Decision of the European Ombudsman on complaint 3962/2005/ELB against the European Commission

Strasbourg, 26 July 2007

Dear Mr M.,

On 16 December 2005, you submitted a complaint to the European Ombudsman against the European Commission concerning its failure to reply to your letters.

On 23 January 2006, I forwarded the complaint to the President of the Commission. The Commission sent its opinion on 8 June 2006 and I forwarded it to you with an invitation to make observations, if you so wished. No observations have been received from you.

You sent additional documents and requested information on progress made with your complaint on 6 February 2006, 9, 10, 14, 15, 16 and 23 August 2006 and 9 September 2006.

I sent you information in relation to your complaint and its handling on 15 March 2006, 11 August 2006, as well as 4 and 26 September 2006.

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

THE COMPLAINT

According to the complainant, the facts can be summarised as follows:

Background to the complaint: complaint 3187/2005/ELB

On 26 September 2005, the complainant addressed a complaint to the European Commission's Directorate-General for Budget ("DG Budget") concerning a EUR 12 million penalty imposed on the Irish authorities for the administration of the 1994-1999 European Social Fund ("ESF"). This penalty resulted from an audit based on the retroactive application of Commission Regulation (EC) No 2064/97 of 15 October 1997 establishing detailed arrangements for the implementation of Council Regulation (EEC) No 4253/88 as regards the financial control by Member States of operations co-financed by the Structural Funds(1) ("Regulation 2064/97"). In his complaint to the Ombudsman, dated 3 and 6 October 2005, the complainant argued that the Commission (i) abused its power by requesting the retroactive application of Regulation 2064/97 to Ireland, (ii) breached principles of fair procedure, (iii) withheld information, and (iv) adopted incorrect practices. According to the complainant, the retroactive application of the Regulation resulted in his being accused of an illegal act.

As the complainant had written to the Commission only one month before lodging a complaint with the European Ombudsman on 28 October 2005, he was informed of the inadmissibility of his complaint.

The present complaint

On 16 December 2005, the complainant sent a new e-mail to the Ombudsman, indicating that he had made a formal complaint to the Commission's Directorate-General for Regional Policy ("DG Regional Policy") in May 2005 and to other services of the Commission. On 22 December 2005, he sent a new e-mail to the Ombudsman and attached the letters which he had sent to the Commission and which had remained unacknowledged:

A formal complaint to DG Budget dated 6 May 2005:

In this complaint, the complainant asked whether the Commission could inform him how it undertook the audit of the closure process in relation to the 1994-1999 Structural Funds and to confirm when the certification process as required by Regulation 2064/97 was undertaken.

A note to Directorate-General for Employment ("DG Employment") dated 15 July 2005:

The complainant's note of 15 July 2005 dealt with a meeting he had with Commission officials the previous day. The complainant expressed his thanks for the meeting and indicated that he would reply to the officials in a subsequent correspondence. He offered to send them the Arthur Andersen audit reports. He indicated that he had had access to evidence of a conspiracy. He also stated that the Commission now had evidence that it was told lies, this evidence being found in the "2001 Chapman Flood report and SBOP-Final report 2002". He argued that he was badly affected and defamed by the consequences of the retroactive application of the Regulation and asked the relevant authorities for the truth to be acknowledged. Finally, he requested assistance in this regard.

A letter to DG Employment dated 18 July 2005:

The complainant asked whether DG Employment was aware of the Arthur Andersen reports, the Chapman Flood Mazars report, the Deloitte&Touche report, and whether the findings of the Chapman Flood Mazars report had been accepted. He also asked the Commission to confirm what it meant by "incurred expenditure". He also noted that (i) the Commission required that ESF invoices be paid before it awarded the relevant grant; (ii) the Commission was aware that the Irish authorities refused to confirm compliance with Regulation 2064/97; (iii) the Irish authorities missed the deadline of 30 June; (iv) the 2001 Commission audit was related to the earlier non-compliance with section 9 of Regulation 2064/97; and (v) the audit found errors within the audit process, which led to the application of Regulation 2064/97 to 1994 expenditure.

In his complaint, the complainant alleged that the Commission failed to reply to his letters of 6 May 2005, 15 and 18 July 2005.

THE INQUIRY

The Commission's opinion

The Commission's opinion can be summarised as follows:

The complainant is a former director of an Irish organisation which received funding through the Small Business Operational Programme under the ESF implemented under the responsibility of the Irish Department for Enterprise, Trade and Employment. In 1999, the Irish authorities conducted a financial review of the expenditure declared by the complainant's organisation in the framework of the audit and control requirements of the applicable Structural Funds Regulations. According to the complainant, the conclusion reached by the Irish authorities was that the amount of IRL 16 500 was deemed to be ineligible. According to the complainant, the competent Irish authorities subsequently accused him of acting illegally.

Since autumn 2004, the complainant has repeatedly requested information from the Commission on the implementation of the eligibility of expenditure and control requirements under Council Regulation 2082/93(2) and on the implementation of Commission Regulation 2064/97(3). In this respect, the complainant has sent many electronic requests to various officials, asking for similar information. The Commission answered each of these requests (copies of the letters were attached to the opinion). The Commission also granted the complainant access to documents, when his requests could be satisfied under the provisions of Regulation 1049/2001(4). On 19 May 2005, the Commission informed the complainant that, in accordance with the Code of Good Administrative Behaviour, it considered his correspondence as abusive and pointless and that it would no longer reply to him.

(1) The letter of 6 May 2005 to DG Budget

The Commission explained that, apart from various allegations, the only questions raised by the complainant were the following:

"Can you now please inform me how the Commission undertook the audit of the Closure Process in relation to the 1994 to 1999 SF in light of the disclosures by Arthur Andersen and the admittance of ignorance of EU regulations/decisions, the refusal of the General Secretaries between 1998 to 2001 to confirm "observation", the confirmation of "blind" certification of expenditures. The recording by Head of EU Audit that criteria other than those laid down by 2064/97 [were] used to sign off expenditures, etc.

Can you please confirm when the certification process as required by 2064/97 was undertaken in respect of Measure 5 of the Small Business Operational Programme? Mrs [ Q.] previously informed me that Mr [S.] and [Mr P.] of the Irish Dept. of Enterprise (DoE) were responsible. They deny any responsibility or knowledge. DoE's Head of EU Audit has not returned my calls."

In its letters of 18 November 2004, 4 February 2005 and 14 March 2005, the Commission informed the complainant of the procedures applied in the closure process 1994-1999. The Commission informed the complainant that the reports issued by Arthur Andersen could not be considered in isolation from the other closure audit activities carried out by the competent Irish authorities, that is, the Internal Audit Unit of the Department for Enterprise, Trade and Employment.

The same letters had also addressed the second question. It should be clear that all Structural Fund programmes follow the same regulations. This is furthermore confirmed by the Commission in its letter dated 10 June 2005, in which it stated in the third paragraph that the correct application of Regulation 2064/97 is checked according to the same standards in all Member States. The verification process for all expenditure related to the Structural Funds started with the entry into force of Regulation 2064/97, that is, 1 January 1998 and was concluded on 31 March 2003. The responsibility for carrying out these verification activities lay with the Department of Enterprise, Trade and Employment's Internal Audit Unit for the ESF related programmes.

(2) The letter of 15 July 2005 to DG Employment

According to the Commission, this letter contained no real questions. As in his previous e-mail correspondence, the complainant repeated his allegations against the Irish authorities and referred to evidence he failed to submit to the Commission's services. Bearing in mind that DG Employment decided to discontinue correspondence with the complainant because his requests became pointless and repetitive (see letter of 19 May 2005), the Commission decided, in accordance with the Code of Good Administrative Behaviour, not to give a reply to this letter.

(3) The letter of 18 July 2005 to DG Employment

This last letter was equally considered to be answered, on the substance, by the previous replies. Therefore, in accordance with the letter of 19 May 2005, the Commission decided not to reply.

As far as the substance of this letter is concerned, the questions raised in it were already answered in the various (e-mail) replies given to the complainant previously. DG Employment wrote that it was not aware of any audit reports issued by Arthur Andersen, Deloitte&Touche and other external audit companies (letter of 4 February 2005).

As far as the question relating to "incurred expenditure" is concerned, this query was answered already in DG Employment's letter of 18 November 2004, and in DG Regional Policy's letter of 10 June 2005.

The other queries raised in the complainant's letter relate to internal Irish matters for which the Commission had no evidence. For this reason, it was not in a position to consider them. The complainant was, on several occasions, informed about this. As a matter of fact, the Irish Department of Enterprise, Trade and Employment had designated an official specifically to deal with his queries.

