# Decision of the European Ombudsman on complaint 1915/2002/BB against the European Commission and the  Court of Auditors
- Author: European Ombudsman
- Date: null
- [URL](https://www.ombudsman.europa.eu/en/decision/en/1818)
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Strasbourg, 3 December 2003   

Dear Ms G. and Mr P.,

On 24 October 2002, you made a complaint to the European Ombudsman on behalf
of the Interdisciplinary Centre for Comparative Research in the Social
Sciences (ICCR). This complaint against the European Commission and the
Court of Auditors was received on 7 November 2002. The complaint concerns
an outstanding final payment of € 80,671.61 for Thematic Network contract
No. 1999-TN.10869 "TRANS-TALK" under the Fifth Framework Programme and an audit carried out by the Court of
Auditors.

I would like to inform you that Mr Jacob Söderman, with whom you have previously
corresponded concerning your complaint, has retired and that, from 1
April 2003, I am his successor as European Ombudsman.

On 31 December 2002, the Ombudsman forwarded the complaint to the President of
the European Commission and the President of the Court of Auditors. The
Court of Auditors sent its opinion on 7 April 2003 and I forwarded it
to you with an invitation to make observations, which you sent on 27
May 2003. The Commission sent its opinion on 27 May 2003 and it was forwarded
to you with an invitation to make observations, which you sent on 22
September 2003. On 14 October and 5 November 2003, the European Ombudsman's
secretariat contacted you by telephone regarding your observations.

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

THE COMPLAINT
-------------

The European Commission and the Interdisciplinary Centre for Comparative Research
in the Social Sciences (hereafter: "the ICCR") as one of the principal contractors, signed a contract on 22 December 1999.
The contract was called Thematic Network contract No. 1999-TN.10869 "TRANS-TALK" under the Fifth Framework Programme. This contract covered a period of 18 months,
from January 2000 until the end of June 2001. The total estimated costs
of the project were € 601,015 and the initial advance payment was fixed
at € 180,305 to be distributed amongst the five principal contractors.
The ICCR submitted cost statements at regular six month intervals.

On 31 October 2001, the ICCR was notified that the Court of Auditors would carry
out an audit of the project. The audit took place during 16-18 January
2002. According to the complainants, the auditors stated that they would
be submitting their report to the Commission by the end of January 2002.

The ICCR submitted the final cost statement to the Commission in August 2001.
On 11 December 2001, the Commission DG TREN approved it. As the ICCR
had not heard from the Commission, the project coordinator contacted
the financial officer of the Commission on 26 February 2002, via e-mail,
to inquire about the status of the final payment. By e-mail of 28 February
2002 she was notified that the final payment could not be made prior
to receipt of the Court of Auditors' report.

On 13 June 2002, the financial officer of the Commission forwarded, by e-mail,
the report of the auditors with a request for some clarifications. The
auditor's report was dated 15 April 2002. The ICCR supplied the Commission
with the requested information, via e-mail, on 14 June 2002. On 8 July
2002, the ICCR sent, on its own initiative, a full opinion on the Court
of Auditors' report to the financial officer of the Commission.

In a letter addressed to the Commission and dated 12 July 2002, the ICCR requested
formal clarification regarding the status of the final payment of the
contract. The Commission sent an undated reply in August 2002 stating
that the payment would be suspended with reference to Article 3.2 of
Annex II of the contract. On 29 August 2002, the ICCR informed the Commission
that it could not accept Article 3.2 as a reason for suspension of the
final payment. According to the complainants, the Commission did not
reply to this letter.

On 24 October 2002, the complainants made a complaint on behalf of the ICCR to
the Ombudsman against the European Commission and the Court of Auditors.
The complaint concerns the outstanding final payment of € 80,671.61 for
Thematic Network contract No. 1999-TN.10869 "TRANS-TALK" and the audit carried out by the Court.

As regards the European Commission, the complainants made the following allegations:
> 1) Lack of information regarding the status of the audit and of the final payment;
> and
>
> 2) Non-payment of the outstanding final payment of € 80,671.61.

The complainants claim settlement of the final payment with interest and an official
European Commission position on the audit carried out by the Court of
Auditors and on the procedures followed by both institutions.

