Decision of the European Ombudsman on complaint 1319/2004/GG against the European Commission

Strasbourg, 13 September 2004

Dear Ms S.,

In a letter dated 5 May 2004 that was forwarded to me on 6 May 2004 you submitted, acting on behalf of “Ausbildungspartnerschaft Westfalen-Lippe (AWL) c/o Fachhochschule Bielefeld”, a complaint against the European Commission concerning the duty to pay interest on amounts not used for a Leonardo da Vinci project.

On 17 May 2004, I forwarded the complaint to the President of the European Commission. In my letter of the same day in which I informed you accordingly, I asked you to clarify the identity of the complainant. In your reply of 25 May 2004 you pointed out that the complainant was Fachhochschule Bielefeld. I forwarded a copy of this letter to the Commission on 2 June 2004.

The Commission sent its opinion drafted in French on 3 August 2004. On 10 August 2004, it submitted to me a translation of this opinion into German. I forwarded this translation to you on 23 August 2004 with an invitation to make observations.

In a letter of 18 August 2004 (received here on 23 August 2004), you informed me that you considered the complaint as having been settled.

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

THE COMPLAINT

The present complaint concerns a Leonardo da Vinci project (project D/99/2/11046/PL/II.1.2a/FPI) carried out by the Fachhochschule Bielefeld.

On 25 October 2001, the Fachhochschule submitted the final report for the project. This report stated that an amount of EUR 116 312, 50 had not been used and was to be repaid to the Commission.

In a further letter of 22 October 2002, the Fachhochschule informed the Commission that it had not yet had an answer to its letter and report of 25 October 2001. The Fachhochschule pointed out that it needed to be informed about the account to which it could transfer the above-mentioned amount. It stressed that universities were not allowed to use savings accounts and that it would thus not be able to pay interest on the amount to be refunded.

On 14 November 2002, the Commission’s Accounting Officer wrote to the Fachhochschule to point out that it had to pay the Commission an amount of EUR 129 282, 92 (comprising an amount of EUR 118 620, 50 plus interest amounting to EUR 10 470, 42).

On 16 April 2003, the Fachhochschule informed the Commission that it had repaid the sum of EUR 118 620, 50 but that it was unable to pay the interest claimed by the Commission. The Fachhochschule stressed that it was unable to place funds that had not been used on a savings account with a view to earning interest and therefore asked the Commission to review its calculation.

In a fax sent on 14 November 2003, the Commission referred to the letter of 16 April 2003 and pointed out that it intended to finalise its position regarding the claim for interest in the near future. The Commission therefore asked the complainant to submit, by 8 December 2003, documentary evidence that clearly showed that it was unable to place money on an account with a view to earning interest. On 11 December 2003, the Fachhochschule confirmed that it was unable to place funds on savings accounts, referring to the budgetary rules of the Land Nordrhein-Westfalen.

By letter dated 18 March 2004, the Commission’s Directorate-General (DG) Budget informed the Fachhochschule that the amount of EUR 10 662, 42 was still outstanding. The Commission pointed out that interest would be due on this amount until it was settled by the Fachhochschule.

On 31 March 2004, the complainant sent copies of its previous correspondence with the Commission to DG Budget and asked it to suspend its claim.

In its complaint to the Ombudsman, the Fachhochschule in substance alleged that the Commission had acted wrongly by demanding the payment of interest on the amount that had to be repaid to the Commission. The Fachhochschule claimed that the Commission should accept its objections and withdraw the entire claim for interest.

THE INQUIRY

The Commission's opinion

In its opinion, the Commission made the following comments:

Article 4 (7) of the grant agreement concluded between the Commission and recipient of the grant provided as follows: "Amounts paid to the contracting party or to a partner that are not used within 45 days have to be invested so as to yield interest. The interest thus gained has to be indicated in the financial account and transferred to the recipient of the grant who has to pay it into an account in the name of the Commission." The Commission thus had a claim for interest as regards amounts provided by it that had not been used within 45 days.

This was also in accordance with the new Financial Regulation and its implementing provisions. Article 5 (4) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 no. L 248, p. 1) provides as follows: "Subject to Articles 18 and 74, interest yielded by the funds which are the property of the European Communities shall be entered into the budget as miscellaneous revenue." Article 3 (1) of Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 no. L 357, p. 1) provides: "Pre-financing within the meaning of Article 105 shall remain the property of the Communities, unless the basic act, within the meaning of Article 49 (1) of the Financial Regulation, provides otherwise. (...)".

The Commission's services were bound to protect the financial interests of the Communities. They therefore had to ask for the payment of amounts that were due from recipients of grants under existing grant agreements.

However, where the contractor clearly established that it was unable to invest the amount so as to earn interest the matter was re-examined and the claim for interest could be withdrawn.

The Fachhochschule had claimed that under German law it was unable to invest amounts that it had received so as to earn interest. However, the documents submitted by the complainant on 11 December 2003 and the budgetary rules to which they referred had not enabled the Commission to modify its position that interest was due.

In order to avoid any erroneous interpretation, the Fachhochschule had been asked on 19 May 2004 to provide a copy of the budgetary rules to which it had referred. In the absence of a reply, this request had been repeated on 3 June 2004.

On the basis of the information that was currently available, the Commission was unable to modify its position as regards the claim for interest. However, if it should emerge that the Fachhochschule was prevented by law from placing amounts on accounts so as to earn interest, the matter would be reviewed and the claim for interest could be withdrawn.

The complainant's letter of 18 August 2004

In a letter of 18 August 2004, the complainant informed the Ombudsman that in a letter sent on 9 August 2004 the Commission's DG Education and Culture had accepted its objections against the claim for interest. Subject to the agreement of the Commission's internal financial control services the relevant Leonardo da Vinci project was thus closed. The complainant therefore considered the complaint to have been settled and thanked the Ombudsman for his intervention.

THE DECISION

1 Allegedly unfair claim for interest

1.1 The present complaint concerned a Leonardo da Vinci project carried out by the complainant, the Fachhochschule Bielefeld. An amount of EUR 118 620, 50 that had been provided by the Commission was not used and duly repaid by the complainant. The Commission asked the complainant to pay interest on that sum amounting to EUR 10 470, 42. The Fachhochschule alleged that this claim was unfounded and claimed that the Commission should withdraw it.

1.2 In its opinion, the Commission explained that the grant agreement provided for the payment of interest on amounts that were not used and that this was also in conformity with the new Financial Regulation and its implementing provisions. The Commission added, however, that where the contractor clearly established that it was unable to invest the amount so as to earn interest, the matter was re-examined and the claim for interest could be withdrawn. It stressed that on the basis of the information that had been provided by the complainant so far, it was unable to modify its position as regards the claim for interest. The Commission noted, however, that it had written to the complainant to ask for further information regarding this matter.

1.3 In a letter of 18 August 2004, the complainant informed the Ombudsman that in a letter sent on 9 August 2004 the Commission's Directorate-General Education and Culture had accepted its objections against the claim for interest. Subject to the agreement of the Commission's internal financial control services the relevant Leonardo da Vinci project was thus closed. The complainant therefore considered the complaint to have been settled and thanked the Ombudsman for his intervention.

2 Conclusion

It appears from the Commission’s comments and the complainant's observations that the Commission has taken steps to settle the matter and has thereby satisfied the complainant. The Ombudsman therefore closes the case.

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

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS