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Decision of the European Ombudsman closing her inquiry into complaint 2265/2011/BEH against the European Commission
Case 2265/2011/BEH - Opened on Monday | 05 December 2011 - Decision on Thursday | 19 December 2013 - Institution concerned European Commission ( No maladministration found )
The background to the complaint
1. The complainant is a German non-governmental organisation, acting on behalf of a number of NGOs.
2. The present complaint concerns the European Commission's role in co-funding the conduct of a study initiated by the German authorities to examine different options for developing the river Danube in a section between Straubing and Vilshofen. The study was being conducted in the framework of a TEN-T project with the Commission's funding amounting to EUR 16,5 M.
3. The study aimed at overcoming a stalemate in debates over two possible development options which has been ongoing for roughly two decades.
4. The first of these options, called Variant A, foresees certain flood protection and other measures, but no lock construction. Variant A is favoured by environmental groups since it is considered to preserve the last free-flowing section of the river in its middle part.
5. The other of these options, called Variant C280, provides for a levelled draught of 2.8m and foresees construction of a lock in order to by-pass a bend of the river. Variant C280 is favoured by inland waterway transport operators.
6. The Commission's funding decision contains a provision on conflicts of interest.
7. According to the complainant, the appointment, by the German authorities, of the RMD Wasserstraßen GmbH (henceforth 'RMD'), a limited liability company, to steer the examination of different options for developing the aforesaid section of the Danube, gives rise to a conflict of interest, contrary to the Commission's funding decision. The conflict of interest perceived by the complainant arises from the following two considerations:
(i) As an engineering company, RMD will be the project leader of the actual development of the river section here concerned, with its remuneration being directly dependent on the overall construction costs. It would be significantly more expensive to dam the river instead of taking other measures to regulate it;
(ii) RMD is a subsidiary of a limited company, which itself is owned by a large utility company. RMD has the contractual right to use all suitable constructions in the Danube for generating electricity. In case the aforesaid section were to include a lock, it would be easy for RMD to draw an economic advantage from constructing a hydropower station. In fact, RMD had, in the past, unequivocally promoted the damming of the river.
8. On 19 May 2010, the complainant turned to the Commission requesting it to examine the case and to take appropriate measures to resolve the perceived conflict of interest. With its letter, the complainant enclosed, among other things, a letter dated 8 April 2010 from the Chairman of the Monitoring Group ('the Chairman'), which had been established in order to follow the implementation of the project. In that letter, the Chairman stated that since its privatisation in 1994, RMD operated under the full supervision of and on instruction by the German government. According to him, institutional safeguards would prevent any policy of favouring construction of a dam.
9. In its reply of 5 August 2010, the Commission pointed out that the Monitoring Group was established to ensure that the study would be properly conducted and stated that it trusted the group's deliberations would be in conformity with EU law. The Commission moreover noted that the complainant had raised the perceived conflict of interest with the Monitoring Group, which, in its view, was the proper forum for considering that issue. It had assured the complainant that it would monitor the project so as to ensure that the study would be conducted properly.
10. In further letters, the complainant reiterated its concerns as regards the perceived conflict of interest.
11. In a reply of 18 July 2011, the Commission noted that the complainant had expressed its mistrust as regards RMD and had complained about that sufficient information was not being made available to it. The Commission stated that it had been informed about a large number of meetings of the Monitoring Group and that representatives of the environmental sector had been present at these meetings. The Commission added that the Monitoring Group had recently published an activity report. It finally invited the complainant to support the work of the Chairman in the preparation of a conference to be held in early 2012.
12. On 4 November 2011, the complainant turned to the Ombudsman.
The subject matter of the inquiry
13. The Ombudsman opened an inquiry into the following allegation and claim:
The Commission failed to take appropriate action in the face of the conflict of interest perceived by the complainant.
The Commission should take appropriate action and should, in particular, proceed to pay out its funding only if the conditions set out in the funding decision have unequivocally been met.
14. On 5 December 2011, the Ombudsman informed the complainant of the decision to open an inquiry into its complaint and, at the same time, asked it for certain clarifications concerning its complaint.