The Commission also emphasised that, in an attempt to answer his various queries, several other replies have been sent to the complainant. In this respect, reference can be made to the letters sent on 8 July 2004, 23 December 2004, 14 June 2005 and 11 January 2006.

The Commission considered that it had adequately answered all the questions raised by the complainant and it had provided him with all possible documentary evidence available to it. The complainant's problem, however, cannot be resolved by the Commission's services. Indeed, as the Commission explained to him on numerous occasions, he has to address his complaint to the competent Irish authorities which are, in the first instance, responsible for the verification and certification of expenditure. In this respect, the Commission reminded the Ombudsman that, since national authorities had brought charges against the complainant, the Commission was not in a position to issue an opinion on the matters concerned.

The Commission attached to its opinion copies of the following letters sent to the complainant:

• letter from DG Employment of 8 July 2004,
• letter from DG Employment of 18 November 2004,
• letter from DG Regional Policy of 23 December 2004,
• letter from DG Employment of 4 February 2005,
• letter from DG Employment of 14 March 2005,
• letter from DG Employment of 19 May 2005,
• letter from DG Regional Policy of 10 June 2005,
• letter from DG Employment of 14 June 2005,
• letter from DG Budget of 11 January 2006.

The complainant's observations

No observations were received from the complainant.

THE DECISION

1 Alleged failure to reply to the complainant's letters

1.1 The complainant alleged that the Commission failed to reply to his letters of 6 May 2005, as well as 15 and 18 July 2005.

1.2 First, the Ombudsman recalls that principles of good administration, embodied in the Commission's Code of Good Administrative Behaviour (part 4) and in the European Code of Good Administrative Behaviour (Article 13), require that the Commission reply to correspondence from citizens.

The Ombudsman further recalls that the Commission's Code of Good Administrative Behaviour (in part 4) also provides for an exception to this rule in the case of correspondence which can reasonably be regarded as improper, for example because it is repetitive, abusive and/or pointless. The European Code of Good Administrative Behaviour contains a similar exception (in Article 14).

In the present case, the Ombudsman notes that, on 19 May 2005, DG Employment sent a letter to the complainant which consisted of three paragraphs. The first paragraph referred to previous correspondence and stated that the complainant’s most recent e-mails appeared to repeat the facts and the subjects to which DG Employment had already replied. The second paragraph explained the responsibilities of Member States under Regulation 4253/89(5) and emphasised that the Commission had no power to intervene in a matter between the complainant and the competent Irish authorities. The third paragraph stated:

"(...) I consider that all the queries you raised so far have been effectively dealt with and that I have supplied you with all documentary evidence and assistance you have requested. I have therefore decided to discontinue the correspondence on this matter as in my view the issues you raise in your most recent e-mails are repetitive and pointless."

The Ombudsman takes the view that, given the particular circumstances of the present case, namely, the extensive and exhaustive correspondence from the Commission, the latter has taken adequate steps to comply with the relevant provisions of the European Code of Good Administrative Behaviour and of its own Code of Good Administrative Behaviour.

However, the Ombudsman suggests that, in future, the Commission should avoid characterising correspondence as repetitive, or pointless, in a letter which also appears to provide new information on the substance of the matter.

The Ombudsman also suggests that the Commission should, in future, bear in mind that the exception in its code applies only in the case of correspondence which "can reasonably be regarded as improper". Invocation of the exception is, therefore, unlikely to be an appropriate and courteous way for the Commission to convey to the other party, for the first time, its view that further correspondence on the matter would not be useful.

The Ombudsman notes that, following its letter of 19 May 2005, the Commission provided replies to some of the complainant's further letters, for example on 10 June 2005, 14 June 2005 and 11 January 2006, whereas other letters were not answered. The Ombudsman considers it useful to examine the issues that arise in relation to each unanswered letter from the complainant:

Letter of 6 May 2005

1.3 In his letter of 6 May 2005, the complainant asked whether the Commission could inform him how it undertook the audit of the closure process in relation to the 1994-1999 Structural Funds and to confirm when the certification process as required by Regulation 2064/97 was undertaken.

1.4 In its opinion, the Commission explained that, in its letters of 18 November 2004, 4 February 2005 and 14 March 2005, it informed the complainant of the procedures applied in the closure process for 1994-1999. The Commission informed the complainant that the reports issued by Arthur Andersen could not be considered in isolation from the other closure audit activities carried out by the competent Irish authorities, that is, the Internal Audit Unit of the Department for Enterprise, Trade and Employment.

