Decision of the European Ombudsman on complaint 47/2002/PB against the European Commission

Dear Mr T.,

On 8 January 2002, you made a complaint to the European Ombudsman against the European Commission, concerning grants from the JOP Programme.

On 29 January 2002, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 27 March 2002. I forwarded it to you with an invitation to make observations, which you sent on 22 May 2002.

I am writing now to let you know the results of the inquiries that have been made.

THE COMPLAINT

In January 2002, the complainant submitted allegations against the European Commission on behalf of his clients, W and B. The complaint concerned grant entitlements from the European Union's JOP Programme, a programme under Phare-Tacis.

According to the complainant, the Commission owed his clients 'Facility 2' grant from the JOP Programme. Client W had made its application for a grant in April 1999, and client B made its application in November 1999. Following these applications, contracts were entered with the Commission.

However, no payment from the Commission had been made. The complainant stated that the Commission kept asking for additional information to settle the payments. He stated that this information could have been requested a long time ago. He also pointed out that he considered the administration of the projects to have been extremely cumbersome.

The complainant's clients also faced problems with 'Facility 3' grant applications. The complainant appeared to consider that money should already be due to his clients in respect of these applications.

Thus, the complainant alleges that the Commission is unduly delaying payment of grants from the JOP Programme to his two clients, W and B.

The complainant claims a prompt resolution of the matter.

THE INQUIRY

The Commission's opinion

The complaint was forwarded to the Commission for opinion. The Commission submitted, in summary, the following opinion:

Introduction

JOP is an EU programme that provides financial assistance to companies interested in forming joint ventures (JV) in Eastern Europe. For its implementation, the European Community has signed Framework Agreements (FAs) with Financial Intermediaries (FIs) which provide the link between the Commission and the JOP Beneficiaries.

The FI responsible for the projects here in question is a bank in the United Kingdom (hereinafter the Bank) and the relevant FA is version 15.5.1998 signed on 19.10.1998 between the Commission and the FI.

For each approved project, the Commission signs a "Specific Agreement" (SA) with the responsible FI which in turn signs a "financing agreement" (FinA) with the Beneficiary specifying the terms and conditions of the JOP financing.

Following the receipt of the complaint, the Commission asked the FI on 14.2.2002 for copies of the complete correspondence they had in their files concerning the projects in question. Based on the review of this correspondence and the documentation maintained by the Commission, the current status of the projects in question is as follows:

2. JOP Facility 2 project in Latvia with Client B
2a. Background

The SA for this project was signed on 1.6.2001 and the FinA was signed on 13.6.2001. According to the contracts, the Commission shall reimburse 50% of the actual eligible expenses incurred and paid by the Beneficiary for the preparation of the study. It shall do so upon receipt and approval of the feasibility study and the expense claim together with documentary evidence.

The Commission made a first disbursement of € 7.218 on 30.8.2001 that included an advance towards the feasibility study expenses. However, the Commission could not proceed to the final disbursement before receiving the relevant expense claim (point 7.2 of the SA, and point 4.1.3 of the FinA).

The Commission received the relevant expense claims only on 7.3.2002, sent by the FI on 28.2.2002. Only then could the second disbursement be initiated.

3. JOP Facility 2 - project in Bulgaria with Client W
3a. Background

The SA for this project was signed on 25.1.2000 and the FinA was signed on 5.1.2000. According to the contracts, the Commission shall reimburse 50% of the actual eligible expenses incurred and paid by the Beneficiary for the preparation of the study. It shall do so upon receipt and approval of the feasibility study and the expense claim together with documentary evidence.

A first disbursement was made on 21.3.2000.

As for the second disbursement, the FI informed the Commission on 28.9.2002 that there existed no proof of the payment of ca. € 40.000 to external experts. This is not in compliance with the contractual provisions: the SA stipulates that eligible costs are those "incurred and paid by the Beneficiary", and that the documentary evidence that should be submitted to the Commission together with the second payment request should include "legally valid proofs of payment". Thus, the Beneficiary was not entitled to a second payment.

However, there appears to be a misunderstanding on the part of the Beneficiary. The Commission has therefore decided to give the Beneficiary a final opportunity to pay the claimed external expert fees and submit the relevant proofs of payment. For this purpose, a fax was sent to the responsible FI on 5.3.2002.

4. JOP Facility 3 projects (Investment Grants) in Latvia with Client B and in Bulgaria with Client W
4a. Background

For the Facility 3 grants, a feasibility study had to be presented to the Commission before 30.9.2000. The final investment amount and any other information necessary for analysing the application had to be received within a twelve month period following the applications.

Client B submitted its application on 28.9.2000. Client W submitted its application on 26.9.2000.

On 8 August 2001, the Commission sent a reminder concerning the twelve month time deadline for submission of additional required information. However, no additional information was submitted to the Commission despite this reminder.

Therefore, the JOP Steering Committee in its meeting on 21.2.2002 gave a negative opinion on the Facility 3 grant application for both projects.