15. On 20 December 2011, the complainant sent its clarifications.
16. On 11 January 2012, the Ombudsman asked the Commission for an opinion on the allegation and claim. The Commission's opinion was forwarded to the complainant for observations, which the latter sent on 20 July 2012. On 22 July 2012 and on 23 January 2013, an NGO represented by the complainant (henceforth the 'NGO') submitted further observations.
17. Having analysed the Commission's opinion against the background of the observations received, the Ombudsman considered it appropriate to inspect the Commission's file. The inspection took place on 13 March 2013. A copy of the inspection report was sent to the Commission and a further copy was forwarded to the complainant together with an invitation to make observations. The complainant sent observations on 29 May 2013.
The Ombudsman's analysis and conclusions
18. On 2 December 2011, the complainant submitted to the Ombudsman an expert opinion by a German law firm. The expert opinion, dated 12 November 2011, is entitled "Cooperation of the Federation with the RMD without a tendering procedure" and essentially argues, against the background of German and EU public procurement law, that the involvement of RMD gives rise to a number of breaches of the law. In the letter requesting the complainant's clarifications (see paragraph 14 above), the Ombudsman asked the complainant, among other things, whether it intended also to complain about an alleged infringement of EU public procurement law by appointing RMD. In its clarifications, the complainant stated that it was still in contact with the Commission as regards that aspect and would expand its complaint in the event that the Commission did not address its arguments in this regard. The Ombudsman therefore did not include this aspect in his letter requesting the Commission's opinion. In its further observations, the NGO took the view that it was incomprehensible that the Commission did not address the issue of the alleged infringement of EU public procurement rules which had been documented in the expert opinion submitted to the Commission. In its observations on the report on the inspection of the Commission's file, the complainant reverted to the issue of public procurement and asked the Ombudsman to take this expert opinion into account.
19. The Ombudsman notes that her present inquiry does not include the issue as to the conformity with EU public procurement law of entrusting RMD with conducting the study and the Commission's position on this matter. The Ombudsman could in principle expand her inquiry to include this issue as well, provided that the complainant has made appropriate administrative approaches to the Commission in this regard (Article 2(4) of the Statute of the Ombudsman). At the same time, she realises that extending the scope of his inquiry would require her to ask the Commission to comment on this particular aspect before, in turn, giving the complainant the opportunity to submit observations. However, given the advanced stage of her inquiry, this would hardly be in the interest of procedural economy. Therefore the Ombudsman will not consider the issue as to the conformity of entrusting RMD with conducting the study with EU public procurement law in her analysis. However, the complainant remains free to submit a new complaint in this regard, after having made appropriate administrative approaches to the Commission, should it wish to pursue the matter. The same considerations apply to the complainant's view, expressed in its observations on the inspection report, that RMD is in charge of the current planning and construction of development and flood protection measures, without a prior public tender having been organised.
20. Given their intrinsic logical connection, it is appropriate to consider the complainant's allegation and claim together.
A. Allegation of failure to take appropriate action and related claim
Arguments presented to the Ombudsman
21. The complainant alleged that the Commission failed to take appropriate action in the face of the conflict of interest perceived by the complainant.
22. In support of its allegation, the complainant argued that RMD is actively involved and takes a key role in preparing the basis for a decision, which affects its own economic future. More specifically, the complainant referred to the arguments set out in paragraph 7 above. According to the complainant, the aforesaid conflict of interest is not ruled out by the institutional safeguards referred to in a letter of the Chairman of the monitoring committee of 8 April 2010.
23. The complainant claimed that the Commission should take appropriate action and should, in particular, proceed to pay out its funding only if the conditions set out in the funding decision have unequivocally been met.
24. In its clarifications of the complaint, the complainant rejected the Chairman's view that the legal set up of RMD would rule out a conflict of interest. It was true that RMD had been privatised and was supervised by the German government. However, the decision as to whether or not the Monitoring Group's input would be taken up was with the steering group, the latter giving concrete instructions to the project's 'operative level'. Due to the complexity of the project, it was hardly possible for the higher management of the steering group and of the 'operative level' to influence the technical planning in any detail.
25. In its opinion, the Commission stated that RMD had been set up in 1921 for the maintenance and management of navigable rivers and canals in south-east Germany and was privatised in 1994. It had entered into contracts with subcontractors for the implementation of large parts of the study.