The same letters had also addressed the second question. It should be clear that all Structural Fund programmes follow the same regulations. This was furthermore confirmed by the Commission in its letter dated 10 June 2005, in which it stated in the third paragraph that the correct application of Regulation 2064/97 was verified according to the same standards in all Member States. The verification process for all expenditure related to the Structural Funds started with the entry into force of Regulation 2064/97, that is, 1 January 1998, and was concluded on 31 March 2003. The responsibility for carrying out these verification activities lay with the Department of Enterprise, Trade and Employment's Internal Audit Unit for the European Social Fund ("ESF") related programmes.

1.5 The Ombudsman notes that the Commission has not specifically replied to the complainant's letter of 6 May 2005 and that it refers to its previous replies to the complainant dated 18 November 2004, 4 February 2005, 14 March 2005, as well as a reply dated 10 June 2005.

The Ombudsman notes that, in its letter of 18 November 2004, the Commission stated the following:

"Regulation 2064/97 sets out the requirements to which the national management and control systems and expenditure declared should comply prior to certification in the framework of Article 8 of this Regulation. Regulation 2064/97 does not provide a framework to report expenditures but sets out the standards for audits from national audit authorities (...)

ESF expenditure as well as other Structural Funds expenditure had to be audited respecting all relevant Council and Commission Regulations applicable during the programming period 1994-1999. Furthermore, Regulation 2064/97 provides more detail on the practical implementation of Article 23, paragraph 1 of Council Regulation 4253/89(6) amended by Regulation 2082/93, already in force since 1989 (...)

[T]he audit(s) of sample of expenditure declarations was/were essential in light of the certification of (total) expenditure under Article 8 of Regulation 2064/97. The audit of declared expenditure can be carried out up to three years following payment by the Commission of the balance of the Community participation to the form of assistance concerned. (...)

Payments of Structural Funds' assistance can only reimburse expenditure actually incurred. This has always been a central principle to the Structural Funds eligibility and is outlined in Article 21 of Council Regulation 2082/93 and Datasheet No4 on eligibility of expenditure. ESF advance payments were used in the 94/99 programming period to provide a treasury flow to Member States. These advance payments were used between the Commission and the Member State, whereas annual claims for final payment by Member States had to be based on expenditure actually incurred. (...) ESF can only be claimed on this basis.

(...) the matter should, in first instance, be dealt with by the competent national authorities. In this respect it is my understanding that Mr [M.] of the Department of Enterprise, Trade and Employment is responsible for any queries in relation to your case (...)".

In its letter of 4 February 2005, the Commission stated the following:

"The implementation of the European Structural Funds, of which the European Social Fund is only one element, is executed on the basis of transparency and partnership with the Member States. (...) The obligation and principles governing the financial control by Member States of the operations co-financed by the Structural Funds are laid down in Article 23(1) of Council Regulation (EEC) 2082/93 amending Council Regulation (EEC) 4253/88. In fact, Commission Regulation 2064/97 was adopted by the Commission, after due consultation with the Member Sates, to further specify the minimum acceptable level of financial control throughout the Community and to specify the minimum control requirements in detail to be respected by the Member States. In no way has Commission Regulation 2064/97 changed the conditions and/or criteria that determine the eligibility of the expenditure incurred (...)

Finally I cannot identify the Arthur Anderson report you refer to which was funded by the Commission without any further information. It is however possible that the report you refer to was co-funded by the European Social Fund in the framework of the technical assistance measure of Operation Programmes and Single Programming Documents. However, this report would in such a case be commissioned by the Irish Authorities and the Commission is not necessarily aware of its content and outcome (...)

I must repeat that the implementation and financial control of the operations co-funded by the Structural Funds are the primary responsibility of the Member State. I therefore have to refer you again to the Irish authorities [which] are responsible for dealing with your query."

In its letter of 14 March 2005, the Commission stated the following:

"As far as the late adoption of Commission Regulation 2064/97 is concerned, I have also explained to you (...) in which framework this occurred, namely in the framework of Article 23 paragraph 1 of Council Regulation 4253/89(7) amended by Council Regulation 2082/93, already in force since 1989. The late adoption of the implementing provisions of Council Regulation 4253/88 could be challenged only by means of an action for failure to act as provided for in Article 232 EC or, possibly, by challenging Commission Regulation 2064/97, within two months of its adoption, by means of an action for annulment as provided for in Article 230 EC.

