Background to the complaint

1. The complainant is the CEO of a Guadeloupe-based holding company.

Funding request addressed to the European Investment Bank

2. On 11 May 2015, the complainant submitted, on behalf of the holding company, a request to the European Investment Bank (EIB) for project funding[1] under the European Fund for Strategic Investments (EFSI)[2].

3. On 21 December 2016, the EIB rejected the funding request. The EIB considered that the holding company did not have a sufficiently solid business plan, or sufficient own funds or commercial contracts, to sustain the activities planned. The EIB also explained that it does not provide subsidies, but finances projects by granting loans that need to be reimbursed.

Complaints to the European Investment Bank’s Complaints Mechanism

4. The complainant submitted two complaints to the EIB’s Complaints Mechanism (EIB-CM).

5. In her first complaint, the complainant argued, in essence, that the EIB had failed to respond to her e-mails and phone calls after the staff member in charge of dealing with her request changed.

6. After the EIB-CM got involved, the EIB replied to the complainant, informing her of its decision to reject the funding request.

7. The complainant submitted a second complaint on 30 January 2017, contesting the EIB’s decision. She stated that the EIB had taken its decision without having examined an essential financial document detailing the company’s activities and income. The complainant had omitted this document from the application in error but sent it to the EIB-CM in the context of her complaint.

8. The complainant also questioned the reasons given by the EIB for refusing the funding request. She essentially said that, due to the specific situation of and lack of private-equity funds in the French overseas departments, the EIB should be flexible in how it applies the requirements for co-funding under the EFSI.

9. The EIB-CM could not deal with the complainant’s second complaint. It explained that it did not have the remit to look into the substance of decisions taken by the EIB to participate in financing operations[3].

10. Dissatisfied with this response, the complainant turned to the Ombudsman.

The inquiry

11. The Ombudsman opened an inquiry into (a) how the EIB dealt with the complainant’s funding request and whether it had provided a reasonable explanation for rejecting it, and (b) how the EIB-CM handled her complaint against the EIB’s decision.

12. In the context of her inquiry, the Ombudsman asked the EIB to reply to the complainant and to address her arguments contesting its decision to reject the funding request. In addition, the Ombudsman asked the EIB-CM to clarify how it ensures that, when a complaint falls outside its remit, the substantive issues raised in that complaint are brought to the attention of, and dealt with, by the relevant EIB department.

13. During the inquiry, the Ombudsman received the reply that the EIB sent to the complainant on 13 July 2018, as well as the complainant’s comments on the EIB’s reply. The Ombudsman also received the EIB’s reply to the Ombudsman’s request for clarification.

How the EIB dealt with the complainant’s request for funding

Arguments presented to the Ombudsman

14. The complainant noted that, since June 2016, the EIB had failed to reply to her e-mails and phone calls, and had failed to take a timely decision on her funding request. In her view, the EIB had wrongly rejected the funding request. It should have asked her to provide it with additional financial information, which was necessary to properly examine her request.

15. In its reply to the complainant, the EIB stated that it had examined the additional information contained in her letter of 30 January 2017.

16. The EIB further explained that it had rejected the funding request because the complainant’s consultancy company had an insufficient operational track record, and did not have sufficient proof of creditworthiness or a history of profitability.

17. The EIB can support only projects that are in line with its lending objectives and that are economically, financially, technically and environmentally sound. To benefit from EFSI funding, all project proposals must first be submitted to the EIB's standard pre-audit procedure, which verifies their eligibility. If eligible, an independent investment committee then decides if the project should receive support. Projects financed under the ESFI must be mature enough to be bankable, that is, lenders must be willing to finance it. This was not the case for the project proposed by the complainant. The company did not have a sufficient financial history or demonstrable experience in carrying out projects with a budget similar to that in the proposal.  

18. Finally, the EIB stated that the loans provided under the EFSI normally cover no more than 50% of the total project cost. However, the complainant’s proposal sought funding of EUR 680 million from the EIB for a project estimated to cost around EUR 1 billion. No direct investment was foreseen by the company itself.