26. The Commission explained that the study had been strongly opposed by environmental groups. On the instigation of the European Coordinator for Inland Waterways, appointed by the Commission, representatives of environmental groups agreed to join a Monitoring Group, consisting of experts, which reports directly to the competent German authorities. The Commission added that it received numerous letters from the complainant and another NGO, both members of the Monitoring Group, in which they complained that they were not being properly informed of the progress of the study. At the same time, they confirmed their trust in the Chairman of the Monitoring Group who strongly denied any such lack of information. The Commission also stated that the completion of the study was expected for the end of 2012 and that a conference would take place in autumn 2012 so as to stimulate an open debate on the study results.
27. Against this background, the Commission submitted that "there is no evidence that a conflict of interest can be expected" on the basis of the documents available to it. The Commission stated that beneficiaries of Commission funding are required to respect the main principles of the Public Procurement Directives. Moreover, the funding decision contains a specific provision on conflicts of interest to which the complainant referred in its complaint. Taking into account the concerns of several environmental groups, the Commission took the following additional measures:
-Through the funding decision, it requested German authorities to set up a Monitoring Group. A letter from the Chairman to the Commission dated 7 October 2011 confirmed the transparency of this process.
-At the insistence of the European Coordinator for Inland Waterways, the regional authorities agreed to hold a regional conference in autumn 2012.
28. The Commission furthermore explained that German authorities had entrusted RMD with the study, taking into account its professional skill and history, but the German authorities retained the responsibility for any final decision. Thus, any decision following from the study would be taken by the competent authorities and not by RMD. In this context, the Commission also referred to a contract between the Federal Government, the Land of Bavaria and RMD according to which RMD is subject to the direction and supervision of the Federal Government and thus controlled by it. Lastly, the Commission stated that RMD had made a public declaration according to which it waived its right to erect a hydro power plant in the area in question and would only do so upon the explicit request of the Federal Government and the Land of Bavaria.
29. In its observations, the complainant took the view that the measures referred to by the Commission were ill-suited to resolve an apparent conflict of interest.
30. As for the Monitoring Group, the complainant stated that it receives voluminous but yet at times incomplete information. However, its ability to control the conduct of the study is limited, given that it was left to the discretion of the Steering Group whether it would take up its suggestions. The complainant also stated that it had only limited access to interim study results and study data. Moreover, monitoring the conduct of the study was time-consuming and complex. Due to the fact that there were no financial resources provided to monitor the study, it was impossible to assess the plausibility and correctness of every interim step. For this reason, the Monitoring Group had to simply acknowledge many results without prior checking. In these circumstances, it is all the more necessary to avoid any appearance of bias or of a conflict of interest. The complainant reiterated its view that such a conflict exists in the present case.
31. As regards the control of RMD by national and regional authorities, the complainant pointed out that the latter authorities faced constraints similar to its own in terms of expertise and manpower and therefore had to rely on data provided by RMD. Again, the complainant underscored the importance of avoiding the appearances of a conflict of interest.
32. Concerning RMD's waiver of its right, the complainant acknowledged that it had been certified by a notary. However, it was probable that the German authorities would request RMD to make use of its right. Moreover, the declaration was not legally binding and the use of RMD's concession right could only be restricted by virtue of a contract. As long as there was no legally binding waiver, favouring the variant in support of the damming of the river would give a significant economic advantage to RMD.
33. The complainant concluded by saying that the objectivity and credibility of the study could be guaranteed only by excluding RMD from participation in the study and by having all its findings reassessed by independent experts.
34. In its further observations, the NGO, referring to a number of examples, took the view that the factual information contained in the Commission's opinion was incorrect on a number of grounds.
35. As for the Monitoring Group, the NGO stated that it could not ensure the independence of the study and of its results. In that context, the NGO stated that the Monitoring Group was not sufficiently empowered to invite experts of its choice. Moreover, the Steering Group's initial approach to only reimburse experts for travel expenses but not for any other expenses, although later revised, was testimony to the Steering Group's attitude to the work of the Monitoring Group. The NGO also pointed out that there were problems with having its views included in interim documents and with access to data and interim findings.