As regards the Court of Auditors, the complainants allege that the report drew
false conclusions and ignored the input provided by the Centre, and that
there was undue delay in submitting the report to the Commission.

THE INQUIRY
-----------

**The Commission's opinion**   

In its opinion, the Commission made the following points:

In the context of the management of indirect RTD actions under the Fifth Framework
Programme, the Court of Auditors carried out an audit of the Thematic
Network contract No. 1999- TN.10869 "TRANS-TALK" at the ICCR in Vienna. The auditor's report raised certain complex and serious
matters which required careful consideration by the financial services
of the Commission.

The Court of Auditors came to the conclusion that some declared costs were non-eligible
and were without supporting evidence. This included especially: overcharging
by the beneficiary for cost statements; non-compliance with the contract
by the beneficiary regarding the use of budget rates; subcontracted consultant
declared as a permanent employee.

On the basis of the Court of Auditors' report, the Commission decided to suspend
payments to the beneficiary until its final examination of additional
documents provided by the beneficiary.

On 28 February 2002, the Commission informed the ICCR of the situation regarding
the final payment and its examination in the context of this audit. The
ongoing discussions with the ICCR started in the summer 2002. In the
meantime, discussions between the Commission and the Court of Auditors
were completed in the autumn of 2002. While undertaking these additional
investigations, the Commission confirmed to the ICCR in August 2002 that
all payments were suspended. The Commission requested additional information
by letter dated 5 December 2002. The reply from the ICCR dated 24 January
2003 was received and the Commission informed the ICCR that this reply
was under examination with a view to an early resolution of the final
payment.

On 13 May 2003, the Commission informed the ICCR that the final payment of €
50,821. 03 had been made. According to the Commission, the amount of
€ 29,799.63 could not be taken into account, since this would involve
transfer between cost categories that require prior authorisation.
**The complainants' observations on the Commission's opinion**   

The complainants made, in summary, the following points:

This case raises general issues concerning delays by the Community institutions
in responding to repeated requests for information and the length of
the process. According to the complainants, the principle of transparency
requires that these general issues should be addressed.

Following the complainants' reply to the Commission dated 27 May 2003, the Commission
had proceeded to pay the remaining sum of € 20,447.79.
**The Court of Auditors' opinion**   

The Court of Auditors made, in summary, the following points:

The document at the centre of this complaint is not a report adopted by the Court
of Auditors but a ++sector letter++. The objective of a sector letter is
to present the preliminary findings obtained in the course of an audit
to the auditee, which in the internal policies area, is the Commission.
Following further analysis of the Commission's reaction to the factual
information and related remarks stated in the sector letter, these findings
may then form the basis of observations presented in reports of the Court
of Auditors. In some cases, it may also require corrective action by
the Commission. Since the findings and observations are preparatory at
the stage of a sector letter and are, in principle, subject to further
verification work, they remain confidential between the Court and the
Commission.

In the present case, the sector letter N° 740/02 reporting the audit findings
resulting from the audit of the contract "TRANS-TALK", was addressed to the Commissioner in charge of DG Energy \& Transport (TREN). Following normal practice, the electronic version of this
sector letter was then dispatched to the liaison officer at DG TREN.
It appears, however, that an electronic copy of the confidential sector
letter was then forwarded to the ICCR by an official of the Commission.

As regards the allegation of false conclusions, the auditors of the Court follow
the Court's Audit Policies and Standards (CAPS) and internationally recognised
audit standards, such as those of the International Organization of Supreme
Audit Institutions (INTOSAI). Also, the Court's procedures provide for
an extensive internal quality control before audit findings and observations
are submitted to the auditee. Those standards and procedures were followed
in the present case.

As to the allegation that the input provided by the ICCR was ignored, the audit
team took all information provided by the complainants into account to
the extent considered relevant for the audit. All findings in the sector
letter addressed to the Commission are supported by sufficient and appropriate
audit evidence, based on information collected and received during and
after the audit at the premises of the ICCR, as well as from the Commission.