19. The EIB therefore upheld its decision of 21 December 2016.

20. In her comments on the EIB’s reply, the complainant stated that the EIB continued to ignore the specific situation in Guadeloupe and the French overseas departments. She contested the EIB’s points about the lack of sound financial history, the co-financing level and the proposed terms for the loan. She argued that, due to the fact the EIB was refusing to correspond with her, she could not provide evidence to convince it to overturn its decision.

The Ombudsman's assessment

21. The complainant’s arguments concern two aspects: a procedural aspect, namely the EIB’s failure to reply to her e-mails and phone calls and the time taken by the EIB to adopt a decision on her request; and a substantive aspect, namely its decision to reject the financing request.

22. Regarding the EIB’s failure to reply to the complainant, the Ombudsman notes that the complainant raised this issue in her first complaint to the EIB­CM. After the EIB-CM got involved, the EIB replied to the complainant, informing her of its decision to reject her funding request. By doing so, the EIB has settled this matter.

23. Regarding the time it took the EIB to take its decision, the Ombudsman notes that the EIB was obliged to assess the complainant’s funding request within a reasonable period of time[4]. What constitutes a ‘reasonable period of time’ depends on the circumstances, for example the context of the case and its complexity.

24. In this case, it took the EIB 19 months to take a decision on the complainant’s funding request. She found that to be too long. The EIB explained to the complainant, when it was examining her request, that it needed more time. This was due to what it referred to as “the complexity” of the project, which included several smaller projects with different profiles that had to be assessed by different teams in the EIB. At the time, the complainant did not question this explanation. The information provided in the complaint to the Ombudsman further suggests that the complainant was in regular contact with the EIB and sent it extensive correspondence.

25. The Ombudsman finds the explanations given by the EIB in this particular case to be reasonable. Given that the complainant did not question the EIB’s assertion that it needed more time and that she corresponded extensively with it in relation to her case, there was no maladministration on this aspect.

26.  As regards the substance of the EIB’s decision to reject the complainant’s request for funding, the Ombudsman’s role is to review whether the EIB has provided a consistent and reasonable explanation for its decision.

27. In its decision of 21 December 2016, the EIB provided a clear and reasonable, albeit brief, explanation as to why it had rejected the funding request. The decision was taken after the EIB had asked the complainant to provide it with documents to demonstrate that the holding company was indeed able to carry out the project and, ultimately, reimburse the loan.

28. In her funding request, the complainant omitted a document, which she subsequently considered to be essential. However, the EIB re‑examined the complainant’s request based on the whole file, including the document in question, and upheld its initial decision. In doing so, the EIB provided the complainant with a more detailed and comprehensive explanation of its decision.

29. The EIB explained that the projects it finances must be economically, financially, technically and environmentally sound. While the nature of the project and the specificities of the region where the project is implemented are likely to be taken into account, the economic viability of the project is a decisive factor for the EIB’s decisions whether or not to grant financial support to projects under the EFSI[5].

30. The explanations provided by the EIB allow the Ombudsman to conclude that there was no maladministration on this aspect of the case.

How the EIB-CM handled the complainant’s complaint

Arguments presented to the Ombudsman

31. The complainant contended that the EIB-CM was wrong to reject her second complaint as being outside its remit, and that, by doing so, the EIB-CM failed to examine her arguments and the solution she had proposed about the project financing[6].

32. In its reply to the Ombudsman, the EIB expressed the view that decisions on whether it participates in financing operations cannot constitute maladministration per se, and therefore fall outside the remit of the EIB-CM[7]. Complaints about the procedure for appraising financing operations are, on the other hand, within the EIB-CM’s remit.

33. The EIB also explained that, when a complaint falls outside the remit of the EIB­CM, the EIB-CM informs the relevant EIB departments about the substantive issues raised in the complaint, in line with the European Code of Good Administrative Behaviour (ECGAB). The EIB then reviews the concerns raised in the complaint. This procedure was followed in this case, and the EIB reviewed its decision.

34. However, it emerged from the Ombudsman’s inquiry that the EIB did not inform the complainant of the outcome of this review. The EIB then did so, sending a letter to the complainant on 13 July 2018.