Conclusion

Based on the facts as stated above, the Commission is of the opinion that all decisions taken concerning these projects are justified. Any delays are mainly attributable to the fact that the applications and the documentary evidence submitted to the Commission were incomplete or still pending.

The complainant's observations

The Commission's opinion was forwarded to the complainant for observations.

The complainant made, in summary, the following observations on the Commission's opinion:

First, the Commission's opinion does not directly address the original frustration, namely the cumbersome administration of the projects.

Second, as regards the Facility 3 grant applications the Commission claims that both applications were refused because certain documents were not received within the deadline. However, it was clearly understood by the relevant employee at the Bank that to comply with the deadline of September 2000 it was necessary only to submit the application forms themselves and that any outstanding supporting detail could follow. This information was given during a conversation between that employee and the Commission's TAU in what the Bank's employee recalls as 'unambiguous terms'. However, no written evidence of this conversation exists.

According to the complainant, the Commission was therefore wrong to conclude that the application rules had not been observed.

The complainant also stated that the Commission had not effectively informed him or his clients about its deadlines and their implications before he made the complaint to the Ombudsman. He therefore argued that this was a failure to provide adequate information.

THE DECISION

1 'Facility 2' grants

1.1 The complainant has submitted allegations on behalf of his clients, W and B. The clients have 'Facility 2' grant contracts with the European Commission under the European Union's JOP Programme. One contract concerned a project in Latvia, the other contract concerned a project in Bulgaria. The complainant states that no payments have been made. Thus, the complainant alleges that the Commission is unduly delaying payment of grants from the JOP Programme to his two clients, W and B, and he claims a prompt resolution of the matter.

1.2 On the basis of a detailed account of the factual and legal circumstances of the case, the Commission has stressed that the necessary documentation has not been forthcoming, or has only been sent late.

The Commission's opinion also indicates that following the complaint to the Ombudsman, it received documentation (dated 28.2.2000) which makes it possible to initiate the second disbursement procedure for the project in Latvia. As regards the project in Bulgaria, the Commission has decided to grant a final opportunity to pay the claimed external expert fees and submit the relevant proofs of payment to the Commission so that these expenses can be taken into account. For this purpose, a fax was sent to the relevant person on 5.3.2002.

1.3 According to Article 195 of the EC Treaty, the European Ombudsman is empowered to receive complaints "concerning instances of maladministration in the activities of the Community institutions or bodies". The Ombudsman considers that maladministration occurs when a public body fails to act in accordance with a rule or principle binding upon it. Maladministration may thus also be found when the fulfilment of obligations arising from contracts concluded by the institutions or bodies of the Communities is concerned.

However, the Ombudsman considers that the scope of the review that he can carry out in such cases is necessarily limited. In particular, the Ombudsman is of the view that he should not seek to determine whether there has been a breach of contract by either party, if the matter is in dispute. This question could be dealt with effectively only by a court of competent jurisdiction, which would have the possibility to hear the arguments of the parties concerning the relevant national law and to evaluate conflicting evidence on any disputed issues of fact.

The Ombudsman therefore takes the view that in cases concerning contractual disputes it is justified to limit his inquiry to examining whether the Community institution or body has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. If that is the case, the Ombudsman will conclude that his inquiry has not revealed an instance of maladministration. This conclusion will not affect the right of the parties to have their contractual dispute examined and authoritatively settled by a court of competent jurisdiction.

1.4 The Ombudsman has thoroughly examined the Commission's opinion and the complainant's observations. The Commission explained in detail the factual and legal circumstances relating to the Facility 2 grant contracts.

In his observations, the complainant does not appear to challenge the information in the Commission's opinion.

1.5 On this basis, the Ombudsman considers that the Commission has provided him with a coherent and reasonable account of the legal basis for its actions and why it believes that its view of the contractual position is justified. The present inquiry has not, therefore, revealed an instance of maladministration.

2 'Facility 3' applications

2.1 The complainant also alleges that the Commission is unduly delaying payment from the JOP programme to his clients in respect of 'Facility 3' grants.

2.2 In its opinion, the Commission gave an account of the rules applicable to the application procedure. It noted that a deadline was not observed, despite a reminder sent to the complainant. On that basis, a negative decision was taken on the applications. The Commission does not, therefore, recognise that any money is due to the complainant's clients.

2.3 In his observations, the complainant disputes the Commission's view that there was a delay on his part. According to the complainant, a Commission official had during a telephone conversation stated that it was only necessary to submit the application forms themselves and that any outstanding supporting detail could follow later. No written evidence of this conversation exists, however.

2.4 The Ombudsman considers that the complainant's account of the telephone conversation does not appear to contradict the Commission's argument that, despite the reminder sent on 8 August 2001, the additional required information was not submitted within the deadline of 12 months from the date of application.

2.5 On this basis, the Ombudsman considers that the complainant's submissions do not show that the Commission's position is unreasonable. Thus, it appears that there is no maladministration in regard to this aspect of the complaint.

3 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, there appears to have been no maladministration by the European Commission. The Ombudsman therefore closes the case.

The President of the European Commission will also be informed of this decision.

Yours sincerely,

 

Jacob SÖDERMAN