Regarding the allegation of undue delay, the Audit Manual of the Court states
that a sector letter should be sent within two months of the completion
of the mission. However, this internal rule has no binding character
on the Court with regard to the complainants. Furthermore, the fact that
the sector letter was sent in the present case with a slight delay, which
by no means can be considered as undue, does not affect the interests
of the complainants in any way.
**The complainants' observations on the Court of Auditors' opinion**   

The complainants made, in summary, the following remarks:

According to the complainants, the auditor of the Court of Auditors told the
ICCR that it is up to the Commission to decide whether the report[(1)](#(1)){#Footnote1} is
transmitted to the ICCR.

The complainants maintain that the points of view of the ICCR were not taken
into account by the auditors.

The complainants stress that the ICCR never claimed that the delay in handling
their case was only the fault of the Court of Auditors, but rather the
combined effect of the non-transparent procedures of the Commission and
the Court of Auditors and their interfaces. The complainants maintain
that the delays affected the ICCR's interests as the present case had
not been settled more than one year after the audit took place.
**Further inquiries**   

On 14 October and 5 November 2003, the European Ombudsman's
secretariat contacted by telephone one of the complainants who spoke
on behalf of both complainants regarding the observations received on
29 September 2003. The complainants confirmed that the Commission had
proceeded to pay the outstanding final payment. The complainants had
accepted the Commission's interpretation of transfers between cost categories
which require prior authorisation according to Article 17(4) of the General
Conditions[(2)](#(2)){#Footnote2}. Therefore, the amount of about € 9,000 could not be included
in the final payment. The complainants informed the Ombudsman's secretariat
that the ICCR had not sent any comments on the Commission's letter of
14 July 2003, in which the Commission offered a settlement and informed
that unless it receives comments from the complainants within one month,
the project will be officially closed and no further costs can be claimed.
The complainants confirmed that by not commenting on the settlement offer
made by the Commission, the ICCR had *de facto* accepted that no interest would be paid for the suspended
final payment. The complainant was satisfied with the settlement of the
final payment.

THE DECISION
------------

**1 Preliminary remark**   

1.1 In their observations, the complainants argue that this
case raises general issues concerning delays by two Community institutions
in responding to repeated requests for information and the length of
the process.

1.2 The Ombudsman understands the complainants to be concerned about the general
issue of procedures where two or more Community institutions conduct
simultaneous inquiries or processes affecting the handling of a case.
The Ombudsman considers that this general issue cannot be dealt with
effectively in the framework of the present inquiry. The complainants
have the possibility to present a new complaint to the Ombudsman, if
they wish to do so.
**2 Alleged lack of information by the Commission regarding the status of the audit
and of the final payment**   

2.1 The complainants allege lack of information by the Commission
regarding the status of the audit and the final payment.

2.2 According to the Commission, it informed the complainants on 28 February
2002 about the situation regarding the final payment and its examination
in the context of this audit after the complainants had sent an e-mail
on 26 February 2002. Ongoing discussions with the ICCR were initiated
in the summer 2002. On 12 July 2002, the complainants requested information
about the status of the final payment. In August 2002, the Commission
confirmed to the complainants that all payments were suspended due to
an audit by the Court of Auditors. On 29 August 2002, the complainants
made a request to the Commission to reconsider their case. On 5 December
2002, the Commission requested additional information from the complainants.
On 11 February 2003, after having received the requested additional information,
the Commission sent an acknowledgement of receipt containing a holding
letter. On 13 May 2003, the Commission informed the complainants that
it had initiated the procedure for the final payment.

2.3 The Ombudsman considers that the Commission has provided the complainants
with information about the status of the audit to the extent that the
audit affected the Commission's procedure for making the outstanding
final payment. Furthermore, the Commission appears to have adequately
informed the complainants about the suspension of the final payment.
Therefore, there appears to be no instance of maladministration by the
Commission as regards this allegation.
**3 Alleged non-payment of the outstanding final payment with interest and the
claim for settlement**   

3.1 The complainants alleged that the Commission has not made
the outstanding final payment of € 80,671.61 for Thematic Network contract
No. 1999-TN.10869 "TRANS-TALK" under the Fifth Framework Programme.

