Decision of the European Ombudsman on complaint 49/2004/GG against the European Commission

Strasbourg, 23 March 2005

Dear Dr. K.,

On 6 January 2004, you requested, acting on behalf of Internationaler Hilfsfonds e.V., that I resume my inquiry into complaint 589/2002/GG against the European Commission. The inquiry concerning this complaint had been closed by a decision adopted by the Ombudsman on 21 March 2003. Your letter of 6 January 2004 was therefore registered as a new complaint under the above-mentioned reference.

On 26 January 2004, I forwarded the complaint to the President of the European Commission. The Commission sent its opinion on 29 March 2004, and I forwarded it to you on 15 April 2004 with an invitation to make observations by 15 May 2004.

On 20 April 2004, you telephoned my services to suggest that it would make sense to comment on the Commission’s opinion in the present case after having obtained clarity as to the question of access to the Commission’s file in this matter, which was the subject of case 1874/2003/GG. On 22 April 2004, I informed you that I agreed with this proposal.

On 10 May 2004, you submitted further information concerning your complaint to me.

On 14 December 2004, I closed my inquiry into complaint 1874/2003/GG with a critical remark.

By letter sent the same day, I invited you to present your observations on the present complaint which you sent on 28 January 2005. On 21 March 2005, you sent me a fax concerning this case.

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

THE COMPLAINT

Introductory note

The present complaint is a follow-up to complaint 589/2002/GG. This complaint led the Ombudsman to make a proposal for a friendly solution, according to which the Commission should review its decision to ask the complainant to reimburse the sum of EUR 37 741,07. In its reply, the Commission expressed its willingness to abandon its claim if and to the extent it could be shown that the relevant funds had been used in the overall interest of the ultimate beneficiaries of the project. To this end, the complainant would have to submit a global financial report on this project which would allow the Commission’s services to verify the use of the funds already paid. In these circumstances, the Ombudsman closed his inquiry by his decision of 21 March 2003.

In a letter of 6 January 2004, the complainant asked the Ombudsman to resume his inquiry into complaint 589/2002/GG, given that the Commission had insisted on the reimbursement of the sum of EUR 37 741,07. The complainant’s letter was therefore registered as a new complaint under the above-mentioned reference.

The issues in dispute

The complainant is a non-governmental organisation (NGO) from Germany working in the field of humanitarian aid. Its complaint concerns Co-Financing Agreement No. 97-2011 (“the Contract”) relating to a project in Kazakhstan with the title ‘Organisation of the Centre for Rendering Preventive, Medical and Diagnostic Help for Children and their Mothers, ill with Viral Hepatitis and Viral Carriers (Viral Hepatitis Associated Aids)’. This contract was signed on 28 and 30 April 1998 by the complainant on the one hand and IBF (a body based in Brussels) acting on behalf of the European Commission on the other. The complainant as the lead NGO was to be assisted by two partners, the International Academy for Medical Education and Prevention (IAMED) from Germany and the Association of Paediatrists-Infectionists (API) from Kazakhstan. The project was co-financed by the European Union’s Phare and Tacis LIEN Programme which provides grant finance to foster the development of democratic societies in Central and Eastern Europe and in the New Independent States and Mongolia. The supervision of the project had been entrusted to a technical assistance unit, namely the Centre Européen du Volontariat (CEV) in Brussels.

According to Article 6 of the Contract, the Commission was to provide a non-reimbursable grant to the costs of the project that was not to exceed EUR 127 256 (80 % of the project budget).

Article 4 (4) of the Contract provided that if modifications of Annexes A (‘Project description’) or B (‘Budget’) became necessary, it was the responsibility of the ‘Organisation’ (the complainant) to request the approval of the ‘Contracting Party’ (IBF) by means of a separate letter. A ‘Notice’ specified that “[m]ajor changes like (…) changes of project partners (…) require a contract addendum produced by the LDF Financial and Administrative Office [i.e., IBF] and agreed by the Technical Assistance Office [i.e., CEV] and signed by the European Commission. If you envisage changes to the project proposal, please address yourself to the relevant Technical Assistance Office in writing who will then advise you further and if necessary direct the proposal to the European Commission for approval and to the LDF Financial and Administrative Office for the completion of the necessary formalities.”

Article 4 (4) of the Contract further provided that the Contracting Party had to be informed about any change in the management structure of the Organisation or its partner organisations.

According to Article 12 of the Contract, the latter could be terminated at any time and without notice if the Organisation should “severely contravene” the agreement. In the case of a termination because of a fundamental breach by the Organisation, the Commission reserved the right to refuse to make any further payment and to take legal action to recover any part of the grant already made.

On 13 February 1999, the complainant’s local project officer, Dr. M., informed Mr T., the IBF project officer, via e-mail that IAMED had cancelled its participation because it had felt unable to execute its obligations. Dr. M. also informed Mr T. that API had lost its independence and had become part of the Kazakh Anti-AIDS Association (AAA). She stressed that the Kazakh partner had not been changed, but that the name of the person in charge had changed. Dr. M. also pointed out that the complainant wished to replace IAMED by AAA and asked Mr T. for advice as to the letter that should be sent to IBF “in order to get permission to change our partner”. In his reply of 15 February 1999, Mr T. pointed out that the question of a change of partner could be easily dealt with, but that it fell within the authority of CEV rather than IBF. He noted that he would therefore forward Dr. M.’s message to CEV. On 18 February 1999, Mrs S., the project manager at CEV, replied to Dr. M.’s message. She pointed out that a forthcoming visit to Brussels by Dr. M. would provide an opportunity to discuss the issue. Mrs S. further listed the documents that were needed to set the file “in order”. The documents requested included a new partnership statement and evidence to be provided by API “that certifies that the API NGO has been merged with the Anti-Aids Association”.

The complainant later claimed that it had decided to replace API as its partner because Dr. K., the president of API, was being prosecuted by the national anti-corruption authorities due to illegal handling of state-owned property and misuse of property funds.

In May 1999, CEV carried out a monitoring visit in Kazakhstan.

On 1 October 1999, IBF informed the complainant that the Commission had decided to cancel the project as of that day on the basis of Article 12 of the Contract. The complainant was asked to submit a global report for the period from 30 April 1998 until 1 October 1999 in order to enable IBF to calculate the final financial settlement.

When the complainant objected to the termination of the Contract, the Commission took the view, in an undated letter sent by Mr Soubestre, the Director-General of the Commission’s Common Service for External Relations (SCR), that the complainant had unilaterally and without prior agreement from the official partner concerned (API) and without prior authorisation from the Commission or from the Contracting Party changed its partners, thus violating Article 12 of the Contract. The Commission noted that according to Article 4 (4) of the Contract, IBF had to be informed about any change in the management structure of the Organisation or its partners. According to the Commission’s letter, the complainant had provided “key information” on the relevant issue only after CEV had discovered that the complainant had tried to impose these changes.