Furthermore, the Advocate General of the European Court of Justice has, in a recent opinion (Case C-199/03), stated concerning the retroactive application of the definition of a "sufficient audit trail" as required under Article 2(c) of Commission Regulation 2064/97, and I quote:

̀Next, and more specifically, as regards the definition of 'sufficient audit trail' I note that, although that was not formalised until 1997, that does not mean that before that date a Member State could implement operational programmes co-financed by Structural Funds without delineating a clear and accurate path 'by which the movement of data can be traced forwards and backwards within a management and internal control system', therefore making it possible to evaluate the sound financial management of the projects in question. As appears from paragraph 16 of the contested decision, even before April 1997 any mechanism which did not make it possible to reconcile the summary amounts submitted to the Commission with all the supporting documents regarding expenditure and to check all follows of funding relating to the grant of Community assistance was considered contrary to Articles 4 (1) and 13(3) of Regulation No 2052/88 and Article 17(2) of Regulation No 4253/88.́

Furthermore, the Advocate General, in the same opinion, states that as regards the acceptance or tolerating of irregularities in previous situations:

̀The Court has ruled on several occasions that where the Commission has tolerated irregularities on grounds of fairness, the Member State concerned does not acquire any right to demand that the same position be taken with regard to irregularities committed in the following financial year by virtue of the principle of legal certainty or the principle of the protection of legitimate expectations.́

Finally, concerning the reports to which you refer (Arthur Anderson and Chapman Flood Mazars), I can only state that these reports merely form a part of the audit activities performed in the framework of the closure of the 1994-1999 programming period. You should be aware that those audit activities were supplemented by the programme-closure audit activities executed, inter alia, by the Department of Enterprise, Trade and Employment's Internal Audit Unit until March 2003 and that it would therefore, in my view, be inappropriate to consider any of them outside their full context."

In its letter of 10 June 2005, the Commission stated the following:

"With regard to the issues you raise on the application of Regulation 2064/97, as you are aware, the services of the Regional Policy Directorate-General have been carrying out audits in Ireland on the implementation of the Regulation, and audits are still ongoing at this stage on certain programmes of the 1994-99 period. The Regional Policy Directorate-General will, at the end of the audit process, be in a position to reach a final conclusion on compliance by the Irish authorities with Regulation 2064/97 as regards ERDF and the reliability of the national procedures for closure of programmes.

(...) I would like to reject absolutely the claim that 'disallowance targets' were fixed by the Commission for Ireland or for any other Member State, and that in mid-2001 Regulation 2064/97 was 'reinterpreted' to reach those targets. I can also assure you that the application of Regulation 2064/97 is verified according to the same standards in all Member States.

On your personal case, I can only confirm the reply given by the Employment, Social Affairs and Equal Opportunities Directorate-General on 18th November 2004 that presenting invoices for payment without those being previously defrayed constituted a breach of Community rules applicable at the time."

After examining these replies, the Ombudsman notes that they deal extensively with the procedures concerning the 1994-1999 programming period of the Structural Funds. The Ombudsman thus takes the view that, in its previous letters to the complainant, the Commission had already given an appropriate reply to the issues raised by the complainant in his letter of 6 May 2005. The Ombudsman, however, draws the Commission's attention to the further remark made below.

Letter of 15 July 2005

1.6 The complainant's note of 15 July 2005 dealt with a meeting he had with Commission officials the previous day. The complainant expressed his thanks for the meeting and indicated that he would reply to the officials in a subsequent correspondence. He offered to send them the Arthur Andersen audit reports and he indicated that he had had access to evidence of a conspiracy. He also stated that the Commission now had evidence that it was told lies, this evidence being found in the "2001 Chapman Flood report and SBOP-Final report 2002". He argued that he was badly affected and defamed by the consequences of the retroactive application of the Regulation and asked the relevant authorities to acknowledge the truth. Finally, he requested assistance in this regard.

1.7 In its opinion, the Commission indicated that this letter contained no real questions. As in his previous e-mail correspondence, the complainant repeated his allegations against the Irish authorities and referred to evidence he did not submit to the Commission's services. Bearing in mind that DG Employment decided to discontinue correspondence with the complainant because his requests became pointless and repetitive, it was decided, in accordance with the Code of Good Administrative Behaviour, not to give a reply to this letter.