36. As for the control of RMD by national and regional authorities, the NGO stated that both the Federal Government and the Land of Bavaria were promoting a hydro power plant, as evidenced by public statements. Furthermore, according to the NGO, an information brochure published by the authorities promoting the construction of a dam was biased and contained clearly incorrect information. This, however, ran counter to a decision of the German Bundestag of 2002 which clearly opts for developing the river without foreseeing locks or dams.
37. According to the NGO, the waiver declared by RMD was worthless, given that a request to build a hydro power station was only a matter of form.
38. The NGO concluded by saying that the planned regional conference would be a decisive opportunity to ensure the objectivity of the study.
39. In its supplementary observations, the NGO submitted a "political assessment of the procedure and of the results of 22 January 2013". Other than reiterating the views taken in its previous letter, it essentially stated that it had now become certain that the study was being conducted in a one-sided manner. The NGO also stated that national and regional authorities dealing with environmental matters had not been involved in the study.
The results of the inspection of the Commission's file
40. In the course of the inspection, the Ombudsman's representatives were presented with the technical file in regard to the project funded by the Commission and, more specifically, documents relating to the preparation and adoption of the Commission's funding decision, to subsequent amendments of that decision, as well as to the implementation of the funded project. The Ombudsman's services also inspected the draft report which the Chairman of the Monitoring Group had sent to the Commission in December 2012.
41. The Ombudsman's representatives were furthermore shown correspondence sent to the Commission by the complainant and an NGO as well as, among other things, a newspaper article from a major German daily newspaper reporting on Bavaria's decision not to opt for the development variant providing for a lock in the relevant section of the Danube.
42. Finally, they inspected correspondence between Germany and the Commission concerning the implementation of the project and more specifically the issue of a potential conflict of interest. The inspection of the correspondence showed that the Commission closely followed the work of the Monitoring Group.
43. In its observations on the inspection report, the complainant submitted that the draft report of the Chairman of the Monitoring Group of December 2012 did not contain a full analysis of the plans and assessments steered by RMD, given that the latter had been made available to the Monitoring Group in December 2012 only. Moreover, the complainant pointed out that, on 30 March 2013, the Chairman had submitted the final report of the Monitoring Group a copy of which the complainant forwarded to the Ombudsman. The complainant stated that the final report covers in detail the positions taken by environmental associations throughout the process. The complainant claimed that it is clear from the final report that the study, and its results, were influenced by interests which support a particular outcome. The complainant asked the Ombudsman to take into account this assessment.
44. The complainant added that the decision of the government of the Free State of Bavaria not to opt for a lock is of a provisional nature and the result of pressure exercised by the public which could not be convinced of the plausibility in terms of navigational, economic or ecological considerations of constructing a lock. However, it could not be said that plans to build a lock had been abandoned forever.
The Ombudsman's assessment
45. In this, the Ombudsman is called to decide whether the Commission has taken appropriate action in the face of the conflict of interest perceived by the complainant.
46. To avoid any misunderstanding, it is important to recall that Article 228 of the Treaty on the Functioning of the EU empowers the Ombudsman to inquire into possible instances of maladministration in the activities of Union institutions, bodies, offices and agencies. The Statute of the European Ombudsman specifically provides that no action by any other authority or person may be the subject of a complaint to the Ombudsman. The Ombudsman therefore has no mandate to consider complaints against other institutions or bodies, including national authorities. The present decision therefore deals exclusively with the Commission's conduct. However, it is important also to bear in mind that, as a co-funder of the project along with the German authorities, the Commission does not carry all of the responsibility for ensuring that no conflict of interest arises in the conduct of the project.
47. The Ombudsman recalls that the provision on conflicts of interest contained in the funding decision provided as follows:
"III.2.6 Conflict of interests
1. The Beneficiary undertakes to take all the necessary measures to prevent any risk of conflicts of interests which could affect the impartial and objective implementation of the Action. Such conflict of interests could arise in particular as a result of economic interest, political or national affinity, family or emotional reasons, or any other shared interest.