In an undated letter that was apparently sent in October 2001, the Commission explained that it would ask the complainant to reimburse the sum of EUR 37 741,07, that is to say the difference between the advance payment (EUR 50 902) and the costs accepted by the Commission (80 % of EUR 16 451,16, i.e. EUR 13 160,93). The Commission noted that these calculations were based on the complainant’s report for the period from May until November 1998, the only financial report the Commission claimed to have approved. Attached to the letter was a document prepared by IBF in which the latter stated that there was a very succinct second financial report in the file that had however not been sent to it officially and that IBF had never received any third financial report.

Complaint 589/2002/GG

In its complaint to the Ombudsman lodged in 2002, the complainant took the view that the behaviour of the Commission and its services regarding the proposed change of partners constituted an instance of maladministration. It pointed out that it had handed over a new partnership statement as requested by CEV, that neither IBF nor CEV had ever raised objections to the proposed change and that these services had not forwarded the changes to the Commission for its approval. The complainant concluded that in these circumstances it had been entitled to consider that the information it had handed over to IBF/CEV was sufficient to allow the continuation of the project activities. It considered that the Commission’s decision to cancel the Contract on the grounds that an unauthorised change of partners had occurred was therefore unjustified.

In so far as the financial aspect was concerned, the complainant claimed that it had submitted a second financial report in June 1999 and a third one in March 2000. The complainant stressed that it had continued to finance the project activities in good faith. It further argued that it had not committed any fundamental breach of its obligations and that there had been no violation of Article 12 of the Contract. The complainant thus considered that the Commission’s claim for reimbursement was unjustified.

Finally, the complainant noted that within the framework of its dispute with ECHO that was the subject-matter of another complaint to the Ombudsman (complaint 1702/2001/GG), it had discovered that a copy of the above-mentioned letter of Mr Soubestre had been included in ECHO’s file concerning the complainant. The complainant considered that this showed that the EuropeAid Co-operation Office informed other units of the Commission in a biased, non-objective way.

The allegations made by the complainant were thus as follows:

(1) The Commission’s decision to cancel Co-Financing Agreement No. 97-2011 on the grounds of an unauthorised change in partners was unjustified, given that (a) the complainant had informed IBF and CEV about the change, that (b) neither IBF nor CEV had requested the complainant to make a formal request for authorisation to the Commission or had themselves submitted the matter to the Commission, that (c) the complainant had been entitled to consider the information it had provided to IBF/CEV as sufficient to allow the continuation of the project since it had received no reaction to the contrary and that (d) the Commission therefore could not subsequently invoke the complainant’s alleged failure to comply with the procedural rules laid down in the Contract.

(2) The Commission’s claim for reimbursement of the sum of EUR 37 741,07 was unjustified, given that there had been no fundamental breach by the complainant of its obligations and no violation of Article 12 of the Contract.

(3) The statement in Mr Soubestre’s undated letter according to which the complainant had provided “key information” on the relevant issue only after CEV had discovered that the complainant had tried to impose these changes was incorrect and only pursued the aim of disqualifying the complainant.

(4) The fact that a copy of Mr Soubestre’s letter was included in one of ECHO’s files showed that the EuropeAid Co-operation Office informed other units of the Commission in a biased, non-objective way.

The Ombudsman's inquiry

On 29 April 2002, the Ombudsman forwarded the complaint to the European Commission. The Commission sent its opinion on 7 August 2002. The Ombudsman forwarded this opinion to the complainant with an invitation to make observations, which the complainant sent on 29 August 2002. On 2 and 13 September 2002, the complainant submitted further comments to the Ombudsman.

On 14 October 2002, the Ombudsman submitted a proposal for a friendly solution to the Commission which focused on the second of the complainant’s allegations. In his letter to the Commission, the Ombudsman noted that he considered that it was not necessary for him to deal with the first allegation of the complainant at that stage of the procedure. He further noted that his preliminary conclusion was that there was no maladministration in so far as the third and the fourth allegations were concerned.

In his proposal for a friendly solution, the Ombudsman reasoned as follows:

• The dispute relating to the Commission’s claim for repayment concerned two issues, namely (1) the question as to whether there had been a “fundamental breach” within the meaning of Article 12 (3) of the agreement and (2) the question as to whether the Commission was right, if there had been such a fundamental breach, to insist on the repayment of sums already provided to the complainant. In the Ombudsman’s view, it was not necessary for him to deal with the first of these questions at that stage of his inquiry. He therefore limited his analysis to the second question, on the purely preliminary and hypothetical assumption that there had been a “fundamental breach” as alleged by the Commission.

• In such a case, Article 12 (3) gave the Commission the “right” to recover any part of the grant already made. The said provision did however not seem to oblige the Commission to ask for the repayment of funds already provided. The Commission thus appeared to dispose of a discretion in the matter. It therefore had to be examined whether the Commission had properly exercised this discretionary power when acting as it did. It was obvious, however, that the Ombudsman could not substitute his own appraisal for that of the Commission. The Ombudsman thus had to limit his examination to assessing whether the Commission had manifestly exceeded the margins of its discretion, for example by not taking account of circumstances that were relevant for its appraisal.

• The Ombudsman noted that the Commission’s objections appeared to be directed at the replacement of the local (i.e., Kazakh) NGO, API, by the complainant. It appeared that it was only in March 1999 that CEV had realised that such a change had been carried out or had been proposed. In that case, however, the Commission should have been in a position to decide on whether the agreement should be terminated already by the end of March 1999. If there had indeed been a fundamental breach of contractual obligations, one would have assumed that the Commission had acted quickly to terminate the agreement. The decision to terminate the agreement was however only communicated to the complainant in October 1999, and only after an audit had been carried out in May 1999. The Commission had not explained why it had nevertheless decided to ask for the repayment of funds that had been provided and spent prior to October 1999. What was more, the Commission had not explained why it had only accepted expenditure incurred until the end of October 1998 whereas the alleged breach appeared to have taken place in February 1999.

• The complainant furthermore submitted evidence to show that the project implementation even after the change of the local partner had satisfied local authorities in Kazakhstan. According to its note of 30 July 2001, the EC Delegation in Kazakhstan itself seemed to have assumed that the funds had been used to meet the project objectives.