1.8 The Ombudsman notes, after having examined the complainant's letter, that previous letters from the Commission addressed the points raised by the complainant, notably the following:

• letter of 18 November 2004: "(...) the matter should, in first instance, be dealt with by the competent national authorities. In this respect it is my understanding that Mr [M.] of the Department of Enterprise, Trade and Employment is responsible for any queries in relation to your case (...)".
• letter of 4 February 2005: "I must repeat that the implementation and financial control of the operations co-funded by the Structural Funds are the primary responsibility of the Member State. I therefore have to refer you again to the Irish authorities [which] are responsible for dealing with your query."
• letter of 14 March 2005: "Finally, concerning the reports to which you refer (Arthur Anderson and Chapman Flood Mazars), I can only state that these reports merely form a part of the audit activities performed in the framework of the closure of the 1994-1999 programming period. You should be aware that those audit activities were supplemented by the programme-closure audit activities executed, inter alia, by the Department of Enterprise, Trade and Employment's Internal Audit Unit until March 2003 and that it would therefore, in my view, be inappropriate to consider any of them outside their full context."
• Letter of 19 May 2005: "(...) as far as the allegations (...) against you and the issues arising from this I can only confirm that, according to Article 23, paragraph 1 of Council Regulation 4253/89(8) amended by Council Regulation 2082/93, it falls primarily under the Member State's, i.e. Ireland, responsibility to prevent and to take action against irregularities and to recover any amount lost as result of an irregularity or negligence. The charges brought against you are therefore a matter between you and the competent Irish Authorities i.e. the department of Enterprise, Trade and Employment. I must emphasize that the Commission has no powers to intervene in this matter."

The Ombudsman concludes that the Commission has, in its previous correspondence with the complainant, adequately addressed the questions asked in the letter of 15 July 2005. The Ombudsman, however, draws the Commission's attention to the further remark made below.

Letter of 18 July 2005

1.9 In his letter of 18 July 2005, the complainant asked whether DG Employment was aware of the Arthur Andersen reports, the Chapman Flood Mazars report, the Deloitte&Touche report and whether the findings of the Chapman Flood Mazars report had been accepted. He also asked the Commission to confirm what it meant by "incurred expenditure". He also noted that (i) the Commission requested that ESF invoices be paid before it awarded the relevant grant; (ii) the Commission was aware that the Irish authorities refused to confirm compliance with Regulation 2064/97; (iii) the Irish authorities missed the deadline of 30 June; (iv) the 2001 Commission audit was related to the earlier non-compliance with section 9 of Regulation 2064/97; and (v) the audit found errors within the audit process, which led to the application of Regulation 2064/97 to 1994 expenditure.

1.10 In its opinion, the Commission stated that this letter was equally considered to be answered, on the substance, by previous replies and it therefore decided, in accordance with the letter of 19 May 2005, not to give a reply.

As far as the substance of this letter is concerned, the questions raised in this letter were already answered in the various (e-mail) replies given to the complainant previously. In its letter of 4 February 2005, DG Employment indicated that is was not aware of any audit reports issued by Arthur Andersen, Deloitte&Touche and other external audit companies.

The other queries raised in his letter relate to internal Irish matters for which the Commission had no evidence and was therefore not in a position to give a reply. The complainant was, on several occasions, informed about this. As a matter of fact, the Irish Department of Enterprise, Trade and Employment had designated an official specifically to deal with his queries.

1.11 The Ombudsman notes that, in previous replies, the Commission stated the following as regards the different issues raised in the complainant's letter:

• as regards the various audit reports from external audit firms

(i) letter of 4 February 2005: "I cannot identify the Arthur Anderson report you refer to which was funded by the Commission without any further information. It is however possible that the report you refer to was co-funded by the European Social Fund in the framework of the technical assistance measure of Operational Programmes and Single Programming Documents. However, this report would in such a case be commissioned by the Irish Authorities and the Commission is not necessarily aware of its content and outcome".

