July 2009

---

[1] The Ombudsman excluded from his inquiry, however, one of the allegations and claims made by the complainant in his complaints, concerning the illegibility of third party contributions, because they were not supported by sufficient evidence.  The Ombudsman informed the complainant accordingly.

[2] "[...] The project working time of each employee (including national civil servants and governmental agency employees working for the project) shall be registered using time sheets established and certified by the beneficiary and its eventual partners."

[3] Contract-Life Third Countries granting financial support under Article 5 of Regulation of the European Parliament and the Council (EC) N° 1655/2000 (LIFE Third Countries) to the project "Strengthening the Environmental Legislation  Development and Application System in Lebanon" (LIFE02 TCY/RL/032).

[4] "The beneficiary shall maintain up-to-date books of account, in accordance with the normal accounting conventions imposed on him by law and existing regulations. He shall keep all appropriate supporting documentation for all expenditure, income and revenue of the project reported to the Commission (including copies of those of partners and subcontractors), such as invoices, time sheets and the documents used for the calculation of the overheads. The documentation shall be complete, precise and effective."

[5] Article 19 SAP (Jurisdiction):

"The Court of First Instance and, in the event of an appeal, the Court of Justice of the European Community is the only one qualified to rule on any dispute concerning the project and occurring between the Commission and the beneficiary."

[6] "Overall the report is well presented and comprehensive and most key deliverables have been provided. However, there are a number of technical and financial aspects that need to be clarified before considering your final payment request. These are detailed in Annex 1. We will examine your response and use that to calculate our contribution to the project."

"Annex 1 - Financial aspects - 1) Personnel costs: we are concerned that your record keeping has not complied with Article 21.2 and we sill need to verify that the records you have kept meet our needs. Consequently I request that you provide your 'monthly time records' for [...]."