• Most importantly, however, the complainant had insistently argued that the replacement of the local partner had been necessary for objective reasons. In this context, the complainant had in particular pointed at the inquiry that had been carried out against Dr. K., the president of the local NGO, by an anti-corruption authority in Kazakhstan and that had resulted in sanctions being imposed on this person. The complainant argued that it had been in the best interests of the EU or even necessary to avoid that projects supported by it should be discredited by the participation of persons suspected of corruption, and that the local partner therefore had to be changed. This was a weighty argument. There was however no evidence in the documents submitted to the Ombudsman to show that the Commission had taken this argument into account when deciding on whether to ask for the repayment of funds under Article 12 (3) of the agreement.

• The Ombudsman thus could not exclude that the Commission had not taken into account all the relevant facts and considerations when adopting the contested decision.

• In these circumstances, the Commission’s decision to claim back the sum of EUR 37 741,07 could be an instance of maladministration.

The Ombudsman therefore proposed that the European Commission should consider reviewing its decision to ask the complainant to pay back the sum of EUR 37 741,07.

In its reply, the Commission maintained its position as regards the legal interpretation of the contractual situation. It recognised, however, that the funds might have been spent in the interest of the ultimate beneficiaries, i.e. the children and their mothers affected by viral hepatitis and in the antihepatitis centre in Almaty. The Commission therefore declared itself willing to abandon its claim if and to the extent it could be shown that the funds had been used in the overall interest of the ultimate beneficiaries of the project.

The Ombudsman's decision on complaint 589/2002/GG

In his decision of 21 March 2003 on complaint 589/2002/GG, the Ombudsman noted that the Commission had expressed its willingness to abandon its claim and that the complainant had in the meantime sent a global financial report to the Commission and proposed possible dates for the audit that the Commission had requested. In these circumstances, the Ombudsman took the view that a friendly solution to the complaint had been agreed between the Commission and the complainant. The Ombudsman therefore closed his inquiry. He noted, however, that the complainant was free to renew its complaint if the friendly solution should not be satisfactorily implemented.

The present complaint

It emerges from the complainant’s letter of 6 January 2004 that a verification of the expenses was carried out by the Commission’s services at the premises of the complainant on 4 and 5 April 2003. On 20 August 2003, the Commission sent a copy of the Verification Report to the complainant. This report explained that different “scenarios” had been explored by the auditors, and that taking into account the basic rule of co-financing (up to 80 %) for grants, the maximum acceptable amount would be EUR 40 191. A new recovery order for EUR 10 711 could therefore be issued.

In letters sent on 25 August and 5 September 2003, the complainant objected to this proposed approach, arguing that it should not be bound to repay anything. A further meeting between the parties was held on 30 September 2003.

In a letter dated 12 December 2003, the Commission asked the complainant to pay back the sum of EUR 37 741,07 plus interest as from 15 July 2002.

In these circumstances, the complainant asked the Ombudsman to renew his inquiry into its complaint.

The new complaint comprised a number of enclosures, including a copy of an order of the Healthcare Department of Kazakhstan dated 5 October 1999 in which a "stringent reprimand" was issued to Dr. K.

THE INQUIRY

The Ombudsman's approach

The objections raised in the complainant’s letter of 6 January 2004 concerned the legality and fairness of the Commission’s decision to ask for the reimbursement of monies paid under the relevant project, that is to say, the first two of the allegations that had been raised in complaint 589/2002/GG. The third and the fourth allegations were not mentioned in this letter. The Ombudsman therefore took the view that his inquiry into the new complaint should only cover the first two of the allegations that had been raised in complaint 589/2002/GG.

The Commission's opinion

In its opinion, the Commission made the following comments:

Background

The majority of the elements of information and proof which constituted the background of this complaint had already been conveyed to the Ombudsman in the framework of the latter's inquiry into complaint 589/2002/GG.

The Phare and Tacis LIEN programme ("LIEN") was an NGO co-financing programme implemented by the Commission. This programme was not only a subsidy mechanism for NGO projects but it aimed at fostering co-operation through establishing bonds/links between NGOs in the EU and in the target countries. This importance was reflected by the Partnership Statement, which had to be signed by all NGOs involved in a given LIEN project. The Partnership Statement was the core of a grant contract under the LIEN programme. Consequently, provisions had been inserted in the grant contract that stipulated that a change of partners had to have the prior approval of the Commission. If this condition was not respected, the Commission had the right to terminate the contract.

The complaint
The changes of partner without authorisation

Article 4.4 of the Contract stated the following: "If modifications to Annexes A or B become necessary, it is the Organisation's responsibility to request the Contracting Party's approval by means of a separate letter." Nevertheless, the complainant had changed partners and had not requested the approval of the Contracting Party.

There had been two separate changes of partner, the German partner IAMED and the Kazakh partner API. Regarding the first partner change, the complainant announced its intention to cancel the partnership with IAMED in December 1998. Regarding the second partner change, which took place in February 1999, the complainant did not inform IBF or CEV of their intention to change the local partner API to APA. When IBF and CEV learnt of the above-mentioned change, they requested supporting documents on several occasions in order to confirm the statements made by the complainant and in order to be able to give their formal authorisation.

These contacts were described in more detail in a note enclosed with the opinion which contains (taking into account the document to which it refers) the following statements(1):

8 December 1998: The complainant contacted CEV by telephone to ask how it could cancel the partnership with IAMED. CEV informed the complainant that IAMED had to withdraw formally from the project and that this had to be approved by all partners.

9 December 1998: CEV received a fax from the complainant, on the latter's letterhead, announcing the withdrawal of IAMED, signed by the complainant and IAMED. This fax was rejected by CEV which required an original version signed by IAMED, on IAMED's letterhead. A letter from IAMED announcing its withdrawal from the partnership arrived at IBF on 18 February 1999.

13(2) February 1999: The complainant claimed that it would like to introduce a new partner to replace IAMED. This new partner, Anti-Aids Association ("AAA"), was also presented to be the legal representative of API. In an e-mail sent to the complainant on 18 February 1999, CEV listed the documents that were needed to include the proposed partner in the project. Written evidence that API had been absorbed by AAA was also requested together with an updated partnership statement signed by all NGOs involved.

2 March 1999: CEV received a new partnership statement from the complainant dated 26 February 1999, from which it emerged that the complainant had not only replaced IAMED by AAA but also that API had been replaced by a new organisation called Association of Paediatricians of Almaty ("APA")(3). AAA, presented in the e-mail of 13(4) February 1999 as the new legal representative of API, was not the association replacing API. API was replaced by APA. The complainant never informed CEV or IBF about this change.

10 March 1999: CEV informed the complainant that this kind of operation was illegal and could lead to the suspension of the Contract. The response from the complainant was that APA and API had the same chairman and that therefore this change was not a problem. CEV explained to the complainant that it was not possible to proceed like this and required proof.