The Ombudsman's assessment

35. The EIB-CM was correct to state that the substantive issues raised by the complainant concerning the EIB’s decision not to finance her project were outside its scope of activities. It was for the relevant EIB departments to review their decision in the light of the concerns raised by the complainant. Therefore, in this case, the EIB-CM’s decision not to look into the substance did not constitute maladministration.

36. However, as the complainant raised substantive arguments concerning the EIB’s decision, the EIB-CM was obliged (i) to forward the complaint to the relevant EIB department so that it could address the complainant’s concerns, and (ii) to inform the complainant that it had done so[8].

37. The EIB-CM did forward the complaint to the relevant EIB department. However, at the time, the EIB did not communicate to the complainant the outcome of its review. It did so only during the Ombudsman’s inquiry. The EIB­CM also did not inform the complainant that it had forwarded her complaint within the EIB[9]. This is a regrettable oversight, which understandably led the complainant to believe that the EIB had not re-examined her arguments and her request, including the additional information she had submitted. The Ombudsman will therefore make a suggestion for improvement below.

Conclusions

Based on the inquiry, the Ombudsman closes this case with the following conclusions:

The EIB settled the matter of its failure to reply to the complainant. For the rest, there was no maladministration.

The complainant and the EIB will be informed of this decision.

Suggestion for improvement

Whenever the EIB’s Complaints Mechanism forwards a complaint falling outside its remit to the relevant EIB department(s), it should inform the complainant thereof. The relevant EIB department should then reply to the complainant within a reasonable time.

 

Emily O'Reilly

European Ombudsman

Strasbourg, 14/12/2018

 

^[1] The aim of the project was to promote the development of the digital economy in French overseas departments, in particular Guadeloupe. 

^[2] The European Fund for Strategic Investments, which is implemented by the EIB, supports investment in key areas such as infrastructure, education, research and innovation, as well as risk finance for small businesses. It aims to overcome market failures by addressing market gaps and mobilising private investment.

^[3] The EIB-CM referred to Article 4.1 of the Principles of the EIB-CM in place at the time. This article stipulated that: “The EIB Complaints Mechanism applies to all complaints of alleged maladministration lodged against the EIB Group. Decisions concerning the investment mandate of the EIB, its credit policy guidelines or the EIB’s participation in financing operations fall outside the scope of the present Mechanism. […]” (emphasis added)

[4] Article 41 of the Charter of Fundamental Rights of the EU.

^[5] The economic and technical viability of a project are amongst the eligibility criteria set out in Article 6(1) of Regulation (EU) 2015/1017 of the European Parliament and of the Council of 25 June 2015 on the European Fund for Strategic Investments, the European Investment Advisory Hub and the European Investment Project Portal and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013 — the European Fund for Strategic Investments, OJ L 169, 1.7.2015, p. 1–38 .

[6] See the complainant’s arguments in paragraphs 7 and 8 of this decision.

^[7] In line with Article 4.1 of the Principles of the Complaints Mechanism in place at the time (see footnote 3 above).

^[8] Article 15 of the ECGAB (‘Obligation to transfer to the competent service of the institution’) stipulates that: “1. If a letter or a complaint to the institution is addressed or transmitted to a Directorate General, Directorate, or Unit which has no competence to deal with it, its services shall ensure that the file is transferred without delay to the competent service of the institution. 2. The service which originally received the letter or complaint shall inform the author of this transfer and shall indicate the name and the telephone number of the official to whom the file has been passed”. In addition, Article 9(2) of the Code of good administrative behaviour for the staff of the European Investment Bank in its relations with the public stipulates that: “If an enquiry does not fall within their area of responsibility, staff shall refer members of the public to the relevant Bank department.”

[9] The EIB-CM informed the complainant that, in accordance with Article 10.2 of the ‘Complaints Mechanism- Principles, Terms of Reference and Rules of Procedure’, in place at the time, a reply would be sent to her by 10 April 2017. However, it would have been difficult for the complainant to understand, from this reference to Article 10.2 (which is about time limits for dealing with complaints), that the EIB-CM had transferred her complaint. To understand this, the complainant would have had to read this provision in conjunction with other provisions from the ‘Complaints Mechanism- Principles, Terms of Reference and Rules of Procedure’, such as Articles 7.1 or 7.6.