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Proposal of the European Ombudsman for a solution in the inquiry into complaint 1689/2015/PHP against the European Commission concerning subsidies co-financed by the European Social Fund

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This complaint was treated as confidential. This document has therefore been anonymised.

  • Case: 1689/2015/PL
    Opened on 19 Nov 2015 - Decision on 06 Jul 2017

Made in accordance with Article 3(5) of the Statute of the European Ombudsman[1]

The background to the complaint

1. The complainant is a Spanish association that organises training for unemployed people. In 2011, the complainant received some subsidies to cover the costs of this training. The subsidies were co-financed by the European Social Fund (ESF). Under the relevant rules, the ESF would cover 80 per cent of the total amount and the local authority the remaining 20 per cent. The latter would also be in charge of the payment of the total amount.

2. The payment of the subsidies would take place in 3 steps. However, the complainant received the first payment only. Thus, it sought assistance from several local authorities. Two local authorities issued two administrative orders in relation to some of the amounts owed, acknowledging that the complainant was entitled to receive those amounts and ordering the authority in charge to pay them. However, the complainant never received those payments.

3. The complainant raised the matter with several national authorities, political parties, members of the Spanish Government and members of the European Parliament. Finally, the complainant complained to the European Commission.

4. On 17 June 2015, the Commission informed the complainant that it had contacted the national authority in charge of the management of the ESF in Spain (Unidad Administradora del Fondo Social Europeo - "UAFSE"), which replied that there was no evidence of "certified expenses" in favour of the complainant. Therefore, the Commission invited the complainant to pursue the matter at national level.

5. The complainant forwarded to the Commission the documents published in the local official journal awarding the subsidies to the complainant, as well as the above mentioned administrative orders (see paragraph 2).

6. Given the Commission's failure to deal with its complaint, the complainant turned to the Ombudsman.

The inquiry

7. The Ombudsman opened an inquiry and identified the following allegation and related claims:

Allegation

The Commission failed to give a proper follow-up to the complainant's complaint concerning the payment of a number of subsidies co-financed by the European Social Fund.

Claims

1) The Commission should provide the complainant with a follow-up concerning the payment of a number of subsidies co-financed by the European Social Fund.

2) The Commission should adopt the necessary measures to ensure that the national authorities pay the complainant the remaining amounts of the subsidies.

8. Following the Ombudsman's opening of the inquiry, the Commission contacted the national authorities with responsibility in this area. The Local Education Department replied that issues related to professional training were no longer its responsibility and that these matters were now the responsibility of the Local Employment Department. The Commission tried to contact that department, without any reply. The Commission also contacted the Spanish Permanent Representation in Brussels, which contacted UAFSE. UAFSE replied that it had also tried contacting the local authorities, without any success either.

9. Having examined all the information at her disposal, the Ombudsman has decided to make a proposal for a solution.

Arguments presented to the Ombudsman

10. The Commission has argued that it tried to contact the local authorities on several occasions, and through different channels, in order to assist the complainant. However, since UAFSE had said that it never received a "certification of expenses" in favour of the complainant, the Commission could not do anything else in that regard.

11. The complainant repeated that it was entitled to the subsidies in question. It had thus organised and implemented the training accordingly, at its own expense and on the expectation that all the amounts due would finally be paid. The complainant found it unacceptable that the Commission is satisfied with UAFSE's response that there is no "certification of expenses" in its favour and that, without that certification from the local authority, it cannot intervene. In fact, the complainant has provided the Commission with documents that prove that it is entitled to the amounts it is claiming. The Commission should therefore take action to ensure that the subsidies, partly funded by the EU budget, are fully paid.

The Ombudsman's preliminary assessment leading to the solution proposal

12. The Ombudsman welcomes the fact that, after the opening of this inquiry, the Commission tried to contact the local authorities on several occasions, including through the Spanish Permanent Representation in Brussels. She also acknowledges that the Commission has kept the complainant informed in that respect.

13. However, in the Ombudsman's view, the Commission has fallen short of what it is required from it under the relevant rules.[2] The Ombudsman notes that, according to these rules, the Commission shall satisfy itself that the Member States have set up management and control systems, and that the systems function effectively during the periods of implementation of operational programmes. In this respect, the Commission is empowered to carry out on-the-spot audits to verify the effective functioning of the management and control systems. The Commission may also require a Member State to carry out an on-the-spot audit to verify the effective functioning of systems or the correctness of one or more transactions.[3]

14. Having examined the documents at her disposal, the Ombudsman considers that the Commission had sufficient evidence to, at least, doubt the effectiveness and proper functioning of the management and control systems in this case.

15. Furthermore, the Ombudsman notes that, as regards the ESF, the EU courts have stated that the competent authorities in the Member States must implement the programmes under the Commission's direction, and that the final decision concerning the grant of EU assistance lies exclusively with the Commission. The underlying idea is to ensure that the same criteria apply to all economic operators.[4]

16. Under the relevant rules the local authorities have the obligation to certify the expenses that have been incurred.[5] Once those expenses are certified, the final decision on that proposal should then be taken by the Commission.

17.  In this case, the Ombudsman finds that the Commission had enough evidence to establish that the expenses claimed by the complainant should have been certified by the local authority. The Ombudsman does not accept the Commission's position that it has done everything possible within its competences and powers to assist the complainant in receiving the remaining payments owed. The Ombudsman considers that the relevant rules provide the Commission with means to carry out additional checks to ensure the effective functioning of the management and control systems or the correctness of one or more transactions (Article 72 Regulation 1083/2006).

18. The Ombudsman thus makes the preliminary finding that the Commission has failed to make use of all of the means at its disposal to ensure the above objective. In fact, faced with the lack of cooperation from the local authorities responsible, the Commission could have carried out on-the-spot audits or required the Member State concerned to carry out such an audit. The Ombudsman therefore makes a proposal for a solution below, in accordance with Article 3(5) of the Statute of the European Ombudsman.

The proposal for a solution

The Commission should take all the steps open to it to ensure that the complainant is paid the remaining subsidies due. The Ombudsman proposes therefore that the Commission make use of the means at its disposal in order to ensure the effective functioning of the management and control systems in this case. In particular, the Commission should take the necessary actions to further investigate why the relevant local administration failed to certify the expenses incurred by the complainant.

Strasbourg, 06/09/2016

European Ombudsman

 

[1] Decision of the European Parliament of 9 March 1994 on the regulations and general conditions governing the performance of the Ombudsman's duties (94/262/ECSC, EC, Euratom), OJ 1994 L 113, p. 15.

[2] Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (applicable for the 2007-2013 period)

[3] Article 72 Regulation 1083/2006.

[4] Judgment of the Court of 25 January 2001, C-413/98 - Frota Azul-Transportes e Turismo, ECLI:EU:C:2001:55

[5] See also Article 61 Regulation 1083/2006.