12 March 1999: CEV asked the complainant for clarification about the partnership issue.

13 March 1999: The complainant's answer only repeated that APA and API were the same legal body and that it would provide CEV with an official confirmation of this.

26 March 1999: CEV received a fax from APA in which the author stated that APA and API were identical. This statement could not be considered as the official confirmation promised by the complainant on 13 March 1999, as the document was prepared by APA itself and was not the expected confirmation provided by a Kazakh authority.

Moreover, according to API and the Association of Medical Doctors and Pharmacists of Kazakhstan, APA and API were different organisations.

IBF and CEV had always made it clear that the project could not continue without prior written approval of fundamental changes to the contract. The complainant had received a warning that what it had done was not in accordance with the Contract and could constitute a reason for terminating the Contract.

After having obtained some explanations from the complainant, which had alleged that API and APA were the same legal body, CEV had requested evidence to prove this. In this way, it had been established that it was untrue to claim that API and APA were the same legal body. In addition, API had declared that it had not even been aware of the proposed change.

On 4 November 1999, the complainant had sent a fax to CEV containing a copy of a reprimand from the Healthcare Department of Kazakhstan addressed to Dr. K., a doctor-infectionist working for API. On the basis of this document, the complainant had argued that changing the local partner API had been in the best interests of the EU and even necessary to avoid that projects supported by the Commission be discredited by the participation of persons suspected of corruption. This argument had never been invoked at the time of the change of partner API and the fax had been sent after many other attempts at explanation, following the notification of the termination of the contract and eight months after the change of partner. As a matter of fact, even if the complainant's argument had proved to be true, the complainant should still have requested the change of partners in accordance with the rules.

It had to be said that different statements had been made by the complainant to explain the change regarding API: That API had been included in another structure (AAA), that APA and API were the same legal entity, that API had to be replaced taking into account the behaviour of its president. Nevertheless, none of these statements was either provided before the change of the local partner or confirmed afterwards.

The termination of the contract and the reimbursement of funds

Article 12 (3) of the Contract provided that where the agreement was terminated because of a "fundamental breach" by the Organisation, the Commission reserved the right to refuse to make any further payment and to take legal action to recover any part of the grant already paid out. The change of partners carried out by the complainant was a fundamental breach of the basic conditions of participation laid down in the contract.

After the Ombudsman had presented his proposal for a friendly solution in complaint 589/2002/GG, the Commission had informed him that it would abandon its claim if and to the extent it could be shown that the funds had been used in the overall interest of the ultimate beneficiaries of the project. The complainant would then have to submit a global financial report on the project which would allow the Commission's services to verify the use of the funds that had already been paid out. This report was submitted by the complainant on 14 March 2003.

The Commission considered that this proposal was and continued to be a fair and positive way of exercising its discretionary power.

In this context, a verification of the eligibility of items of expenditure related to the contract had been carried out. The objective of the verification had been to check the eligibility of expenditure under the contractual conditions and to ascertain those items of expenditure that were not eligible but that were potentially admissible in the overall interest of the final beneficiaries of the project. An exhaustive description of the findings could be found in the verification report(5).

As a result of this mission, four separate scenarios had been examined. In none of the cases could the recovery order be totally abandoned. The most favourable solution for the complainant was the issue of a recovery order for an amount of EUR 10 711 (a decrease of EUR 27 030,07 compared to the initial one). This figure represented the difference between the amount of EUR 50 902 that had been paid out to the complainant and the final amount of EUR 40 191 of eligible expenditure.

It was worth highlighting the fact that the assessment of the admissible costs had gone far beyond a strict application of the contract's conditions to which the Commission's services and the contractors/beneficiaries were bound. Even taking into consideration the objective of a friendly solution and the good of the ultimate beneficiaries some costs could not be considered admissible, since doing so would go against the fundamental principles of budgetary rules that the Commission had to respect.

With the aim of finding an agreement, the Commission had written to the complainant on 20 August 2003, setting out the possibility of issuing a new recovery order for an amount of EUR 10 711. The complainant had not accepted this proposal but insisted that no repayment at all should be made.

Nevertheless, the Commission had made another effort to reach an amicable solution and had invited the complainant for a meeting. During the meeting that had been held on 30 September 2003, the Commission's services had agreed to explore the possibility of completely abandoning the recovery order and any administrative penalty.

In the following days, the Commission had received a telephone call from the complainant in which the latter had demanded the award of contracts by way of compensation. Such a proposal was of course unacceptable to the Commission, given the competitive nature of awarding contracts. A few days later the complainant had lodged a new complaint with the Ombudsman concerning access to Commission documents. In this complaint, the complainant had taken the opportunity to report on the recent meeting in an erroneous and misleading way.

On 18 December 2003, the Commission had received a telephone call from the complainant's lawyer who had asked whether there was any possibility of re-opening the discussions and of reaching an amicable settlement. The Commission had invited the lawyer and the complainant to submit a global proposal for a friendly solution. Nothing had been received by the time the opinion was submitted to the Ombudsman.

Conclusion

The Commission considered that its services had been highly committed to finding a friendly solution that could prove acceptable to both parties and that they had now exhausted all possibilities for reaching that friendly solution. It also considered that there had been no case of maladministration concerning the termination of the Contract or concerning the use it had made of its discretionary power to recover monies not used in the interest of the beneficiaries of the project.

The complainant's observations

In its observations, the complainant maintained its complaint and made the following further comments:

Abuse of power

The Commission had deprived the complainant of its right to be heard and to make observations before taking its decision to terminate the contract, thus violating Article 16 of the European Code of Good Administrative Behaviour (the "Code"). The Commission's letter of 1 October 1999 had also infringed Article 19 of the Code, given that it did not contain any indication as to the possibilities of appeal.

The Commission's decision to terminate the contract had damaged the reputation of the complainant.

As to the change of partners

The complainant had never initiated or carried out the change of the project partner IAMED. On the contrary, this partner had of its own decision abandoned the project. The Commission's untrue accusation that the complainant had "unilaterally changed" the partner IAMED was not in accordance with good administrative behaviour and was defamatory. The Commission had also disrespected its obligation to state the reasons for its decision, as required by Article 18 of the Code.

As evidenced by the e-mail to IBF of 13 February 1999, the complainant had not unilaterally changed its partner API but had asked those responsible for the Contract for advice. In a fax that had been sent to the complainant on 19 February 1999 (with a copy to CEV), Professor Dr. I. had pointed out that there were problems with Dr. K. and asked for the complainant's approval to change Dr. K. "as president of API" and "to continue our project in partnership with [AAA]". It was slanderous to pretend and state that the complainant did not inform IBF or CEV about the change of the Kazakh partner.

The message of 13 February 1999 constituted the request foreseen by Article 4 (4) of the Contract.

The Commission had failed to take its decision within a reasonable period of time, contrary to Article 17 of the Code.

In a letter to the complainant of 4 February 1999(6), the Deputy Governor of Almaty had stated that the work of the Antihepatitis Centre did not correspond to the aims of the project and to the requirements of the Partnership Statement, that Dr. K. was in default of several points of the Partnership Statement, that API did not have "the legal status and settlement account" and that there was illegal handing over of state property. The complainant had thereupon immediately informed IBF, by e-mail of 13 February 1999, of Dr. K.'s misbehaviour. However, the Commission had not intervened.

The Commission disregarded the fact that the complainant, as lead NGO, had been entitled to stop the payment for Dr. K. at any time because there had been evidence that she had not satisfactorily performed her tasks.

The Committee on Registration Services of the Kazakh Ministry of Justice had informed the complainant that it had no information as regards the registration of API(7). This proved that API did not legally exist as a Kazakh NGO. The continued participation of API would therefore have been against the law and the objectives of the LIEN programme. The fact that Dr. K. had never used her own API stamp might be a further important indication as to the non-existence of API.

Professor Dr. I., who had been the author of the project, had remained in the project. Her know-how and working input had been most important for the successful continuation of the project.

In a note to CEV dated 27 May 1999, the complainant's representative in Kazakhstan informed CEV that after having received the money due to her, Dr. K. had lost all interest in the project. Due to the negative attitude of Dr. K., the project had been in danger of becoming paralysed and the complainant had therefore had to react without further delay in the interest of the continuation of the project. Both IBF and CEV had been informed about these problems already in February 1999. In the above-mentioned note of 27 May 1999, CEV had further been informed as follows: "In February in order to continue our project Professor [Dr. I.] invited [AAA] to the project implementation. Then we have requested CEV and IBF to allow as [sic] changing our partners. We did not like to do any noises therefore we did not tell about violations of Mrs. [K.]. We just asked CEV to change her because under articles 3 point 2 of 'the Co-financing agreement under the LIEN programme' [the complainant] is responsible for full project implementation."

The Commission's Delegation in Kazakhstan had been perfectly aware of the problems that had arisen from the misbehaviour of Dr. K., as shown by a note for the file drawn up on 27 April 1999. This note also showed that the Commission had considered blackmailing the parties concerned by threatening to stop the project. This was contrary to Articles 7 ("Absence of abuse of power") and 8 ("Impartiality and independence") of the Code.

On 28 June 1999, CEV had sent an e-mail to Dr. K., asking her whether she thought that the project could still be continued. The complainant had not been consulted. The Commission had thus been infringing Article 5 ("Absence of discrimination") and 8 ("Impartiality and independence") of the Code.

The fact that the contract had been terminated on 1 October 1999 whereas the Kazakh authorities issued a reprimand to Dr. K. on 5 October 1999 was probably no coincidence. The answer to this question could probably be found in the more than 100 documents on the Commission's file to which the complainant had been denied access.

CEV's monitoring report had been full of mistakes and contradictions. The complainant had therefore asked the Commission on 7 July 1999 to arrange for a neutral monitoring of the project. The Commission's refusal, despite several reminders, to reply to this request constituted a further instance of maladministration, given that it infringed Article 8 and 11 ("Fairness") of the Code.

The complainant had strictly applied the guideline adopted by Mr Prodi, the former President of the Commission, according to which "zero tolerance" should be shown towards corruption. As the lead NGO, the complainant had had to ensure the continuity of the project. It had therefore been unable to wait endlessly until "the EC bureaucracy in Brussels" reacted "in its typical slow-motion manner [to] its request to give advice for a partner change". Persons infected with hepatitis C had to receive their medical treatment regularly. An interruption of their treatment would have endangered all previous efforts and increased the danger of infection of people belonging to so-called high risk groups. Tolerating somebody under corruption investigation within its own structure would certainly have undermined the credibility of the Anti-hepatitis Centre.

As to the recovery order

The relevant project had been seen by the Kazakh authorities and the Kazakh public as a model case for the whole of Kazakhstan, due to the quality of the work performed. The complainant had contributed to this project EUR 120 276, corresponding to 70 % of the project's expenditure, whereas the Commission had only provided EUR 50 902 or 30 %. The project would never have had a chance of becoming functional if the complainant had not invested much more money than initially programmed.

The Commission had at first insisted that the complainant should repay the full amount of EUR 50 902. In 2001, it had asked the complainant to repay EUR 37 741,07. On 20 August 2003, the Commission had asked for the repayment of EUR 10 711. The Commission had never explained how it had calculated these differing amounts.

The Commission's auditors had confirmed that there had not been the slightest abuse of EU funds by the complainant whatsoever.

The Commission's decision to close the project had been disproportionate, thus infringing Article 6 ("Proportionality") of the Code. Regard should be had to the fact that Kazakhstan belonged to the countries that were most affected by Hepatitis C. The project had been held in high esteem by experts and authorities in Kazakhstan. An MEP had also considered the Commission's decision to close the project as being disproportionate.

THE DECISION

1 Introductory remarks

1.1 The complainant is a non-governmental organisation (NGO) from Germany working in the field of humanitarian aid. Its complaint concerns Co-Financing Agreement No. 97-2011 (“the Contract”) relating to a project in Kazakhstan with the title ‘Organisation of the Centre for Rendering Preventive, Medical and Diagnostic Help for Children and their Mothers, ill with Viral Hepatitis and Viral Carriers (Viral Hepatitis Associated Aids)’. This contract was signed on 28 and 30 April 1998 by the complainant on the one hand and IBF (a body based in Brussels) acting on behalf of the European Commission on the other. The complainant as the lead NGO was to be assisted by two partners, the International Academy for Medical Education and Prevention (IAMED) from Germany and the Association of Paediatrists-Infectionists (API) from Kazakhstan. The project was co-financed by the European Union’s Phare and Tacis LIEN Programme which provides grant finance to foster the development of democratic societies in Central and Eastern Europe and in the New Independent States and Mongolia. The supervision of the project had been entrusted to a technical assistance unit, namely the Centre Européen du Volontariat (CEV) in Brussels.

Article 4 (4) of the Contract provided that if modifications of Annexes A (‘Project description’) or B (‘Budget’) became necessary, it was the responsibility of the ‘Organisation’ (the complainant) to request the approval of the ‘Contracting Party’ (IBF) by means of a separate letter. A ‘Notice’ specified that “[m]ajor changes like (…) changes of project partners (…) require a contract addendum produced by the LDF Financial and Administrative Office [i.e., IBF] and agreed by the Technical Assistance Office [i.e., CEV] and signed by the European Commission. If you envisage changes to the project proposal, please address yourself to the relevant Technical Assistance Office in writing who will then advise you further and if necessary direct the proposal to the European Commission for approval and to the LDF Financial and Administrative Office for the completion of the necessary formalities.”