2. Any situation constituting or likely to lead to a conflict of interests during the implementation of the Action must be brought to the attention of the Commission, in writing, without delay. The Beneficiary shall undertake to take whatever steps are necessary to rectify this situation at once.
3. The Commission reserves the right to check that the measures taken are appropriate and may demand that the Beneficiary take additional measures, if necessary, within a certain time."
48. Article III.2.6 thus aims at preventing certain conflicts of interest. To this end, it requires the beneficiary (i) to prevent any risk of conflicts interests and (ii), in the face of an actual or potential conflict of interests, to inform the Commission and take the necessary steps to correct the situation. As for the Commission, Article III.2.6 empowers it (i) to check the appropriateness of the measures taken and (ii) to demand the beneficiary to take additional measures.
49. It is against this legal background that the Ombudsman needs to assess the appropriateness of the Commission's action in the present case.
50. To start with, Article III.2.6 does not provide for a definition of 'conflict of interest'. Still, it clearly emerges from that provision that, in addition to actual conflicts, it covers potential conflicts ("any risk of conflicts of interests which could affect the impartial and objective implementation of the Action"; emphasis added). Lastly and in conformity with the OECD Guidelines for Managing Conflicts of Interest in the Public Service which have received widespread recognition, the Ombudsman considers that Article III.2.6 should be interpreted to furthermore include apparent conflicts of interests.
51. It is not in dispute that RMD, in view of its historic rights and the legal framework governing its operations, enjoys a specific economic position as regards the development of the section of the Danube which is at issue here. In this regard, the complainant made reference to the particular role of RMD in implementing the variant ultimately chosen as well as RMD's contractual right to use all suitable constructions in the Danube for generating electricity. In this context, it should be noted that Article III.2.6 makes specific reference to the existence of an economic interest as a circumstance potentially giving rise to a conflict of interests.
52. It is true that the Commission pointed to certain institutional safeguards, as detailed in the letter of the Chairman, as well as to RMD's waiver of its contractual right. While the Ombudsman shares the complainant's view that the current waiver could not effectively rule out that RMD would make use of its contractual right which, in turn, could have an influence on how it conducts the study, she also considers that the institutional safeguards are such as to render an actual conflict of interests less likely. In this regard, the degree of control exercised by the German authorities over RMD is clearly of relevance. This finding is not called into question by the fact that, at least at one point in time, the German authorities apparently favoured Variant C280, given that it is not in dispute that the ultimate decision on which development option to chose is in any event not with RMD.
53. These considerations notwithstanding, the fact remains that entrusting RMD with responsibility for the study, in view of its specific economic position (see paragraph 51 above), could give rise to an apparent or a potential conflict of interest. In fact, in the eyes of the wider public, the impression could be created that, regardless of the fact that it is not ultimately deciding on the choice of development option, RMD could seek to influence the ultimate decision-maker in a way which would allow it fully to exploit its specific economic position. This impression could be created in spite of RMD's professional skill and historical role which the Commission referred to in its opinion. The Ombudsman therefore considers that appointing RMD could give rise to a risk of a conflict of interest, as referred to in Article III.2.6.
54. With the Commission having been duly informed of the appointment of RMD, the central question therefore is whether the Commission, in line with its obligations pursuant to Article III.2.6, has taken appropriate action.
55. In its opinion, the Commission referred to its insistence on establishing a Monitoring Group and holding a regional conference in this regard. In the following, the Ombudsman will therefore examine both measures in turn.
56. As regards the Monitoring Group, the Ombudsman recalls that the complainant, in its observations on the inspection report, attached particular importance to the Monitoring Group's final report which it considered to be objective. In addressing the appropriateness of establishing the Monitoring Group in order to contain the risk of a conflict of interest, the Ombudsman will therefore focus on that report.
57. The final report is divided into five parts. Part A. contains the Chairman's report. Parts B. to D. contain the opinions of the representatives of (i) environmental associations; (ii) trade associations; and (iii) citizens' action groups respectively, while part E. consists of documents annexed to the report. In light of the divergence of views taken in the opinions of the aforesaid representatives, the Ombudsman considers it appropriate to focus her analysis on the Chairman's report. Incidentally, she notes that the complainant underlined its trust in the Chairman's work.