3.2 The Commission states that the final payment of € 50,821. 03 was made on
13 May 2003. According to the Commission, the amount of € 29,799.63 could
not be taken into account since this would involve transfer between cost
categories, which requires prior authorisation.

3.3 In the observations, the complainants inform the Ombudsman that, following
their reply to the Commission dated 27 May 2003, the Commission had proceeded
to pay the sum of € 20,447.79.

3.4 The European Ombudsman's secretariat contacted by telephone one of the complainants
who spoke on behalf of both complainants regarding the observations.
The complainants had accepted the Commission's interpretation of transfers
between cost categories which require prior authorisation according to
Article 17(4) of the General Conditions. Therefore, the amount of about
€ 9,000 could not be included in the final payment. The complainants
informed the Ombudsman that by not sending any comments to the Commission
regarding the settlement offer, the ICCR had *de facto* accepted that no
interest would be paid on the suspended final payment. The complainants
were satisfied with the settlement.

3.5 Based on the information provided by the European Commission and the complainants,
the Ombudsman finds that the Commission has settled the matter and has
thereby satisfied the complaint.
**4 Claim for an official Commission position on the audit and the procedures followed**   

4.1 The complainants claim that the Commission should take
an official position on the audit and the procedures followed.

4.2 The European Ombudsman considers that this aspect of the case is covered
by the settlement reported in part 3 of the decision.
**5 The allegations against the report[(3)](#(3)){#Footnote3} of the Court of Auditors**   

5.1 The complainants allege that the report of the Court of
Auditors drew false conclusions and ignored the input provided by the
ICCR.

5.2 The Court of Auditors argues that it took into account all information provided
by the complainants to the extent considered relevant for the audit and
that all findings in the sector letter are supported by sufficient and
appropriate audit evidence. The Court of Auditors also argues that it
did not reach false conclusions.

5.3 The Ombudsman considers that there appears to be no evidence to suggest that
the Court of Auditors ignored the input of the complainant. Furthermore,
there is nothing to suggest that the conclusions of the Court were wrong
or unreasonable. Therefore, there appears to be no maladministration
regarding these aspects of the case.
**6 Alleged undue delay by the Court of Auditors**   

6.1 The complainants allege undue delay in submitting the
Court of Auditors' report[(4)](#(4)){#Footnote4} to the Commission. According to the complainant,
the audit mission was completed on 18 January 2002 and the auditor's
report was dated 15 April 2002.

6.2 In its opinion, the Court of Auditors states that its Audit Manual provides
that a sector letter should be sent within two months of the completion
of the mission. The Court acknowledges that the sector letter was sent
in the present case with a slight delay, but that the delay could not
be considered as excessive.

6.3 The Ombudsman notes that the Audit Manual of the Court of Auditors is an
unpublished internal guide, which is not intended to establish any entitlements
for third parties. In these circumstances, the Ombudsman does not consider
the slight delay acknowledged by the Court of Auditors to constitute
maladministration.

6.4 The Ombudsman therefore finds no maladministration regarding this aspect
of the case.
**7 Conclusions**   

The Ombudsman finds no maladministration in relation to the
complainants' first allegation against the European Commission. As regards
the complainants' second allegation and their claim, it appears from
information provided by the European Commission and the complainants
that the Commission has settled the matter and has thereby satisfied
the complaint. Furthermore, the Ombudsman finds no maladministration
by the Court of Auditors. The Ombudsman therefore closes the case.

The Presidents of the European Commission and the Court of Auditors will also
be informed of this decision.

Yours sincerely,

P. Nikiforos DIAMANDOUROS

*** ** * ** ***

[(1)](#Footnote1){#(1)} The
European Ombudsman notes that the complainants use the term "report" to what the Court of Auditors refers to as a sector letter.

[(2)](#Footnote2){#(2)} According to Article 17(4) of the General Conditions, principal contractors
may transfer between themselves as well as between cost categories up
to 20 % of their total amount, without prior approval of the European
Commission.

[(3)](#Footnote3){#(3)} In its opinion, the Court of Auditors pointed out that the document concerned
is a sector letter.

[(4)](#Footnote4){#(4)} In its opinion, the Court of Auditors pointed out that the document concerned
is a sector letter.