According to Article 12 of the Contract, the latter could be terminated at any time and without notice if the Organisation should “severely contravene” the agreement. In the case of a termination because of a fundamental breach by the Organisation, the Commission reserved the right to refuse to make any further payment and to take legal action to recover any part of the grant already made.

On 13 February 1999, the complainant’s local project officer, Dr. M., informed Mr T., the IBF project officer, via e-mail that IAMED had cancelled its participation because it had felt unable to execute its obligations. Dr. M. also informed Mr T. that API had lost its independence and had become part of the Kazakh Anti-AIDS Association (AAA). She stressed that the Kazakh partner had not been changed, but that the name of the person in charge had changed. Dr. M. also pointed out that the complainant wished to replace IAMED by AAA and asked Mr T. for advice as to the letter that should be sent to IBF “in order to get permission to change our partner”. In his reply of 15 February 1999, Mr T. pointed out that the question of a change of partner could be easily dealt with, but that it fell within the authority of CEV rather than IBF. He noted that he would therefore forward Dr. M.’s message to CEV. On 18 February 1999, Mrs S., the project manager at CEV, replied to Dr. M.’s message. She pointed out that a forthcoming visit to Brussels by Dr. M. would provide an opportunity to discuss the issue. Mrs S. further listed the documents that were needed to set the file “in order”. The documents requested included a new partnership statement and evidence to be provided by API “that certifies that the API NGO has been merged with the Anti-Aids Association”.

The complainant later claimed that it had decided to replace API as its partner because Dr. K., the president of API, was being prosecuted by the national anti-corruption authorities due to illegal handling of state-owned property and misuse of property funds.

On 1 October 1999, IBF informed the complainant that the Commission had decided to cancel the project as of that day on the basis of Article 12 of the Contract. The Commission subsequently informed the complainant that it would ask it to reimburse the sum of EUR 37 741,07, that is to say the difference between the advance payment (EUR 50 902) and the costs accepted by the Commission (80 % of EUR 16 451,16, i.e. EUR 13 160,93).

1.2 In 2002, the complainant turned to the Ombudsman (complaint 589/2002/GG). In its complaint, the complainant made four allegations, the first two of which can be summarised as follows: (1) The Commission’s decision to cancel the Contract on the grounds of an unauthorised change in partners was unjustified; (2) the Commission’s claim for reimbursement of the sum of EUR 37 741,07 was unjustified, given that there had been no fundamental breach by the complainant of its obligations and no violation of Article 12 of the Contract.

1.3 On 14 October 2002, and within the framework of his inquiry into complaint 589/20002/GG, the Ombudsman submitted a proposal for a friendly solution to the Commission which focused on the second of the complainant’s allegations. In his letter to the Commission, the Ombudsman noted that he considered that it was not necessary for him to deal with the first allegation of the complainant at that stage of the procedure. The Ombudsman proposed that the European Commission should consider reviewing its decision to ask the complainant to pay back the sum of EUR 37 741,07. The Commission accepted this proposal and entered into discussions with the complainant. In his decision of 21 March 2003 on complaint 589/2002/GG, the Ombudsman noted that the Commission had expressed its willingness to abandon its claim and that the complainant had in the meantime sent a global financial report to the Commission and proposed possible dates for the audit that the Commission had requested. In these circumstances, the Ombudsman took the view that a friendly solution to the complaint had been agreed between the Commission and the complainant. The Ombudsman therefore closed his inquiry. He noted, however, that the complainant was free to renew its complaint if the friendly solution should not be satisfactorily implemented.

1.4 By letter dated 6 January 2004, the complainant informed the Ombudsman that the negotiations with the Commission had not led to a successful conclusion. The complainant therefore asked the Ombudsman to renew his inquiry into its complaint.

1.5 The Ombudsman decided to register the complainant's letter of 6 January 2004 as a new complaint and to open a new inquiry into the above-mentioned two allegations. In his letter informing the complainant of the opening of the inquiry, the Ombudsman stressed that two further allegations that had been raised in complaint 589/2002/GG would not be covered by the new inquiry.

1.6 In its observations on the Commission's opinion on this complaint, the complainant submitted a considerable number of new allegations, indicating the provisions of the European Code of Good Administrative Behaviour (the "Code") that the Commission had in its view infringed. According to the complainant, the Commission (1) had deprived it of its right to be heard before adopting the decision of 1 October 1999 (Article 16 of the Code), (2) had failed to indicate the possibilities of appeal in this decision (Article 19 of the Code), (3) had contemplated blackmailing it by threatening to stop the project (Articles 7 and 8 of the Code), (4) had failed to reply to a request to arrange a neutral monitoring of the project (Article 8 and 11 of the Code) and (5) had infringed the principle of proportionality by terminating the project (Article 6 of the Code).

1.7 The Ombudsman takes the view that these allegations should not be taken up for inquiry so as not to delay the decision on the original complaint. In any event, and upon a preliminary examination of the issues raised by the complainant, there appear to be insufficient grounds for an inquiry into these further allegations. As regards the last of these new allegations in particular, it should be noted that Article 12 (1) of the Contract expressly provided that the Contract could be terminated by the Commission at any time and without notice if the complainant should “severely contravene” the agreement. Regard should further be had to the fact that already on 10 March 1999, that is to say immediately after having understood that the complainant had proceeded to a change of its local partner, CEV had pointed out that the approach chosen by the complainant was "illegal" and constituted a "serious issue". In a further fax of 12 March 1999, CEV had asked for evidence regarding the alleged identity of API and APA, making clear that this information was needed for the Commission's decision "about the continuation of the contract". In view of these prompt warnings, and taking into account the fact that there had been a fundamental breach of the Contract, the Ombudsman considers that there are clearly not enough grounds to warrant an inquiry into the complainant's allegation that the termination of the Contract was a disproportionate measure.

2 Allegedly unjustified termination of contract

2.1 The complainant alleged that the Commission's decision to terminate the Contract was not justified, given that (a) it had informed IBF and CEV about the change, that (b) neither IBF nor CEV had requested it to make a formal request for authorisation to the Commission or had themselves submitted the matter to the Commission, that (c) it had been entitled to consider the information it had provided to IBF/CEV as sufficient to allow the continuation of the project since it had received no reaction to the contrary and that (d) the Commission therefore could not subsequently rely on its (the complainant’s) alleged failure to comply with the procedural rules laid down in the Contract.