58. The Chairman's report meticulously records the various meetings held as well as the subject-matters discussed. On a general level, the Chairman states that the numerous meetings in the course of the project enabled the members of the Monitoring Group to receive extensive and voluminous information. He adds that written and electronic documents resulted in a 'good level of information'. According to the Chairman's report, the members of the Monitoring Group were able, for instance, to make significant contributions to a balanced presentation of the various interests at stake in an information brochure on the different development variants.
59. The Chairman's report concludes with a section entitled "Assessment of the monitoring process". Recording certain criticism levelled at the monitoring process (for instance, belated provision of information and complexity of the process), the Chairman also notes that establishing the Monitoring Group translated into marked improvements in the participation of associations in this respect. The Chairman in particular highlights the involvement of associations in an open-ended process from an early stage and (ii) the high level of participation, which included, for instance, intensive dialogues and, ultimately, making available data which enabled the Monitoring Group autonomously to follow the various stages. As regards the latter aspect, the Chairman concedes that this process was 'partly cumbersome'. In addition to that, the Chairman also draws attention to certain limitations in the work of the Monitoring Group. In this regard, he refers in particular to (i) the high investment in terms of time required from participants; (ii) the fact that, in some instances, complex negotiations proved necessary before requested information was provided; and (iii) the need to optimise the possibility of including external experts so as to substitute for the Monitoring Group's limited capacity to assess highly complex processes. The Chairman also put forward (iv) that complete transparency and understanding of highly demanding scientific processes is next to impossible to achieve and underscored the need for a certain degree of trust in the exercise. He added that the work of the Monitoring Group was affected by this problem, given that the representatives of the environmental associations, for reasons of principle, disapproved of the role of RMD throughout the project.
60. The Ombudsman understands from the report of the Chairman that in spite of certain difficulties, detailed above, there was a high degree of participation by the Monitoring Group in the project. It is true that, in its observations, the complainant itself drew attention to specific problems encountered in the work of the Monitoring Group as well as to the complexity of the process and the impossibility of controlling every aspect thereof. However, the Ombudsman also takes into consideration that the Chairman, other than reiterating different views concerning involvement of RMD taken by various actors, did not report on any specific problems ensuing from a risk of a conflict of interest. Instead, the Chairman points to certain systemic problems surrounding the work of the Monitoring Group which, as such, do not ensue from the participation of RMD. Moreover, there is nothing to suggest in the Chairman's report that the role of RMD would have influenced the substantive outcome of the study, as suggested by the complainant.
61. As for the regional conference referred to by the Commission, the Ombudsman considers that this contributed to opening up participation in the process to a wider circle of interested parties and to reducing the likelihood of a single interest dominating the project.
62. In view of these findings, the Ombudsman considers that the Commission's insistence on establishing a Monitoring Group and on holding a regional conference constituted appropriate actions so as to address a risk of a conflict of interests. Lastly, it is relevant to note that, as confirmed by the findings of the inspection, the Commission closely followed the entire process.
63. The Ombudsman therefore finds that the Commission has taken appropriate measures and followed up on their implementation in the present case. It follows that the complainant's allegation cannot be sustained. Consequently, the claim cannot succeed either.
On the basis of her inquiry into this complaint, the Ombudsman closes it with the following conclusion:
There has been no maladministration in the Commission's activities.
The complainant and the Commission will be informed of this decision.
Done in Strasbourg on 19 December 2013
 "Ausschreibungsfreie Kooperation des Bundes mit der RMD" in the German original.
 The OECD Guidelines for Managing Conflicts of Interest in the Public Service (available at: http://www.oecd.org/gov/ethics/48994419.pdf) provide the following definition of "conflict of interest":
(i) An actual conflict of interest exists when there is a conflict between a public official's public duty and his/her private interests, such as where the public official has private interests which could improperly influence the performance of their official duties and responsibilities.
(ii) An apparent conflict of interest can be said to exist where, despite the fact that there is no actual conflict of interest, an impression exists that a public official's private interests could improperly influence the performance of his/her duties.
(iii) A potential conflict arises where a public official has private interests which are such that a conflict of interest would arise if the official were to become involved in relevant official responsibilities in the future.
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