(ii) letter of 14 March 2005: "Finally, concerning the reports to which you refer (Arthur Anderson and Chapman Flood Mazars), I can only state that these reports merely form a part of the audit activities performed in the framework of the closure of the 1994-1999 programming period. You should be aware that those audit activities were supplemented by the programme-closure audit activities executed, inter alia, by the Department of Enterprise, Trade and Employment's Internal Audit Unit until March 2003 and that it would therefore, in my view, be inappropriate to consider any of them outside their full context."

• as regards incurred expenditure

(i) letter of 18 November 2004: "Payments of Structural Funds' assistance can only reimburse expenditure actually incurred. This has always been a central principle to the Structural Funds eligibility and is outlined in Article 21 of Council Regulation 2082/93 and Datasheet No4 on eligibility of expenditure. ESF advance payments were used in the 94/99 programming period to provide a treasury flow to Member States. These advance payments were used between the Commission and the Member State, whereas annual claims for final payment by Member States had to be based on expenditure actually incurred. (...) ESF can only be claimed on this basis."

(ii) letter of 10 June 2005: "On your personal case, I can only confirm the reply given by the Employment, Social Affairs and Equal Opportunities Directorate-General on 18th November 2004 that presenting invoices for payment without those being previously defrayed constituted a breach of Community rules applicable at the time."

(iii) letter of 11 January 2006: "(...) The Commission has regularly informed the Member States of its view that this provision means that only eligible expenditure actually paid out by a beneficiary can be claimed. The Commission publicises the eligibility rules, principally through the management committee and through its websites, and each Member State is expected to ensure that claimants are aware of these rules (...)".

• as regards the Irish authorities' refusal to comply with Regulation 2064/97

(i) letter of 18 November 2004: "The delegated authorising officer of the Commission (the Director general of the DG), in accordance with the rules of delegation of authorisation within the DG to the respective ESF units, assisted where necessary by the ESF audit unit, review the Final reports and have the responsibility to accept, to ask for more clarification and information or to refer the certificate back to the Member State (...)

Article 24 of Council Regulation 2082/93 sets out the conditions for reduction, suspension and cancellation of assistance; the Commission gave guidelines to its services in October 1997 by its Decision No 3151/97 concerning the implementation of financial corrections, including where necessary, flat rate corrections."

(ii) letter of 10 June 2005: "With regard to the issues you raise on the application of Regulation 2064/97, as you are aware, the services of the Regional Policy Directorate-General have been carrying out audits in Ireland on the implementation of the Regulation, and audits are still ongoing at this stage on certain programmes of the 1994-99 period. The Regional Policy Directorate-General will, at the end of the audit process, be in a position to reach a final conclusion on compliance by the Irish authorities with Regulation 2064/97 as regards ERDF and the reliability of the national procedures for closure of programmes."

• as regards the retroactive application of Regulation 2064/97

(i) letter of 18 November 2004: "ESF expenditure as well as other Structural Funds expenditure had to be audited respecting all relevant Council and Commission Regulations applicable during the programming period 1994-1999. Furthermore, Regulation 2064/97 provides more detail on the practical implementation of Article 23, paragraph 1 of Council Regulation 4253/89(9) amended by Regulation 2082/93, already in force since 1989"

(ii) letter of 14 March 2005: "As far as the late adoption of Commission Regulation 2064/97 is concerned, I have also explained to you (...) in which framework this occurred, namely in the framework of Article 23 paragraph 1 of Council Regulation 4253/89(10) amended by Council Regulation 2082/93, already in force since 1989. The late adoption of the implementing provisions of Council Regulation 4253/88 could be challenged only by means of an action for failure to act as provided for in Article 232 EC or, possibly, by challenging Commission Regulation 2064/97, within two months of its adoption, by means of an action for annulment as provided for in Article 230 EC.

Furthermore, the Advocate General of the European Court of Justice has, in a recent opinion (Case C-199/03), stated concerning the retroactive application of the definition of a "sufficient audit trail" as required under Article 2(c) of Commission Regulation 2064/97, and I quote:

̀Next, and more specifically, as regards the definition of 'sufficient audit trail' I note that, although that was not formalised until 1997, that does not mean that before that date a Member State could implement operational programmes co-financed by Structural Funds without delineating a clear and accurate path 'by which the movement of data can be traced forwards and backwards within a management and internal control system', therefore making it possible to evaluate the sound financial management of the projects in question. As appears from paragraph 16 of the contested decision, even before April 1997 any mechanism which did not make it possible to reconcile the summary amounts submitted to the Commission with all the supporting documents regarding expenditure and to check all follows of funding relating to the grant of Community assistance was considered contrary to Articles 4(1) and 13(3) of Regulation No 2052/88 and Article 17(2) of Regulation No 4253/88.́

Furthermore, the Advocate General, in the same opinion, states that as regards the acceptance or tolerating of irregularities in previous situations:

̀The Court has ruled on several occasions that where the Commission has tolerated irregularities on grounds of fairness, the Member State concerned does not acquire any right to demand that the same position be taken with regard to irregularities committed in the following financial year by virtue of the principle of legal certainty or the principle of the protection of legitimate expectations.́

Finally, concerning the reports to which you refer (Arthur Anderson and Chapman Flood Mazars), I can only state that these reports merely form a part of the audit activities performed in the framework of the closure of the 1994-1999 programming period. You should be aware that those audit activities were supplemented by the programme-closure audit activities executed, inter alia, by the Department of Enterprise, Trade and Employment's Internal Audit Unit until March 2003 and that it would therefore, in my view, be inappropriate to consider any of them outside their full context."

(iii) letter of 11 January 2006: "As regards the issue of retroactivity, [Article 3.2 of Regulation 2064/97] provided that the checks to cover the minimum 5% of expenditure should be carried out before closure of the programme. In other words, when the Member State submitted its final expenditure claim, it had to have checked on the spot, at the level of the beneficiaries, at least 5% of the expenditure declared. Some of the checks may have been carried out before the adoption of Regulation 2064/97 under the general provision of Article 23.1 of Regulation 4253/88 mentioned above. In most Member States, not enough checks had been carried out on expenditure incurred before the date of adoption of Regulation 2064/97 to meet the target and therefore additional audit work was quite correctly executed on that expenditure, to ensure compliance with the regulation. To take account of the possible difficulties for Member States in meeting the target because of the adoption of the regulation midway during the programme period, Article 3.2 also provided "For forms of assistance approved before the entry into force of this regulation, the percentage [of expenditure to be checked] may be reduced proportionally". My recollection is that the Commission allowed Member States to adopt different ways of achieving a proportional reduction in the percentage of checks, and to adopt different ways for each fund, provided that the end result assured equal treatment between Member States."

In light of the above, the Ombudsman considers that the Commission adequately addressed the issues raised by the complainant in his letter of 18 July 2005. The Ombudsman, however, draws the Commission's attention to the further remark made below.

2 Conclusion

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

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

FURTHER REMARK

The Ombudsman recalls that principles of good administration, embodied in the Commission's Code of Good Administrative Behaviour (part 4) and in the European Code of Good Administrative Behaviour (Article 13), require that the Commission reply to correspondence from citizens.

The Ombudsman further recalls that the Commission's Code of Good Administrative Behaviour (in part 4) also provides for an exception to this rule in the case of correspondence which can reasonably be regarded as improper, for example because it is repetitive, abusive and/or pointless. The European Code of Good Administrative Behaviour contains a similar exception (in Article 14).

The Ombudsman suggests that, in future, the Commission should avoid characterising correspondence as repetitive, or pointless, in a letter which also appears to provide new information on the substance of the matter.

The Ombudsman also suggests that the Commission should, in future, bear in mind that the exception in its code applies only in the case of correspondence which "can reasonably be regarded as improper". Invocation of the exception is, therefore, unlikely to be an appropriate and courteous way for the Commission to convey to the other party, for the first time, its view that further correspondence on the matter would not be useful.

Yours sincerely,

 

P. Nikiforos DIAMANDOUROS

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(1) OJ 1997 L 290, p. 1 .

(2) Council Regulation (EEC) No 2082/93 of 20 July 1993 amending Regulation (EEC) No 4253/88 laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1993 L 193, p. 20).

(3) Commission Regulation (EC) No 2064/97 of 15 October 1997 establishing detailed arrangements for the implementation of Council Regulation (EEC) No 4253/88 as regards the financial control by Member States of operations co-financed by the Structural Funds (OJ 1997 L 290, p. 1).

(4) Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (OJ 2001 L 145, p. 43).

(5) The Ombudsman understands that the Commission wishes to refer to Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ 1988 L 374, p. 1) and not Regulation 4253/89.

(6) See footnote 5 above.

(7) See footnote 5 above.

(8) See footnote 5 above.

(9) See footnote 5 above.

(10) See footnote 5 above.