2.2 In its opinion, the Commission took the view that the complainant had proceeded to a change of partners that was not in accordance with the provisions of the Contract and that this way of behaving constituted a fundamental breach of the Contract allowing the Commission to cancel the latter without giving notice.

2.3 The Ombudsman notes that the Contract signed by the complainant stipulated that the latter should be assisted by two partners, IAMED and API. Although the Commission has also referred to IAMED, the Ombudsman considers that its case appears to be based mostly on the replacement of API. The Ombudsman therefore takes the view that it is legitimate to focus on this partner. He further notes that the complainant does not dispute that a change of partners required, pursuant to Article 4 (4) of the Contract, an addendum that was to be produced by IBF, to be agreed by CEV and to be signed by the Commission. In the Ombudsman's view, it is therefore clear that any proposed changes needed to be brought to the attention of IBF or CEV. The Ombudsman notes that the complainant does not dispute that it was under such an obligation but argues that the e-mail sent by its local project officer, Dr. M., to IBF on 13 February 1999 constituted the relevant request foreseen by Article 4 (4) of the Contract.

2.4 In her e-mail of 13 February 1999, Dr. M. stated that "API has lost its independence and has become a part of [AAA]. (...) But I want to emphasize once more: we do not change the Kazakh partner, the partner remains the same, but the name of the person authorized varies." The Ombudsman notes that this e-mail explicitly stresses that the Kazakh partner (i.e., API) was not changed. In the light of this wording, he finds it difficult to understand how this e-mail could be interpreted as a notification of a request to change this partner under Article 4 (4) of the Contract. In its e-mail of 18 February 1999 reacting to Dr. M.'s message, CEV pointed out that the complainant needed to submit "an official certificate about this merging operation, to be provided by the relevant authorities" and a "new partnership statement" signed by all NGOs involved. However, no such certificate ever appears to have been submitted to CEV, IBF or the Commission. The Ombudsman further notes that the new partnership statement that was dated 26 February 1999 and that was received by CEV on 2 March 1999 showed that API had been replaced not by AAA but by another organisation called Association of Paediatricians of Almaty ("APA")(8). In the Ombudsman's view, the complainant has not been able to refute the Commission's view that CEV or IBF had never been informed about this change. In these circumstances, the Ombudsman considers that CEV acted correctly, in its letter of 10 March 1999, by alerting the complainant to the fact that the withdrawal of API was contrary to the rules and that this was a serious issue. It is true that in its reply of 10 March 1999 the complainant submitted that APA and API were "one and the same institution" and that this view was repeated in the complainant's letter of 13 March 1999, according to which "API-APA is one unique legal body". However, the Ombudsman notes that the complainant never submitted official documents proving that this was indeed the case(9). In the Ombudsman's view, the Commission could reasonably request the complainant to produce such evidence, given that API had originally been named by the complainant itself as its local partner in Kazakhstan.

2.5 In its observations, the complainant submitted that API did not legally exist as a Kazakh NGO. Even on the assumption that this view was correct, the entry of APA as the local partner of the complainant in Kazakhstan would still have constituted a change of partners that required the Commission's approval and that would have had to be brought to the attention of CEV or IBF before being implemented. However, and as mentioned above, this change was never brought to the attention of CEV or IBF which learnt of this change only from the revised partnership statement.

2.6 In its observations, the complainant also relied on a fax sent to it on 19 February 1999 by Professor Dr. I., acting on behalf of "Paediatric Association of Almaty"(10) in order to support its claim that it was slanderous to pretend and state that the complainant did not inform IBF or CEV about the change of the Kazakh partner. It should be noted, however, that this fax only asked for the complainant's approval to "my offer to change [Dr. K.] as president of API and to involve into project our good Kazakh partner, with whom we carry out our project tasks for the last period" and expressed the hope that the complainant would allow "us to continue our project in partnership with Almaty Anti-Aids Association". The Ombudsman considers that this fax thus constituted, at best, a request to the complainant to accept a change of the Kazakh partner. The fact that this fax was copied to CEV is clearly not enough to allow this fax to be considered as a communication by the complainant to CEV under Article 4 (4) of the Contract. In any event, it is far from clear that the contents of the fax of 19 February 1999 could be understood as meaning that API was to be replaced by APA.

It should further be noted that in a letter to IBF of 2 March 1999, a copy of which was submitted to the Ombudsman by the complainant together with its observations, the complainant stated that "one of the Kazakh partner from API - closely interlinked with IAMED - had been exchanged with the [AAA], headed by its President, Dr. [L.]. The other Kazakh partner, the [APA], headed by its President, [Professor Dr. I.], remains partner in this project as she did from the very beginning". This statement is even more difficult to understand, given that only IAMED and API had been named as partners in the Contract.

2.7 The Ombudsman notes that the complainant submitted that it had acted as it did in order to combat corruption. As the Commission correctly points out, however, this argument was not invoked at the time when the complainant had proceeded to change its partner API for another local partner. The Ombudsman considers, contrary to what the complainant assumes, that the e-mail of Dr. M. of 13 February 1999 did not give any concrete indication that the complainant suspected Dr. K., the president of API, to be involved in corruption. In its observations, the complainant referred to a letter addressed to it on 4 February 1999 by the Deputy Governor of Almaty in which, according to the complainant, accusations had been made against Dr. K. The complainant submitted that it had thereupon immediately informed IBF, by e-mail of 13 February 1999, of Dr. K.'s misbehaviour. The Ombudsman presumes that the complainant thus refers to Dr. M.'s e-mail of 13 February 1999. It should be noted, however, that the letter of the Deputy Governor of Almaty of 4 February 1999 was neither forwarded to CEV nor even mentioned on this occasion. In any event, the Ombudsman considers that even if the complainant's argument based on the alleged misconduct by Dr. K. were true, the complainant would still have remained under the obligation to request the change of partners in accordance with the Contract. In this context, the Ombudsman takes the view that the complainant's reference to the alleged slowness of "the EC bureaucracy in Brussels" cannot be accepted, given that the complainant did not even properly inform the Commission of its intention to replace API by APA.

2.8 The Ombudsman notes that the complainant did not dispute the Commission's argument that the identity of the local partners was of particular importance in the framework of a LIEN project. In these circumstances, the Ombudsman considers that the Commission was entitled to find that the complainant's failure to obtain the Commission's approval of the change of its local partner in Kazakhstan constituted a fundamental breach of the Contract within the meaning of Article 12 (3) of the latter.

2.9 In these circumstances, the Ombudsman concludes that there was no maladministration on the part of the Commission regarding the first allegation submitted by the complainant.

3 Alleged lack of justification of Commission’s claim for reimbursement

3.1 The complainant alleged that the Commission’s claim for reimbursement of the sum of EUR 37 741,07 was unjustified, given that there had been no fundamental breach of its obligations and no violation of Article 12 of the Contract.

3.2 The Commission took the view that it was entitled to proceed to a recovery of amounts already paid, given that there had been a fundamental breach by the complainant of its obligations.

3.3 In view of the Ombudsman's conclusions as regards the first allegation (see point 2 above), the Commission's view appears to be reasonable.

3.4 It should be noted, however, that when making his proposal for a friendly solution in complaint 589/2002/GG, the Ombudsman took the view that the following considerations should be taken into account in this context:

(1) Article 12 (3) of the Contract gave the Commission the “right” to recover any part of the grant already made. The said provision did however not seem to oblige the Commission to ask for the repayment of funds already provided. The Commission thus appeared to dispose of a discretion in the matter.

(2) Although the Commission appeared to have been in a position to decide on whether the Contract should be terminated already by the end of March 1999, its decision to terminate the Contract was only communicated to the complainant in October 1999. In the meantime, the project had been allowed to continue. The Commission had not explained why it had nevertheless only accepted expenditure incurred until the end of October 1998.

(3) The complainant had submitted evidence to show that the project implementation even after the change of the local partner had satisfied local authorities in Kazakhstan. Whilst not necessarily conclusive as such, this aspect should certainly have been taken into account by the Commission when deciding as to how to use its discretionary power to ask for the repayment of funds.

(4) Most important, however, appeared the fact that the complainant had argued that it had been in the best interest of the EU or even necessary to avoid that projects supported by it should be discredited by the participation of persons suspected of corruption, and that the local partner therefore had to be changed. This was a weighty argument. There was however no evidence in the documents submitted to the Ombudsman to show that the Commission had taken this argument into account when deciding on whether to ask for the repayment of funds under Article 12 (3) of the agreement.

In view of these considerations, the Ombudsman could not exclude that the Commission had not taken into account all the relevant facts and considerations when adopting the contested decision. He therefore expressed the view that the Commission's decision to ask for the repayment of EUR 37 741,07 could be an instance of maladministration.

3.5 The Ombudsman continues to believe that these considerations are valid.

3.6 In its opinion on the present complaint, the Commission made the following statements:

After the Ombudsman had presented his proposal for a friendly solution in complaint 589/2002/GG, it had decided that it would abandon its claim if and to the extent it could be shown that the funds had been used in the overall interest of the ultimate beneficiaries of the project. The Commission believed that this proposal was and continued to be a fair and positive way of exercising its discretionary power.

In this context, a verification of the eligibility of items of expenditure related to the contract had been carried out. The objective of the verification had been to check the eligibility of expenditure under the contractual conditions and to ascertain those items of expenditure that were not eligible but that were potentially admissible in the overall interest of the final beneficiaries of the project. As a result of this mission, four separate scenarios had been examined. In none of the cases could the recovery order be totally abandoned. The most favourable solution for the complainant was the issue of a recovery order for an amount of EUR 10 711 (a decrease of EUR 27 030,07 compared to the initial one).

It was worth highlighting the fact that the assessment of the admissible costs had gone far beyond a strict application of the contract's conditions to which the Commission's services and the contractors/beneficiaries were bound. Even taking into consideration the objective of a friendly solution and the good of the ultimate beneficiaries some costs could not be considered admissible, since doing so would go against the fundamental principles of budgetary rules that the Commission had to respect.

With the aim of finding an agreement, the Commission had written to the complainant on 20 August 2003, setting out the possibility of issuing a new recovery order for an amount of EUR 10 711. The complainant had not accepted this proposal but insisted that no repayment at all should be made.

Nevertheless, the Commission had made another effort to reach an amicable solution and had invited the complainant for a meeting. During the meeting that had been held on 30 September 2003, the Commission's services had agreed to explore the possibility of completely abandoning the recovery order and any administrative penalty.

In the following days, the Commission had received a telephone call from the complainant in which the latter had demanded the award of contracts by way of compensation. Such a proposal was of course unacceptable to the Commission, given the competitive nature of awarding contracts. A few days later the complainant had lodged a new complaint with the Ombudsman concerning access to Commission documents. In this complaint, the complainant had taken the opportunity to report on the recent meeting in an erroneous and misleading way.

On 18 December 2003, the Commission had received a telephone call from the complainant's lawyer who had asked whether there was any possibility of re-opening the discussions and of reaching an amicable settlement. The Commission had invited the lawyer and the complainant to submit a global proposal for a friendly solution. Nothing had so far been received.

3.7 The Ombudsman considers that the above statements confirm that the Commission has shown its commitment to finding a friendly solution that could prove acceptable to both parties. He further notes that the Commission has made substantive proposals in order to reach such a solution. It is true that even under the solution most favourable to the complainant, the Commission still insisted on the repayment of a substantial sum of money. The Ombudsman considers, however, that the complainant has not shown that the Commission's argument that regarding further expenses as being eligible would infringe fundamental principles of budgetary rules was incorrect. He further notes that notwithstanding this position, the Commission had even agreed to explore the possibility of completely abandoning the recovery order.

3.8 In these circumstances, the Ombudsman takes the view that there is no maladministration on the part of the Commission as regards the complainant's second allegation.

3.9 The Ombudsman considers it useful to add that he understands the above-mentioned statements by the Commission as saying that the Commission continues to be ready to reach a friendly solution along the lines outlined in its opinion on the present complaint.

4 Conclusion

On the basis of the Ombudsman's inquiries into this complaint, there appears to be 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,

 

P. Nikiforos DIAMANDOUROS

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(1) A copy of this note and of the documents referred to therein had already been submitted to the Ombudsman by the Commission together with its opinion on complaint 589/2002/GG.

(2) The Commission's note refers to "15" February 1999. It is clear, however, that the reference is to the e-mail of Dr. M. that was (as the copy submitted by the complainant shows) sent on 13 February 1999.

(3) This is the name used by APA itself. The revised partnership statement submitted by the complainant referred to "Almaty Pediatric Association".

(4) See footnote 2 on page 9.

(5) A copy of this document was submitted to the Ombudsman by the Commission.

(6) The complainant submitted a copy of a translation of this letter into English.

(7) The relevant letter (a copy of a translation of which was submitted by the complainant) stated that it replied to a request made on 26 January 2000.

(8) This is the name used by APA itself. The revised partnership statement submitted by the complainant referred to "Almaty Pediatric Association".

(9) A simple statement to this effect by APA can obviously not be considered to constitute such proof.

(10) This is the expression used on the letterhead. A letter sent on 26 March 1999 by Professor Dr. I. to CEV uses a similar letterhead. However, in this document the name of the association is rendered as "Association of Pediatricians of Almaty".